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Short sale to investor who rents to previous homedebtor?

Chicago, IL
By A.B. Dada
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Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester. Gershburg is a NACA member, an organization I speak very highly of who defends consumers from junk debt buyers and other collector nightmares.

On his blog, Gershburg covers a topic that we’ve spoken about lately: short sales. Gershburg introduces a new thought in the mix:

Furthermore, the remaining balance of the mortgage would be forgiven by the lender and she would be able to live in the house, albeit with a new owner, until such time as she had the funds to repurchase the house. The description is insane.

What Councilor Gershburg is saying is that some property buyers are actually looking to acquire property, at a discount, that they can immediately rent to the previous homedebtor and now tenant. What an amazing investment idea: you don’t need to shop for a tenant, you don’t need to worry about rehabilitating the place, you may get an excellent price from the bank, and you have a future buyer should you wish to sell it: the now-tenant previous homedebtor.

A few days ago we spoke of ways for the bank to short sale a home and keep the buyer in it. I hated my proposal because it allowed the “deadbeat” homedebtor to walk away from debt and still “own” the home. This solution, though, is a great solution for real estate investors who want to take a risk, but have some of the front-end of the risk taken care of: finding a tenant, fixing the property, looking for a future buyer.

Will it work? Only time will tell…