Looking for an ingenious lease-buy idea (Staunton: sales, real estate market, foreclosure)

[Star C Star]

I live in Staunton, about 25 miles from C'ville and this was the closest section to where I live. That's why I'm posing this question here.

I have been renting a 5-year-old townhome for 4.5 years and the owner has now decided to sell it. However, it is in a community that is still under construction. The houses up the street are just now being worked on (again) after a 2+ year hiatus.

I would very much like to buy the townhouse I am living in and the landlady wants to sell to me but I am self-employed (making my living online) and banks are not loaning to people like me right now.

I have never missed or been late on my rent since moving in so I know that I will be able to continue making mortgage payments, even if no one is willing to give me a mortgage.

My landlady is selling the townhouse because she wants to retire from the real estate market (she is an agent-broker in her mid-seventies). She wants to live on the money she will make by selling the townhouse and therefore is partial to a clean outright sale. However, she has told me a couple of times that she might consider a lease / purchase option. But the longer the house is on the market (she listed it May of 2010) the more desperate I think she becomes to get out from under it.

A clean sell would benefit her immediately while a creative financing arrangement would benefit me. If she would give me 2 years or so to show outstanding 1040's, I know I could get a mortgage. But until then, I can't.

I thought about a land contract but that would give her all the power and put my investment at great risk. Something like a balloon note -- paying on it for two years and getting a mortage before month 25 might be a good option as well. But I can't think of anything other than those two options.

If you have any ideas, I'm listening.

Thanks in advance,
C

[TN Lily]

Why don't you ask this in one of the real estate sub-forums? I suspect you will get a better response there.

Does your landlord own the property outright or is it encumbered with a mortgage?

Many states treat land sales contracts for residential properties as equitable mortgages meaning that the vendor has to go through a foreclosure to deprive the buyer of his or her "equity" in the property. Essentially, these states abolish the forfeiture aspect of a land sales contract. I do not remember offhand whether Virginia is one of these states.

[Star C Star]

Thank you, TN Lily, for your answer to my question.

I will follow your advice and post this question in a real estate sub-forum.

I will also do a little research on the way Virginia treats land sales contracts.

[tellitetre]

You could try speaking with your bank, or even better, a mortgage lender who still does some type of creative financing. Some who have been around a long time and are above board, have other sources, including private lenders who may be able to help you out for some equity down the road. If you have a great credit score and structure the deal correctly with proper documentation, you may be able to get it done.

If you do a land contract, make sure to have a real estate attorney who is familiar with those type deals structures the contract. Also, it may be expensive because of her age, but you may want to a business partner type of insurance policy for the amount of your interest and a clause in her will that specifies your interest.

Having been there, done that, it pays to cover your assets from all angles. Just start asking around, you'll be surprised where a few inquiries can lead you.

[MrRational]

Originally Posted by Star C Star

...but I am self-employed (making my living online) and banks are not loaning to people like me right now.

Qualifying Income = IRS Form 1040.
That it gets there, and consistently, is all that matters.
How it gets there... doesn't matter so much

I have never missed or been late on my rent since moving in so I know that I will be able to continue making mortgage payments, even if no one is willing to give me a mortgage.

See above on qualifying income..
Beyond ability to make the monthly payment income needs to allow accumulation of down payment and closing money as well as a reserve for repairs and such. If you don't have that... then the income probably wasn't enough.
---

As to the lease option deals... there are VERY few that will work even when both sides actually want it to work out. Aside from the buyer responsibility issues that somehow always prevent them ever actually closing... there is really no good reason for a seller to lock themselves into a price on a ddeal that keeps them as a landlord... other than as a last resort way to unload something that can't be sold otherwise.