I own a home that i currently rent out. I prefer to sell my home to an investor however since there isn't a great profit to be made by renting investors have offered me to "take over the payments". They put it into a trust account and then they say at some point they turn around and sell the house and what ever profit they get. I basically walk away free and clear and not make any profit. Has anyone heard of this? Or is this a scam? They claim that if they don't pay on the mortgage then we both can loose the house. This is what scares me most because I don't want to ruin my credit if they don't pay. A lot of "we buy your home quickly" companies are offering this as an option.
2007-09-12 08:33:13 · 11 answers · asked by B L 1 in Business & Finance ➔ Renting & Real Estate
ABSOLUTELY DO NOT DO THIS WITH SOMEONE THAT YOU DO NOT KNOW! You are basically giving a loan to someone that contacted you through a real estate ad. If you would not loan that person the money to purchase the house, then do not let them "take over payments." All of their late payments will go on your credit. You are basically giving away the equity in the house and getting nothing in return. Why wouldn't you just rent the house yourself and wait until it appreciates in value and the mortgage is paid down? You are still taking the same risks.
2007-09-12 08:48:09 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Many of the quick turn around places do this type of thing. it protects them in that your credit is what is tied to the property. if they don't pay you, you are in default. Sure you can go after them, but then you will have to pay to sue them. this will be after they mortgage company forecloses on your home. also, they will find the tenants for the property. If the place gets trashed too bad, they can walk away and leave you holding the bag. i would never sell a place this way. let them know if they are truly interested in your place then they should make you an offer. many of the Real Estate get rich quick schemes you see on TV and the internet sell this type of practice as a win-win situation for everyone. it can be, but you have to look at where the risk is. What risk is this investor putting up in the deal? Is the risk you are dealing with worth the payout you are getting now (not in the future)?
I considered this type of investment back when I started my real estate dealings but decided to go the tried and true route of purchasing my own properties and renting them out. Good deals are out there and can easily be bought. No need to have your credit tied to this deal.
Cash is King.
2007-09-12 15:47:44 · answer #2 · answered by Patrick 5 · 1⤊ 0⤋
This is a scam. You're basically losing money if you let someone take over your mortgage payments. All the money that you've paid for the house means nothing now. If you sell the house, you would actually receive the amount that it's sold for minus closing costs. For instance, if your house is worth $300,000 and was sold for that amount, you get $300,000 minus closing costs. If you let someone take over the mortgage payments, you end up with $0 and no house. You would be better off if you sell the house to a regular buyer.
2007-09-12 15:47:35 · answer #3 · answered by Mrs Apple 6 · 0⤊ 0⤋
It might not be a scam but if there have been many times where the "investor" pocketed the rent payments and did not make the loan payment. The person who took out the loan is liable unless the bank agrees to transfer the loan.
2007-09-12 15:56:22 · answer #4 · answered by ralph 5 · 1⤊ 0⤋
Sounds like a big fat way to get screwed to me!
Work out a lease option with someone who has less than perfect. It might offer you the best of both worlds. You actually get to SELL your place, and maybe have a little bit of money in your pocket at the end. You're also helping someone who can't get a loan because of the current market situation.
2007-09-12 15:37:56 · answer #5 · answered by Roland'sMommy 6 · 1⤊ 0⤋
Just by your initial question I've gotta say that if the person taking over payments don't pay, you could end up losing the house. You would have to make the payments for them and the bad credit goes in your name.
2007-09-12 15:41:14 · answer #6 · answered by Tasha 4 · 0⤊ 0⤋
hell depending on your payment i'll take them over for my little porfolio. I would say that you enter it in as a seller fianced deal. that way the would actually purchase the house from you and then pay the mortage directly to you as if you were the bank. Arrange their mortage date say a week before its actually due and then if they dont make it have a clause in there that terminates the contract. That way you know the mortage is getting paid and you make at least interest off the whole thing
2007-09-12 15:41:14 · answer #7 · answered by sarah W 4 · 0⤊ 0⤋
It would be wise to get a real estate attorney to take a look at their written offer before you do anything.
Talk to a reputable settlement/title company in your area. They will probably be very glad to help you.
2007-09-12 15:38:48 · answer #8 · answered by Sharon 3 · 0⤊ 0⤋
Even if they keep their promises, (and you're
right, there's no guarantee of this), it is a very
bad deal for you. You assume the risk, they
get the profit.
2007-09-12 15:55:50 · answer #9 · answered by Irv S 7 · 1⤊ 0⤋
remember you are still responsible for mortgage until its sold so be careful!
2007-09-12 15:42:47 · answer #10 · answered by Rick K 3 · 0⤊ 0⤋