Amount to put down on Subject To take over on existing loan

Buying & Selling Real Estate
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Amount to put down on Subject To take over on existing loan

Denis Churchill
Loxahatchee, FL · Member since 2017 · 20 posts · 10 votes

What would be the % or $ figure on a Subject To take over on existing loan on tenanted rental property ? Thanks

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  • Dustin TuckerPro Member
    Lender · Savoy, TX · Member since 2020 · 187 posts · 78 votes
    2y

    Short answer is as little as possible.

    The long answer is it depends on the deal.

    Typically you end up in a subject 2 situation when the current owner has little or no equity in the property, the current advantage of subject 2 properties is that most mortgages are below current market rates.

    Keep in mind when acquiring a property subject 2, in most instances you are not notifying the current lender of the change in ownership, and most if not all mortgages have a due on sale clause, which is the lender's decision if they want to enforce it or not.

    I personally like the idea its a great way to get investment properties with low rate loans, that with most likely appreciate in the coming years.

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  • Denis Churchill
    OP
    Loxahatchee, FL · Member since 2017 · 20 posts · 10 votes
    2y

    Hey Dustin, Thanks for the reply. I am the seller. I am on the other side of the equation. Everything you said is spot on. But at the same time with little to no money down it seems like I will be giving away these rentals. 

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  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    2y

    @Denis Churchill  Why wouldn't you just sell it outright and get the loan paid off and out of your name?  It still seems to be a sellers market in many locations, and probably will continue to be with the drop in mortgage rates lately.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Denis Churchill

    Why would you risk selling a rental property subject 2 ?

    I know one thoughts are “I can sell it for more” but that increases the risk as well because if I had a $250k loan on a $225k property and values continued to decline and the mortgage is in someone else’s name - I would be like “ok let me hand the deed back and walk away and go ahead and sue me…

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  • Denis Churchill
    OP
    Loxahatchee, FL · Member since 2017 · 20 posts · 10 votes
    2y

    Hey Chris, I have been looking for ways to sell our properties and I was entertaining all avenues. They have been listed for a little while now in a market that seems to be more renters than buyers. Ending partnership is reason for selling. Thanks for your reply.

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  • John Clark
    Member since 2018 · 1k+ posts · 1k+ votes
    2y
    Quote from @Denis Churchill:

    Hey Dustin, Thanks for the reply. I am the seller. I am on the other side of the equation. Everything you said is spot on. But at the same time with little to no money down it seems like I will be giving away these rentals. 

    I love it when people withhold material information and yet want binary answers. Next!
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