Selling Subject To

[Adam Janssen]

Hi BP nation. I've been on BP for a few months but this is my first post. I have a question concerning selling properties subject to existing financing.

I own 3 SFR rentals and one has given me constant problems with turnover and continual repair costs. I think it's related to the area of town - not the worst, but not the most desirable either. I've decided to cut my losses and sell the property. I've talked to my RE agent about listing it but the retail market won't pay quite what I'd like to get out of the place. I'm also not crazy about paying a sales commission.

So, I started talking to another investor who suggested selling on contract, subject to my existing mortgage (standard 30 yr note with a big bank). There is a large imigrant population in this area and it looks like others in this part of town are selling on contract for about a 5k premium, which sounds good.

Now my questions:

1) From everything I've read the due on sale risk is pretty minimal and not worth worrying about as long as I structure the deal so I continue making the bank payments myself. Do you agree?
2) I assume I should continue carrying the property insurance and not risk having the contract buyer lapse on that. Agree?
3) I also assume there's no reason to notify the bank I'm doing this. Let the sleeping giant sleep. Agree?
4) For others who have done this, how much of an interest rate premium have you changed buyers? I'm thinking a couple % points is certainly reasonable.
5) If I do this and for some reason the contract buyer defaults, will the foreclosure process be long, drawn out and expensive? I haven't talked to an attorney about that yet.
6) Any other pitfalls I should be thinking about as I plan this out?

For what it's worth I will have an attourney draw up the contract to make sure I'm covered. In case you're interested, I owe about $46k on the house. It's been fully remodeled and is in good condition for the area. Market price is about $70-73k. I'm hoping I can sell on contract for $75-78K.

Thanks in advance for any advice you can provide!