Subject to Financing- Investing

[H. Jack Miller]

I wanted to chat with people who have done subject to deals and see what had gone wrong with them?

thank 

Jack

[Jay Hinrichs]

Quote from @H. Jack Miller:

Quote from @Account Closed:

Quote from @H. Jack Miller:

I wanted to chat with people who have done subject to deals and see what had gone wrong with them?

thank 

Jack

Most won't admit what can go wrong. ;-) 
If it can go wrong, I've done it over the last 30 years and have the lawsuits to show for it. In fact, I've made up a few of my own that aren't in the book. I include all of that in my person to person training. 

How can I help you?

 anything you can share would be appreciated 

Here is what can go wrong.  Just a short list its like 50 ways to leave your lover there are 50 gothcas in sub to.

1. the easiest for everyone to understand the sub to violated the Alienation clause in the mortgage or deed of trust and holder of the mortgage DT / Note decides to call the note due and payable and starts a foreclosure.

2. foreclosure started and the person who bought sub to has no means to pay it off or refinance it and the original sellers credit get trashed and if its a deficiency judgement state even on an owner occ like Texas lender sues original seller for the deficiency.

3. this kind of investing or acquiring assets tends to attract those with limited resources so they have no ability to fix things they decide to scale up and then it goes out of control and sellers are really harmed

4. deal goes south and original seller sues or files complaint with AG.

5. Financial predators who realize up front that they are not on the note and have no risk to their credit  rip rents with no intention of fulfilling the contracts and original seller gets wiped out.

AS a HML I have seen this play out with investors that drink the sub too coolaid and are simply not financially capable to handle issues when things go sideways.

I have also personally bought over 100 sub to deals in my career.. I did mine as fix and flip or when foreclosure rescue was legal in Or and Wa.. So for us these properties were all sold within 18 months thereby paying off the original mortgage.  I did have two called and we paid them off upon receipt of notice from the mortgage servicer/ credit union in one case.

And there are many more gotchas bottom line if you have deep pockets this is fine if an investor thinks this is a no money down I dont need any money this is a disaster waiting to happen.