I have a concept for a financial real estate service and I would like some feedback on whether or not it could work.
Say someone has owned their home for several years and own a large amount of equity in their property "lets say $65,000". However the owners fall onto hard times and start falling behind on their mortgage and are at risk of being foreclosed on. No bank would buy back that equity in their home and give them a second mortgage because they already can't pay the first mortgage. So their only choices are to go through with the foreclosure in which case their credit score would be ruined and they would only see a small amount of that equity if any. Or try to sell the house before it gets foreclosed on in which case any logical buyer would only pay a price well below market value. This puts the owners in a tight spot.
What my company would do is we would step in and find a third party investor to buy the home. The previous owners would sign a contract agreeing to buy back the house within a set time period and they would agree to live in the home and take care of it until they buy it back. The investor would take out a second mortgage on the house to get the 65,000 in equity. My company will take 35% of that equity as a fee and use the rest to pay off the mortgage on the house until the previous owners buy back the house. We will use whatever remaining equity that is left to cover the down payment when the previous owners buy back the property. So the owners get to keep their house with zero or very little money down and I am able to make a $22,750 profit.
Say someone has owned their home for several years and own a large amount of equity in their property "lets say $65,000". However the owners fall onto hard times and start falling behind on their mortgage and are at risk of being foreclosed on. No bank would buy back that equity in their home and give them a second mortgage because they already can't pay the first mortgage. So their only choices are to go through with the foreclosure in which case their credit score would be ruined and they would only see a small amount of that equity if any. Or try to sell the house before it gets foreclosed on in which case any logical buyer would only pay a price well below market value. This puts the owners in a tight spot.
What my company would do is we would step in and find a third party investor to buy the home. The previous owners would sign a contract agreeing to buy back the house within a set time period and they would agree to live in the home and take care of it until they buy it back. The investor would take out a second mortgage on the house to get the 65,000 in equity. My company will take 35% of that equity as a fee and use the rest to pay off the mortgage on the house until the previous owners buy back the house. We will use whatever remaining equity that is left to cover the down payment when the previous owners buy back the property. So the owners get to keep their house with zero or very little money down and I am able to make a $22,750 profit.
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