Buying a flip subject to

[Charlie John]

Hello BP,

I currently have a verbal agreement to purchase a home for 90k. I met with the children over the weekend who inherited the property from mom. The house has already gone through probate and they are ready to sell. They were cleaning most of the junk out of it when I met with them.

At this point, they are 30 days behind on the mortgage and need to sell the property as-is and quickly because they do not want to put anymore energy or money toward it.

I offered them 90k and they gladly accepted. I told them on Monday I will draft up a purchase agreement and we can move forward.

The mortgage balance is 78k.

This house needs about 20-25k in repairs and I expect to retail it for 159k.

A couple questions:

• If I were to buy this house subject-to and keep the existing financing in place, how do they get paid at closing? Do they get a check for the difference? 12k.
• How much would this typically cost to have my title company draft this type of contract up?
• Is buying subject to as simple as changing the mailing/billing address with the mortgage company and now I make the payments for the next 3-6 months until the house sells?

Thanks for any help you can provide. I will continue to search the forums for more information, but it's always nice to have a thread of your own!

[Ryan Dossey]

We did one of these recently where it wasn't subject to but a lease option. The seller couldn't pay his mortgage anymore. So we stepped in covered his payments, spent around 25k in renovations, sold in one day on the market. Cashed out a 30k profit. 

This was an attorney state so it wasn't a "strict" lease option it was structured differently but that was the gist of it. Keep in mind some banks, lenders, and even title companies won't double close or allow one to happen. In this instance it worked well for us.