"Subject to" Acquisition

[Winston Reed]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $90,000
Cash invested: $10,000

Purchased a 3/2/2 SFR from my mother-in-law using a mortgage "subject to" existing financing. She just wanted us to assume the note and the "subject to" contract was an easy fit, since she is a family member and trusts us to pay the note off.

What made you interested in investing in this type of deal?

My mother-in-law had a house that she no longer wanted to maintain and we offered to take it off her hands.

How did you finance this deal?

We just assumed payment of the existing note. Owner had recently refinanced, so we would not have gotten better terms.

How did you add value to the deal?

A general make-ready was all that was needed, since the house was well maintained.

What was the outcome?

We were able to take over a $938/month note and rent the property for $1450/month.

Lessons learned? Challenges?

The only issue is that the mortgage remains in the original mortgagor's name. That is why it works best if you have an existing relationship with the seller.