Subject to pre foreclosure with equity

[Jay Garcia]

Hey everyone, 

I am a new investor exploring options and trying to learn as much as I can. Right now I have questions regarding buying a property subject to existing financing. The property is in pre foreclosure. I’m finding these properties on the county website where the lender has filed a notice of default. In researching these properties, I’m finding these properties have decent equity. My question is, is it possible to acquire these properties subject to, have the property deeded to me, and I turn around and sell the property as is to take advantage of the equity in the property? The subject To agreement could have something designating the homeowner receives a small portion of the proceeds and I receive the rest. Example, found one that has lien of 180k when purchased 3 years ago, property looks to have market value around 250k. 70k in equity. If I was to acquire property and resell immediately, would I be able to get some return minus commissions and reinstatement fees and small portion that’s is agreed upon in sub to agreement?

Hope that’s not too complicated to understand. Thanks in advance for any advice on this. 

[Ron S.]

You have to bring the loan current. You have to ensure that you know all of the liens that are outstanding. You have to make sure you are not required to be a licensed foreclosure consultant or otherwise prohibited by the state from stripping the borrower of their equity, or taking advantage of them. You have to be prepared for the lender to accelerate the note and then pay it off in its entirety before they foreclose. If you have all of that under control, its easy.