Dangers of Sale-Lease Back when Investing in Foreclosures

Dangers of Sale-Lease Back when Investing in Foreclosures

One of the oldest techniques when investing in pre-foreclosures is sale-leasback.
In essence you approach a seller in foreclosure, offer to buy the property and lease it back to him giving him the option to buy it back in a few years.

In essence hoping that he won't and you'll evict him.

Problem is, if not structured properly, and if you use creative financing techniques, the homeowner can claim the sale as being nothing more than a refinance or he can claim he didn't realize what he was doing.

You've got to be real careful when dealing with homeowners in foreclosure especially senior citizens.

Courts truly frown upon investors who try to take advantage of the elderly and I don't care how you structure it and how much you disclose the risks. When in court, the seniors have all the advantages and you as the investor are the "bad guy".

So keep this in mind when structuring your next sale-leasback or creative foreclosure deal.




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