Subject To Has 5 phases (ok, there are more, but I’m covering these 5 for now) 

[Account Closed]

I’ve been doing Subject to and Creative Finance for a very long time, and I know you have to think ahead. You can’t SAFELY buy properties for full price, using Subject To.

It’s to your benefit to learn how to buy Properties using Subject To, at a discount, safely.

Subject To Has 5 phases (ok, there are more, but I’m covering these 5 for now) J

I did a spreadsheet on how to figure a good deal on Subject To. Let me know if you want it.

1. Finding, As hard as it is to find people willing to sell Subject To their existing financing, they can be found. These fall into a couple of groups

a. Those who have had their house on the MLS for over 90 days and really, really, want to sell. (you're going to spend too much on these and it's risky.)

b.   Those who need to sell because of life circumstances. (Good Choice!)

1. 2. Buying, These fall into a couple of groups

a.   Some will sell SubTo for full price, if you give them cash for their equity. (If you love the house and are moving in, and have the money, that’s fine, but it isn’t investing.)

b.   Some need to sell and will let you take over the mortgage while leaving a bit of equity. (This is what Investing is all about.)

1. 3. Maintaining, Yikes! You mean I have to spend money on the place after I buy it?

a.   If you buy a house, you have to care for it. That means new roof, HVAC, water heater, landscaping, painting, upkeep and so on. Houses are expensive to keep up.

b.   You can sell your Subject To on lease option and let the optionee keep up the house. (This is what we do, no upkeep,  and we love the 10% down, plus cash flow, principal deduction and tax write offs) Some of our investors use their SDIRA or 401(k) or pension to do this.

4. Defending, These fall into a couple of groups, both nasty

1. Eventually you will either face a Due on Sale clause, a seller bankruptcy, a court order in a divorce that affects the property or a fire insurance claim, a slip & fall, very bad tenant, storm damage, and the list goes on. (You have to plan ahead, there are things to know and do).
2. Sometimes you will get a seller who comes back and declares they want off of the loan, or a nasty letter from an attorney saying that you ripped off their client, or a letter from the State Attorney General that you get to visit them in their office. (You have to plan ahead, there are things to know and do).

5. Selling There are a couple of things to know about selling.

1. If you now want to or have to sell, you need proper documentation from your purchase, you may have an uncooperative original seller, maybe you didn’t get title insurance and there is a problem and so on.
2. You have to sell, you over leveraged, but the property has dropped in value, no lender will lend to you and you have to bring money into closing to sell the property, but you don’t have the money.

We know how challenging it is to navigate real estate, either starting out or as an experienced investor, especially when it comes to creative finance. And it doesn’t matter if it’s CA TX  ID AR or FL Subject To can be done SAFELY, out of state, too.

More info at the link provided by Bigger Pockets, just below.

[Dave Kush]

Quote from @Account Closed:

I’ve been doing Subject to and Creative Finance for a very long time, and I know you have to think ahead. You can’t SAFELY buy properties for full price, using Subject To.

It’s to your benefit to learn how to buy Properties using Subject To, at a discount, safely.

Subject To Has 5 phases (ok, there are more, but I’m covering these 5 for now) J

I did a spreadsheet on how to figure a good deal on Subject To. Let me know if you want it.

1. Finding, As hard as it is to find people willing to sell Subject To their existing financing, they can be found. These fall into a couple of groups

a. Those who have had their house on the MLS for over 90 days and really, really, want to sell. (you're going to spend too much on these and it's risky.)

b.   Those who need to sell because of life circumstances. (Good Choice!)

1. 2. Buying, These fall into a couple of groups

a.   Some will sell SubTo for full price, if you give them cash for their equity. (If you love the house and are moving in, and have the money, that’s fine, but it isn’t investing.)

b.   Some need to sell and will let you take over the mortgage while leaving a bit of equity. (This is what Investing is all about.)

1. 3. Maintaining, Yikes! You mean I have to spend money on the place after I buy it?

a.   If you buy a house, you have to care for it. That means new roof, HVAC, water heater, landscaping, painting, upkeep and so on. Houses are expensive to keep up.

b.   You can sell your Subject To on lease option and let the optionee keep up the house. (This is what we do, no upkeep,  and we love the 10% down, plus cash flow, principal deduction and tax write offs) Some of our investors use their SDIRA or 401(k) or pension to do this.

4. Defending, These fall into a couple of groups, both nasty

1. Eventually you will either face a Due on Sale clause, a seller bankruptcy, a court order in a divorce that affects the property or a fire insurance claim, a slip & fall, very bad tenant, storm damage, and the list goes on. (You have to plan ahead, there are things to know and do).
2. Sometimes you will get a seller who comes back and declares they want off of the loan, or a nasty letter from an attorney saying that you ripped off their client, or a letter from the State Attorney General that you get to visit them in their office. (You have to plan ahead, there are things to know and do).

5. Selling There are a couple of things to know about selling.

1. If you now want to or have to sell, you need proper documentation from your purchase, you may have an uncooperative original seller, maybe you didn’t get title insurance and there is a problem and so on.
2. You have to sell, you over leveraged, but the property has dropped in value, no lender will lend to you and you have to bring money into closing to sell the property, but you don’t have the money.

We know how challenging it is to navigate real estate, either starting out or as an experienced investor, especially when it comes to creative finance. And it doesn’t matter if it’s CA TX  ID AR or FL Subject To can be done SAFELY, out of state, too.

More info at the link provided by Bigger Pockets, just below.

 This is a really good post. I have been trying to get more into creative finance, and understand it conceptually, but I appreciate some of the nitty-gritty details here. Would love to get a copy of that spreadsheet as well. Thanks again!