how do you refi a subject -to

Question

hello my BP family I am a newbie working on my first deal its a subject-to. I have a ton of questions but my main one is how do I refinance a subject to and get the loan in my name the seller wants to no how long am I going to keep the loan in there name. please help me I feel like I'm so close yet so far away from my first deal

thanks everyone

Jeff Rappaport · Answer

@Henry Winn, I am not sure why you would want to be the one refinancing a subject to deal.  In my mind, the whole reason to do a subject to deal is not to get any conventional financing.  It really comes down to what your exit strategy is.  Are you going to use the property as a straight rental?  If so, you want as long as you can get.  Why not tell the seller it will remain in his name until your end buyer gets a loan.  That may be one year or the length of the term of the original mortgage.  How long would you like me to continue to make your payments, deal with the maintenance and repairs and the taxes and insurance on your property?  Most sellers that are contemplating subject to deals are looking for debt relief.  If you explain it properly to them the sellers will usually tell you what their objections are.  Isolate those objections, be honest, and tell them what you need to get this deal done!

If you are going to lease to own the property or sell it on a contract then you may only need 2-3 years.  I typically ask for a minimum of 3 years with the right to extend for an additional year or two for either no money (as long as the payments have been made on time) or for $1,000.  I would give my buyer less time than I have and would charge them more to extend.

Also keep in mind that anything you negotiate now can be renegotiated later.  What happens if you agree to 3 years and your buyer or tenant cannot buy the property?  Well, you go back to the seller and tell him you need more time.  If the seller is not getting any money from the sale of the home then it is fairly easy to show him that this is the best deal for him.  If he is gettting some money offer him some.  Offer him more money if he waits.  Offer to give him the house back.  Unless you rented the house for cash flow and future appreciation you have made some money on this house.

The only other suggestion I would give you is make sure you not only understand how subject to works but other options you may be able to present the seller.  For instance, you should definitely let the seller know that by doing a subject to deal you will be violating the due on sale clause and the bank could call the loan due.  I would hope that you will take some precautions to make sure that will probably not happen but the seller needs to know it is a possibility.  If that objection is too difficult to overcome let the seller know you may have another solution in terms of a Land contract or a Contract for deed.  Basically the same as subject to except you as the buyer does not get the deed until you have paid the seller in full.  You do not violate the due on sale clause so the bank will not be calling the loan due.  You still own the property and can usually do anything you would have done anyway with the deed.

Hope this helps!  At the very least it should get you thinking about some different things.  If I can be any further help you can pm me.  Good luck!

Bill Gulley · Answer

I very strongly suggest you stay away from podcast #70, unless you like orange jumpsuits. You can search the forums for the issues.

How things sound is salesmanship!

You can refi a sub-to after a year without any issues, it's a standard refi, some lenders will do 6 months to cash out, but your loan to value needs to be in line for cash out financing. Within the first year you'll probably refi on the appraised value or the purchase price, whichever is less, after a year the purchase price is not used. Sub-2 deals;

@Brian Gibbons

@Dion

@Dion DePaoliundefined

@Don ......   can't find him, sorry.

our attorneys on BP

and your's truly

there are a couple more that aren't clicking with me, but you won't get the proper way they are to be done in any podcast, unless those mentioned did one and they haven't to my knowledge.

Read my blog, how to develop a good BS Meter, a little bit of knowledge in real estate and financing is a dangerous thing! :)

Henry Winn · Answer

this was a big help thank you.

Bill Gulley · Answer

You're just priming the pump aren't you......

And, thanks for the TIC comment, it's a pretty useful tool! :)

Brian Gibbons · Answer

oh and learn TIC agreements  to get on legal title so that you can legally wholesale

Now Bill I'm mentioning you :)

@Bill Gulley

Bill Gulley · Answer

LOL, Brian, did you mention me to tell me that or you just wanted me to read it?

Yes, nice post Jeff!  :)

Corey Woodruff · Answer

why would listening to podcast 70 lead to an orange jumpsuit? He does everything in a legal way and does his contacts at a loan originator? Nothing in podcast 70 points you into doing something illegal. I think you may have your podcast mixed up.

Hope you got the answers to yourquestions for the refi

Henry Winn · Answer

1000 for mortgage not 100

Henry Winn · Answer

thank you everyone I think I almost made  a big mistake I was looking at it on a long term buy and hold. and I ran the numbers it wasn't really working ( they said 300 cash flow a month  but it was 1300 rent and 100 for mortgage didn't factor in anything else but I really wanted to get my first deal under my belt not to mention a property for next to nothing that comes with a tenant I really feel that buy and hold is best for me and I though I could do that with this deal but it don't sound like this method is good for that also I cant flip cause she is owe 80k and the comps are around 60k. I really appreciate  the feed back if wasn't for BP I would have closed on this deal by end of month. its hard to walk away when you never did a deal and you have one someone is giving you like this

Brian Gibbons · Answer

@Jeff Rappaport

(nice post Jeff:)

@Bill Gulley

Sub2s are great for short term such as buy - fix - resell or buy - fix- refi.

Sub2s are not for long term, and wrapping as an exit strategy is not advised by many on this board.  Lease 2 own exit is a gamble as an exit strategy too.  Think what happens to the occupant if the loan gets called and you as the sub2 purchaser - owner can not refi the loan?  Most non owner occupant loans are 20% down.

Sub2s and property trusts are common tools together.

If you are going to buy on a wrap, buy with private money with no due on sale clause, then sell on on a wrap.

Remember all of your creative tools: sub2 with or without a note, land contract - contract for deed, lease with option, lease purchase, purchase with private 1st mortgage, jv with cash partner, jv with home seller and use private money for rehab, wrap-aitd, and more.

Dont be a one trick pony, be a transaction engineer. :)

how do you refi a subject -to

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