I met again with my pre-foreclosure folks today and the bank is not willing to do a loan modification. It seems, since he is working on his disability, a modification is just going to delay the fact that he still may not be able to make payments. So, this opens the door to an investment opportunity. The situation is, he owes approximately $170,000 on a house valued at $245,000 and really would like to stay in the house if possible.
My idea, this morning, was to possibly work out an equity partnership. This would work as follows. Find an Investor, me maybe, that is willing to payoff the mortgage and assume ownership of the house. Give the Seller a note for part of his equity, say $40,000. This would be a no interest no payment note to be redeemed when the property is sold, some time in the future. The current Owner would become a tenant with a vested interest (his note) to maintain the property. The rent would cover the payment on the new financing of $170,000. As long as he continued to make the rent payment, he could stay in the house. If for some reason he could not make the payments, he would be evicted, as would any other tenant. The only difference is, he would still own the note for $40,000.
If my thinking is correct, this would give me (or another investor) an immediate $35,000 equity position and of course any future appreciation and tax benefits. The Seller would get to stay in his house and would save his equity from foreclosure.
Now my question is. Can this scenario be achieved with no money out of my pocket? I figure with all the L.O.s and investors on ActiveRain, someone may be able to help me with some ideas. Also, it will be a good learning exercise for any members that are interested in this type of stuff.
So what say you? Deal or no deal?