Closed on a Subject to deal

[Maxwell Fontaine]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $58,000
Cash invested: $1,771

Took over the property subject to existing mortgage. Very motivated seller so this was a lay up for my first sub2 deal. TIMING IS EVERYTHING.

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

I really looked at this property originally as a wholesale deal but I found out there was no equity pay to entice an investor. Also, it wasn't worth me making a cash purchase. The only tool to use is to leverage the existing loan.

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

I found this deal through a cold call. I found this while on the phone speaking with another property owner as a comp and it was listed as a $0 transfer so it caught my attention. After I called the seller, I spoke about why the property transferred for $0 dollars and we spent a few days about the family situation. In terms of a negotiation, I just asked open ended questions directed towards the pain points so they would make a mental image of why they want to get rid of the property without me.

How did you finance this deal?

I just inherited the current loan. So a conventional mortgage is currently on the property but my portion was CASH for the passed mortgage payments and all closing costs for me and the seller.

How did you add value to the deal?

The property is pretty much move in ready in terms of big things. Part of how I made the seller feel much more comfortable about the deal I offered to clear of the property into a storage unit of their choosing at no cost and the day of their choosing as long as we use MY ATTORNEY. The value add is strictly cleaning up the property and taking care of the landscaping and interior paint.

What was the outcome?

The outcome, closed on the property after 17 days since the contract was signed. The seller felt happy and relieved that the "huge headache is just gone and I feel like I made money".

Lessons learned? Challenges?

This was overall a WIN WIN deal. Don't negotiate yourself out of a deal. Be open to use different tools to invest. NEGOTIATE THE TERMS. I am not very experienced in real estate if you compare me to some, I have only been in real estate for 2.5 years so far, but my mentor/ realtor explained to me how simplicity wins some times. We made an agreement while standing in the middle of the living room.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No special professionals were used outside of an attorney.