Subject To Seller Financing

[Ran Iarovich]

For investors:

Have you ever tried doing the subject-to strategy? What are your personal pros and cons with it? Do you recommend it to new investors? I'm assuming that it would be an easy way to get started with real estate investing with little cash flow but it sounds like it may be too good to be true. Any input is much appreciated! 

[Yael Lederman]

I've personally never done it but know many folks that have. Pros are pretty straightforward – you can take on the loan without having to qualify for a new one, you can avoid some closing costs, you can typically close quicker, and often get better terms. The cons are more important to understand but fall mostly on the seller. There are pretty significant legal and financial risks, especially for the seller if they maintain responsibility for the mortgage. It may be harder for them to obtain new financing too. Overall its a better deal for the buyer which is why @Paul De Luca is correct that its hard to get a seller onboard.