- Joined
- Sep 7, 2007
- Messages
- 164
Would this scenario be legal?
* Current owner occupant has mortgage trouble and cannot re-qualify for a mortgage today. Current owner has lived in property many years and has built up equity (let`s say 25% of current value). Current owner would like to keep house and stay.
* Investor sets up rent to own with this occupant as the tenant buyer. Deposit from tenant buyer would be significant (let`s say the equity they have built up).
* Agreed purchase price today would be under today`s fair market value (let`s say 10% under FMV)
* Agreed purchase price at end of rent to own term would be either at or over today`s fair market value (let`s say up to 10% over today`s FMV)
Because the investor is buying from and then selling back to the same party, is that a concern? Is it a problem or illegal activity if the two different price points create a spread for investor, at the expense of the current owner (equity loss)? The reason for the under market value purchase would to be neutralize any additional downswing in value on the backend of the RTO deal. If current owner is willing to forgo some of that equity in order to fix their credit problem, is it legitimate?
There are some many rules and laws these days, just want to make sure.
Thanks for the help!
* Current owner occupant has mortgage trouble and cannot re-qualify for a mortgage today. Current owner has lived in property many years and has built up equity (let`s say 25% of current value). Current owner would like to keep house and stay.
* Investor sets up rent to own with this occupant as the tenant buyer. Deposit from tenant buyer would be significant (let`s say the equity they have built up).
* Agreed purchase price today would be under today`s fair market value (let`s say 10% under FMV)
* Agreed purchase price at end of rent to own term would be either at or over today`s fair market value (let`s say up to 10% over today`s FMV)
Because the investor is buying from and then selling back to the same party, is that a concern? Is it a problem or illegal activity if the two different price points create a spread for investor, at the expense of the current owner (equity loss)? The reason for the under market value purchase would to be neutralize any additional downswing in value on the backend of the RTO deal. If current owner is willing to forgo some of that equity in order to fix their credit problem, is it legitimate?
There are some many rules and laws these days, just want to make sure.
Thanks for the help!