I had the pleasure of meeting a family of four when I became aware that their property was in danger of foreclosure. Hearing their story was heartbreaking. The couple and their children had moved into their first home three and a half years ago, taking out a three year ARM with a very attractive introductory rate. Paying $1000.00 month for their dream was not a problem for these two gainfully employed individuals, but like so many people with ARM's when their mortgage ballooned to $2557.00 a month, they struggled to keep up. So they sank deeper into debt trying to keep up with their payments but eventually fell behind. And because of their credit histories, refinancing was not an option right away.
After meeting the couple and their children, I came up with a novel idea with the husband. So that they would not "lose" their home, I decided to buy the house from them for the outstanding principle balance of their loan and would allow them to rent the house from me with the agreement that they could buy the house back from me within a two year period for market value or purchase price (whichever is greater) plus ten percent. This allowed the couple to keep their kids in the home they love, save face with friends and neighbors and gives them two years to get their finances in order to buy back their home. For me what this means is if they can afford to buy the home from me in 2 years, I'll receive a guaranteed 10 percent profit, with no agent or brokers fees, plus the small monthly profit I make from renting the home to them. Even if they can't afford to buy the home from me in two years, I have instant equity in the property and renters who I feel confident are responsible and will make their payments on time and will take care of my property as if it were their own - because it sort of is.