Can you refinance subject to, to who's now on the deed

Question

if I wanted a property to hold and had the owner subject to the property to me but needed to be off the loan with in two years for other purposes but but the property makes for good money later but the Note is to high to buy, my question is in this situation is it better to just pass or is this a good if at all possible option?

Jay Hinrichs · Answer

no equity sub too is a fools errand in a non appreciating market .. or a rental market that is not bullet proof.. you could =go negative cash flow in a hurry and you jeopardize the seller if you can't carry the property if the rent does not come in

Richard Balsam · Answer

I assume you mean that the owner is willing to allow the subject-to for up to two years, then requests his name to be off the deed, but the amount of the note is almost equal to the market value of the property? That would be tough due to his two year requirement in my opinion.

For example- if he is willing to stay on for 5 years (or close to this time frame), a few things can happen.

1. The property over the next five years can be paid down a little by you creating a small amount of equity. Better yet - pay a little bit MORE per month in principal reduction with each payment, or make 13 payments per year - from the tenant's cash flow.

2. You can cash flow with the right lease-option tenant where you keep the option payment if you have to evict -so you have funds to fix up and re-market the home to another lease option tenant. This way- if it ever comes to fruition, and the lease option tenant exercises his/her option, you will lock in the specified sale price that you created in the Option agreement ( property must appraise of course). No real estate commissions, no marketing expenses- just a small amount of closing fees - attorney, pro-rated taxes, transfer tax, HOA, etc. Approx $2,000 +/- on your side. Same for their side ( new annual property insurance, pro-rated fees, escrow deposit ( 2-3 months, etc).

I'm not saying it will be easy finding the right tenant - luck plays a role too. Also, that the house doesn't have major repairs needed during the term, the tenant is great ( ha!), etc, but it can be done. Just be careful.

Brent Coombs · Answer

@Westen Barnes, if "the Note is too high to buy", why would it be a good buy later? (Or do you just mean "too high for YOU to buy" (at this time)?

On the surface of it, there looks to be too many things that could go wrong. I recommend: pass, until your own funding availability is much improved.

Can you refinance subject to, to who's now on the deed

Can you refinance subject to, to who's now on the deed

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