I Purchased a Subject To within 2 Months of Moving to a New City

[Jeremy Huggins]

Investment Info:

Single-family residence fix & flip investment in El Paso.

Purchase price: $26,250
Cash invested: $52,605
Sale price: $163,000

I partnered on this deal. We purchased the distressed property as a Subject To, taking over the existing mortgage payments. The house is 2,490 sq. ft., and we converted the 3 bed 2 bath into a 4 bed 2 bath. Three contractors later, we sold the property to a couple who made an all cash offer; they bought the house without financing!

This was an amazing learning opportunity, and for my first flip, incredible!

How did you find this deal and how did you negotiate it?

I moved to El Paso in Jan. 2018, and I told EVERYONE I wanted to invest in real estate. By Feb. 2018, a local bank employee gave me a lead on a local investor, so I reached out and offered to pay for his lunch. The investor is a wholesaler, and following lunch we reviewed a few opportunities. Three weeks later, I chose the investment I wanted and we negotiated a Subject To with the Seller. This was a win-win, as we were able to help pay the owner's medical bills, and we got a great investment!

How did you finance this deal?

I used my own capital, selling a few index funds to finance the deal.

How did you add value to the deal?

I kept track of everything; the holding costs, rehab costs, timeline, etc. I also physically checked on the progress of the rehab every week. While I was offered a position as a simple cinderella investor (I funded most of the rehab and holding costs), I wanted to be as involved as possible.

What was the outcome?

Awesome! We made a great profit, helped the original owner pay-off medical bills, helped a new couple find a home before Christmas, and I learned a TON!

Lessons learned? Challenges?

1. Ensure your general contractor has a robust network of sub-contractors.
2. Provide value to everyone you meet, and success will find you.
3. Trust, but verify.
4. This is a people business, so network and develop your social skills.