Subject To/Owner Finance & BRRRR

[Ryan Horne]

Hey All,

I'm a big proponent of the BRRRR strategy. I started acquiring my first personal units last year & am now up to 6 single family units doing BRRRR the traditional way. Getting my cash back out of each deal is priority number 1 for me.

Which brings me to my next thought. With increased interest rates, owner financing or subject to deals are becoming more & more attractive. But like traditional BRRRR deals, I would think there is a reason someone would be willing to sell their home in this fashion (distress). I would love to attempt to buy some of these types of deals, but I have not figured out the rehab portion yet. How are folks getting their rehab money back out of these deals without doing a traditional refinance & ruining the interest rate gained by doing a subject to deal in the first place?

[Andrew Syrios]

That's the biggest reason we don't do subject to and owner finance very often. Rarely will the seller lend you any of the rehab too. Thereby, you basically have to refinance with a bank to pull out the rehab money (assuming you got a good enough deal to do so).

Going forward though, with rates having gone up so much, subject to deals could be very lucrative given how many 3% ish, 30-year fixed loans are out there. (Although this time around, the banks might actually call them due so that's something to be cautious of.) But I would aim for ones that don't need much work. You don't need a great deal (assuming you're holding) if you can assume debt like that. The financing makes the deal great.