Pros and Cons of Subject To

[Harmonie Borden]

Interested in learning more on Subject To. Pros and Cons?

[David M.]

@Harmonie Borden

Get a copy of Wendy Patton's (she is on BP actually) book, Investing in Real Esate with Lease Options and "Subject-To" Deals.  Extremely informative.  I'd don't recall any marketing/upselling.  Just tells you how she did with the pros and cons.

In the meantime...  When you purchase a property "subject-to," you are purchasing subject to the mortgage.  So, the mortage stays in the seller's name.  You need to get Power of Attorney over this mortgage so that you can deal with the lender otherwise they won't take your calls.  You never know..  The seller may just disappear on you after the deal.

So, this means the seller's credit score/history is in your hands because the agreement will be that you are making the mortgage payments.  Also, the seller will have a tough time buying another property since this mortgage is under his name --- their problem.

Now, you have a property encumbered with a mortgage under somebody else's name.  This is a pretty "powerful" technique when you look at it, but its too 'advanced' for me and this sort of deal doesn't quite exist around me, at least not that I've found.  So, it depends on what you do next with the property.  As I recall, I think her strategy was to rent them out and refinance them after a couple of years since she was using the established rental income to support the loan application.

Thats the short of what I remember right now..  Good luck.