How To Beat The Due-On-Sale Clause

[Nick J.]

So there has been some uprising in the discussion of Sub2 investing and the Due On Sale Clause.

Most recently, a blog post of mine titled: Attention: Residential Real Estate Agents

The topic of that blog post was to open the idea to Realtors of selling their clients properties Sub2 and the benefits. Of course, as usual, you've always got a few of those 'That Guy' who will come around and purposely stir up trouble about the only real downfall to Sub2 investing; Due On Sale Clause

Every time I get into one of these discussions, the opposing party always shows their true uneducated 'beliefs'.

Here are a few things that usually come up:

Land Trusts

Garn St-Germain Act

Due On Sale Clause

One of the biggest things I quickly find is that the opposing parties quickly state that the Garn St-Germain act is where the Due On Sale clause started when in reality, it's been around a really, really long time.

Here is an article that I wrote earlier this year: The History of The Due On Sale Clause where you will see how far back it really goes.

If there is any wrong information in that article, please let me know. I certainly would appreciate correct information. Just make sure you include your proof and not just speak to speak and make others believe it's truth.

Now, one of the biggest problems I have is the 'Big Timers' pushing products to make people believe that the 'Land Trust' is the key to Sub2 investing.

There is even an article published titled: How To Beat The Due On Sale Clause, are you kidding me? This stuff shouldn't be allowed to be published, let alone be considered credible because you might recognize his name.

There is even this statement made in that article: Where did the "due on sale" dilemma come from? Banks began inserting "due on sale" clauses in their mortgages in the 1970s when interest rates rose dramatically.

Does this person seriously think that the Due On Sale Clause originated in the 1970's? I seriously hope not. That would mean he has not done his own home work(due diligence) before putting himself out there like that.

Here are the simple facts as said by me,

Sub2 or of course, "Subject-To" investing has risks, we all know that. All Real Estate investing involves risks. This is why the rewards are so great.

By far, the biggest and most fearful risk involved in Sub2 investing is the 'Due On Sale' Clause

I have always said that I am not worried about the due on sale clause, not because they can't call a loan due, we all know they can, but because Sub2 investing is a short to mid-term strategy for me.

I will always have a solid exit strategy in place, as you should with investing to begin with. It's been said that you should never enter without an exit strategy in place and that is soooooo true.

This is my open invitation to those that have either previously, currently or in the future consider or participate in a Sub2 transaction to discuss these things on an open platform.

The only rules I ask are these:

~ For those of you who want to be funny and say 'Subject-To' can be anything in the contract i.e, subject-to inspection, subject-to your grandma wearing pink thongs etc..... please, leave that elsewhere, you know exactly what we're talking about so leave it at that.

~ Please make sure you prove your statement is fact by including the source of your information. Please don't say that Sub2 is illegal in Montana without including the specific state law # etc.......

~ Please keep it on track, now hi-jacking into how to market for Sub2 deals, where to find contracts etc..... Lets leave the discussion to it's true nature. Create your own thread for those questions.

There it is, you basically know where I stand and I'm openly invite you to this discussion. I actually look forward to hearing different views of this as I'm always open to further educate myself.