Contract for Deed Subject to Existing Financing

[Justin Pierce]

Ok, I'm going to give it a shot. I have always heard about subject-to-financing deals.  I've always been skeptical but a deal came to me that seemed perfect for this scenario.

Here's the deal:

I've been advertising in Tooele Utah (my home town) that I buy homes looking to pick up some rentals.  An owner called me who is 6 months behind on payments and looking at foreclosure.

The home would be worth about $130,000 after about $20-25k in fix up.  He owes about $80,000.  He's about $6,000 behind on his payments.  His interest rate is 3.75%.  The deal is just a little too tight to buy outright and try to flip.  And, 3.75% interest is way cheaper money than I could ever get as an investor.

So, I pitched him on seller financing subject to current financing. I will bring the $6k needed to bring the loan current and cover closing costs. The title will be transferred to me and the current loan and insurance will stay in his name. I will make payments of $600 PITI directly to lender. The home will rent for $1,000-$1,100. It will probably cost me about $8,000 to get it rent ready.

To my surprise, I called 2 title companies in the area and explained the deal and both of them said they could handle it, no problem.  I figured most title agents would tell me I'm crazy.

Right now I'm struggling to put together a contract that covers the deal.

Who's done a deal like this? Any advice?