Subject To for Fix and Flip

[Brett Chupka]

Hi everyone, looking for some advice. 

I've been speaking with a seller off market for a SFH value add property. I'm trying to find the best way to go about structuring this deal but it seems like there are so many options and I'm just not all that familiar with most of them.

End goal would be to fix and flip, maybe BRRRR. Probably 4-6 month hold period with most of the work self performed. I'm trying to purchase it with as little down as possible. The seller said they are interested in seller financing but they still have a mortgage of about $130k. The mortgage is what is throwing me off.

I feel like typical sub2's are for long term holds. Like I mentioned, I'd be looking to sell or refi in 4-6 months. Does anyone have any experience using sub2 for flipping? Does it even make sense to use it sub2 for flips? It seems like the sellers tax benefits of seller financing would go away if my intention was to flip it. He would end up getting a lump sum after I would sell the property. 

I thought a wrapped sub2 would be ideal for me because I can get into it for a low down payment and probably afford a lot of the rehab budget without needing a hard money loan or something along those lines. The seller would also get a little more interest in the mean time so it may be a win-win. Any sort of input on this type of deal would be really appreciated!  

[Steve Vaughan]

Quote from @Brett Chupka:

End goal would be to fix and flip, maybe BRRRR. Probably 4-6 month hold period with most of the work self performed. I'm trying to purchase it with as little down as possible. The seller said they are interested in seller financing but they still have a mortgage of about $130k. The mortgage is what is throwing me off.

I'd be looking to sell or refi in 4-6 months. Does anyone have any experience using sub2 for flipping? Does it even make sense to use it sub2 for flips? It seems like the sellers tax benefits of seller financing would go away if my intention was to flip it. He would end up getting a lump sum after I would sell the property. 

I thought a wrapped sub2 would be ideal for me because I can get into it for a low down payment and probably afford a lot of the rehab budget without needing a hard money loan or something along those lines. The seller would also get a little more interest in the mean time so it may be a win-win. Any sort of input on this type of deal would be really appreciated!  

So a wrap should work well.  That basically takes the place of 'sub2'.
Just know it takes at least 6 months to rate/term refi at ARV.  12 months if you want cash out.  If there has to be a balloon, get at least 24 months.  
Try and get at least a special warranty deed with your seller mortgage. Better than a quitclaim.