Subject to Financing

[Andres Ruiz]

I'm interested in doing subject to financing deals but I'm looking for someone that has done several of these deals that can guide me on what forms are needed, CPA recommendations, etc. I know the general process but I've never done one myself so would like to get general advice on this.

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Quote from @Andres Ruiz:

Hi Mike, thanks for the link and the helpful pitfalls to know. I am looking at creative financing as an alternative way to make my numbers cash flow. Since there are certain sellers that have existing loans with a rate below 4%, I think I can do a mix of cash/take over loans at 4% to allow me to cash flow. 

Did you hire an attorney/CPA to build standard forms or is there a provider you can leverage across deals or how did you go about it? A lot of youtube channels and stuff I've read is very high level and it makes it hard for me to be prepared to answer all the seller questions.

@Andres Ruiz:

You are thinking in the right direction but you need a guide to do the first few with you. No two deals are exactly alike. The one I am closing on has an Appraisal of $725,000. I put down $100 (that is not a typo) and I'm buying it for $350,000 to pay off the underlying loan, $177,000 to the seller for a total of $527,000 off market, (not on the MLS) and no real estate agents so no fees.

I was going to take the $350,000 Subject To, with some cash to the Seller and a Seller Carryback on the rest with a purchase price of $640,000. But the Seller is buying a new property and the new lender needed the existing loan paid off in order to complete the loan. Typically, I could have worked around that issue but the Seller's credit was not strong enough.

So, instead of paying the original $640,000 I am paying $527,000. When you pull out your abacus, you can see that is even more of a substantial savings.

This can be done in SoCal, AZ, TX, TN, OH, in fact in every state in the Union.

The problem with the youtubers is that they tell you there are ice cream venders out there, but they don't tell you some ice cream has listeria. Everything is all peachy and rosey, . . . until it isn't.

I've had several attorneys add to my forms over the years. Some you address as "Yes, your honor, I'll fix that" as you stand in front of him in court. That's how I came up with the partial list in the post I gave you. I've had lawsuits, one of which went all the way to the 9th circuit appellate court (which I won). That one went for about 6 years and was kind of expensive. “Ah, but you learn so much”.

I've started other lawsuits to enforce contracts. I've won every case, kind of like Perry Mason, only he got paid for it. But, the point is to avoid lawsuits and unhappy Sellers by not making the numerous errors the youtubers either don't know about yet, (until they get sued) or don't care to warn people about, which is a shame.

If you read & understood all of this, or are if you are very adventuresome, you may not need someone to guide you through learning Subject Tos.

In the off chance you want help, or anybody reading this wants help, DM me and we can discuss and probably save you a lot of time & grief. Subject To is a great way to do investing, I just want you to do it the right way and stay out of trouble.