Hello, I'm just Getting started with creative finance.

[Kody Smith]

Hey everyone,

I have recently read Pace Morby's book about creative finance, and am super stoked!  

I could use some help, and likewise would love to bring business to those in the community here.

1. I could really use some help finding escrow officers familiar with subject-to deals
2. any advice you would give to someone starting out in creative finance is very welcome.

Question to the group: 

How often do you close subject-to deals? 

[Dustin Tucker]

Hello Cody,

I don't think you are going to find any escrow officers who will do a subject 2 deal.  These are done between the buyer (you) and Seller.

The situation that is most common to find these properties are in a foreclosure proceeding, or pre-foreclosure.  The sellers you are dealing with in these situations don't deal with prorating Taxes, or any other kind of prorations, that is what an escrow agent does.  Also, you are not going to be able to purchase a property subject to if you are dealing with a realtor.  You will have to source these properties from a wholesaler, where you will have to put down hard non refundable assignment money at the assignment of the contract, or source them yourself.

The steps to follow for a subject 2 property are as follows:

1. Get the property under contract

2. Pay a Title Company to complete a Title Report

3. For your 1st time, pay a Property/Land/Transaction Attorney to review the title commitment with you to make sure that there are only the outstanding liens on the property, and that the owner has title.

- Collect Tax Certificate to verify Property Taxes are Paid

- Get a current statement from the seller to verify the existing balance, if they are delinquent, you can get the bank on the phone to verify the amount to make the loan current.

- Review the loan documents, there is most likely a due on sale clause, which is why you won't find a title company to process these for you. (Just FYI 99% of subject 2 properties are purchased knowing that there is a due on sale clause)

4. Get a Quit claim or Special Warranty deed from the seller to you, (Preferable a Special Warranty Deed or equivalent)

5. Set up a Joint account with the seller so you can make deposits to continue the automatic payments to the lender until you refinance the property.

Thanks,

Dustin