Sub 2 Financing

[Kyle Carter]

Hello BiggerPockets community!

I would like to learn more about SUB 2 financing.

I know what SUB 2 financing is conceptually. The seller would use this strategy when they don't have a lot of equity in the house. But why would that make them want to use this financing method?

What are the benefits of SUB 2 financing a property? For me as well as the seller.

[Chris Seveney]

Quote from @Ken M.:

Quote from @Kyle Carter:

Hello BiggerPockets community!

I would like to learn more about SUB 2 financing.

I know what SUB 2 financing is conceptually. The seller would use this strategy when they don't have a lot of equity in the house. But why would that make them want to use this financing method?

What are the benefits of SUB 2 financing a property? For me as well as the seller.

First, you have to define Sub to financing.

Do you mean the reckless kind where you overpay for a property, take over the financing and borrow from others to cover closing costs and holding costs when you have no money, no credit, no income, no reserves and can't tell a warranty deed from a deed of trust and you close on the kitchen counter

or do you mean

buying below market value, already having a nice income, having reserves, using escrow and title, already understanding the due on sale clause, have done a lot of creative purchases and know when to use and when not to use creative finance and how to recover if something goes amiss?

There is a big difference in how those are handled

 HAHA I just saw a post and commented where the person wanted to ask if they should overpay for a home because they can get is seller financing. If my crystal ball is correct, we are going to see a lot of these sub2 deals hit the fan in the next 36 months.