How Should I Structure This Deal? (Subject to or Owner Finance)

[James G.]

Hi BP,

I came across a seller who owes $34,000 on a property worth around $20,000. He is in an upside down position, but the property can rent for $800, so even at $34,000 the deal makes sense. How should I structure this deal? They said they are open to giving me the property for no money down.

Option 1) Subject to: How does this exactly work? Do I contact the bank and tell them that I am going to start making the payments? Is the deed transferred to me immediately or once the debt is paid off? If I miss a payment who is liable.. Me or the seller?

Option 2) Seller Financing (Maybe a 5 year balloon): Would this be a better option? What would be the pros and cons of doing this rather than a subject to? Can I even do this even though the seller does not own the property free and clear? Would deed be transferred immediately or once the seller receives his $34,000?

Thank you so much to everyone that replies!