Structuring a Subject To Equity Play

[Dustin S.]

Hi all this is my first really creative deal I've worked on I want to make sure I get it right.

I have an owner who wants to get out of his house and start over but has no money to move and needs more flexibility in move out etc than a traditional sale would allow.

So the home is worth about $230k he owes $160K it looks like I will be able give him $30k and take over payments for the house. I plan on holding the property for a year + as a rental then selling avoid the higher tax rate and possibly do a 1031 exchange. If I wanted to keep it past a year I would refinance. So as a rental it looks like it will break even or make a little bit after all cost PITI vacancy management and maintenance.

So I know there are some pretty standard subject to contracts out there and will have a lawyer look over it after everything is ready.

I have heard different things about recording or not

In mind it is absolute necessary to protect my $30k investment    

but by recording you could trigger the due on sale clause in the loan. If this does happen I would think you still have time the bank would have to go through the foreclosure process and that could take a year or more where I live?

Additionally how do I give the owner the warm fuzzy's that I am gong to pay he is still on the hook for the loan?

I have thought about escrowing a certain number of payments PITI but this would be a lot of $ out of pocket. Is there a better way?