Land Contract Distressed Sellers

[Ram Srinivasan]

Hi BPers,

Here is a question that I am not sure has been asked yet

I recently found a distressed seller who are in the middle of divorce and have agreed to sell their house at a reduced price and via a land contract. The terms and payments to the sellers are simply the mortgage installments as laid out on their mortgage schedule. This is great as I am getting it 40K below market, and I have to only come up with 11K with no initial bank qualifying.

I am trying to figure out a couple things before I move forward.

As the seller retains title to the propery and still holds the mortgage, will this hamper their ability to qualify for another mortgage down the line?

Essentially, I am paying the seller's mortgage as per their ammortization schedule, so from a seller's point of view, would a lending institution take this account when calc's are made on their gross debt ratios and affordability metrics?

Obviously, I am trying to convince the seller that their qualification for future mortgages (on another property) should not be adversely impacted by selling their property to me via land contract.

I am also trying to convince the seller that they can simply renew their existing mortgage when the time comes, and this way, I will still have great financing terms to work with!

Part 2 of the question is, what should my exit strategy be? Do I do a regular lease on the property (cash flow is minimail, but mortgage pay down is great)? Can I sell my contract to a retail buyer or investor (how would I do this?) - 3) Is there anyway to find a tenant buyer and do a lease option, even though I do not have full title to the property?

Thanks!