Subject to-Can Seller buy another property?

[Matthew Yrungaray]

Can a seller that agrees with me to sell "subject to" get a new mortgage right away to buy a new house. If I provide a letter stating that I was covering the mortgage, would the seller be able to turn around and buy another home?

My seller has 2 condos. One is under water and the other is above water. The 2 condos in combination have positive equity before selling costs. He is very motivated to get rid of those and buy a bigger home for his family. I was considering offering a "subject to" deal for both and then turning around and selling them via lease option. My biggest question is, Can the seller buy a new home with the sub-2 in place?

Thanks all

[Andy Luick]

Unlikely....has he stayed current on both mortgages with no lates and does he have the income to cover both mortgages plus the new one? That's where the rubber meets the road...bank really doesn't care about the subject to just that the mortgage is getting paid.

Both Brians give you good advice - be very leery of condos as HOAs can either change or enforce rental rules and limitations at the stroke of a pen...you can fight them legally but most times, once you start to fight with lawyers...you've already lost the battle. I've done a ton of condos and townhouses but never any subject to's....I prefer cash and clean but subject to's are a great way to take over & cashflow a property on someone else's credit. When I do these, I convert them to shared housing and cashflow like crazy. I did a 2/2 TH I bought for $15k spent $15k fixing it up, cut the living room in half to create a 3rd bedroom and sold it for $55k - my cash partner made 48% in about 5 months on the deal....pretty sweet. If you can do a similar thing, you can cashflow it and flip to a cash buyer. Just be sure to get a quitclaim deed signed by your seller and park it with your attorney to be held by him or her until the time you cash out the unit. Otherwise, you could be chasing down the seller who now has no interest in dealing with you. In deals like these, protect yourself and expect the worst in people even if it never materializes! Happy Investing!