Scenerio: If I have a buyer with bad credit can a investor buy the house and lease it to the buyer (without falling into legal issue "straw buyer")?

Why not just go find a house for rent right now and do the lease for your buyer?If your working some kind of deal with the INTENT the buyer eventually purchases the property it could be fraudulent depending on the way the transaction is set up.

It's kind of like going in a car with people drinking,you aren't drinking but could get into just as much trouble.Could be legal who knows you don't have any details here.You need to show the specific contract to your broker or if your not an agent to an r.e. attorney to get answers.

no legal advice

if your buyer can afford the monthly payments, plus 2 months and 5% for closing costs, i can do owner financing with any seller in that area and handle the negotiations and paperwork. ill just split the profits with you.

if the property is listed on the MLS, i can deal with the agent as well.

send me a PM with your phone number and ill explain it to you.

What is a "straw buyer"?

Straw Buyer is a Shadow Buyer, in other words, a Buyer who acts as the intended Buyer.

okay, nobody asked this question---but, why would you want to lease to someone with bad credit?

why not?

here's some out of the box thinking

if the tenant wants to buy the house in a few years then give them the first right of refusal to buy it

collect 2 months up front and 5% closing costs
work with them to refinance the house in their name which may take 2-3 years and collect your commission

if its just a straight rental, depending on your location, you might get some negative cashflow like in california. avoid this burden by structuring a triple net lease which the tenant will cover everything. per the IRS code, we give them the tax deductions while leasing.

I beleive that if you have a lease option person that finds a house he wants and then you have a investor that will purchase that property with the intentions of selling it to the lease option person three years down the road at the fair market value for that time (todays price plue estimated appreciation annually for three years) that there is no reason they can't. the lease does have to be signed after the investor has purchased the home. this is done all the time.

Jerry Burns

What we have done in the past is setup 2 seperate contracts. First get a Option contract and a lease agreement contract. What we would do is collect a 5% option fee for the term of the lease. This gives the tenant security in the home for a period of time and assures them first right to purchase the home. They then sign a lease agreement to live in the home while they are securing financing. This also gives you ample time to see how they will pay you in the event you decide to owner finance. Of course every state is different, so consult your real estate lawyer.

Sounds like you have a client who wants a house but cant buy it. You have an investor that can buy it now, but can later.

Sell it to the investor have the "renter" and investor work out a rental/purchase agreement between them, and move on.

If your investor does not want a rental, find one that does. I do it all the time for my investors. Not only do they buy the house, they do not market it for renters, saving them money, as they have a renter already. I don't don't see where its a straw buyer situation.