Here is a strategy:
Find a seller who is in trouble... facing default and agree to take over the property as is.
A lease with an option to purchase would be ideal. If you can find a seller, with a home that is worth less than the loan, (example the FMV is $300K and the loan balance is $400K) there is a strategy that has worked for others. You agree to rent the home, pay all utilities, taxes and maintenance costs that the current owner pays. The seller pays nothing more on the home as long as you reside in it. You pay everything... and have the right to buy it down the road. Your purchase price will be the loan balance at the time you exercise your option.
This might be more than the FMR (fair market rent) but it gives you the right to buy the home. The option should be for a long term... 10 years. The seller must agree to sell you the home at whatever the current loan balance is at the time you exercise the option. This balance will get less and less over time. We hope the value will go up and up over time.
It is a hedge strategy. The loan should go down a bit every time the rent is paid (rent is equal to the principal, interest, taxes and insurance (PITI). The hope is that the home will go up in value over the time you live there. You will be able to control the property, do with it what you want. YES Virginia... you can have pets.
The seller will be able to salvage their credit, not worry about the property and get a tax deduction for depreciation.
Thank You -
Jeffrey Martino Young