Subject-to

[Ramon Serrato]

Hey everybody, I'm new to real estate and I've been doing research on sub-to's and I was curious as to how people that have no money for a down payment or to make payments on the mortgage are able to find find tenants to pay for the mortgage right away. Are they able to advertise the property while the transaction between buyer and seller is still ongoing?

[Jon Holdman]

WIth a subject to purchase you typically don't have any down payment. You just start making the payments on the existing loan.

That said, you MUST NOT depend on collecting the rent to make your mortgage payments. Having cash reserves is essential to being successful in the rental business. A bare minimum of six months PITI payments, six months rent is better. You MUST be prepared for situations where the tenant moves unexpectedly, or you have a big repair bill.