It seems to me that due to the strict consumer protection laws of the state, sub 2 deals look difficult to accomplish in California without any trouble arising. For instance, Isn't there a five day rescission period for the seller after they sign the contract? Don't a high percentage of people flake out on deals because of this? Also, are there laws pertaining to how much of the equity you're allowed to profit from there, and in the event of a foreclosure, wouldn't they be entitled to any excess equity anyway? Would it better for the seller to give up their equity to an investor? Or lose the home to foreclosure and get the surplus after the sale?