Hey I was reading up on wholesaling lease options to buyers/tenants. And I was wondering, is it good idea to wholesale a lease option on a home that is in pre foreclosure ?
Assuming the owner can't make up the back payments to stop the foreclosure, what do you think will happen in 6-12 mo.s?
Like Wayne Brooks was hinting, it's not the best idea to do that. If the house is behind on payments and tomorrow a lease/option tenant is placed in the house, chances are it will not be a good outcome for the tenant.
Preforeclosure is a sign that the owner is in financial distress. Once they start receiving monthly rent payments from the property, there's a possibility that the income won't go towards satisfying the delinquent mortgage.
There's a high chance that the house will be foreclosed upon prior to the tenant having the option to buy.
@Justin McClelland what if there is a 3rd party service involved making the payments? Im learning about LO and sub2 so I was just curious.
Carolina E I'm not certain I've heard of that before. I'm interpreting your mention of a 3rd party service, as a company that assists the property owner in some capacity to make payments? Please explain more about such a service.
@Justin McClelland maybe this is only used for subject to deals, but I remember reading somewhere that a company makes the payments to the mortgage company. This way both seller and buyer are safer. The buyer sends money to company and they pay loan. I believe some title companies can handle this.
[s]the issue is that the owner is at least 4 months behind on payments. Assuming the owner is behind because they didn't have the money, who is going to make up the late payments? Also, once the loan is accelerated, catching up on the payments is not an option. This all assumes that there is some equity to begin with.
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