Risky Subject To Deal!!! Is it Worth It??

[Horace Hayes]

I have my first Subject 2 Deal under contract and based on a few variables want to be sure this is something I should still take on.

1. Terms include being added as an authorized user on the account, however the current financing company (Shellpoint Mortgage Services) has been giving the owner a hassle with adding me. 

2. The Owner owes more than the agreed to purchase price so my plan is to renovate it and rent it out until the balance is down to the purchase price, which may take up to a year. Then refinance it and payout the owner.

3. Owner is sickly

The Deal:

Purchase Price: 25k

Renovation Needed: 40k

ARV: 120K

Owner Payoff Amount: 37k

If I sold it immediately after renovations, what happens to the difference of the purchase price to the payoff amount? And If I go with the initial plan to keep as a long term rental while still in the current owners name is this too risky?  Ive already started assuming the mortgage payments since Nov1 to keep the Owner on the hook but if too risky I may need to back out.  Any advice is appreciated!

[Andrew Kiel]

I guess I'm confused on how you could be buying a house subject to for less than what is owed; unless of course the owner is paying you cash to take over payments.  My feeling is you're thinking about this the wrong way.  Try this:

Purchase price = 37k - you're taking over payments subject to existing financing.

Owner signs over the deed right away, you record it.  Get a power of attorney and fax it to Shellpoint and add yourself as a 3rd party representative (and yes, I said fax it - most lenders are still archaic that way).  Now, you have control.  If something happens to the sickly owner, you're covered.  You have a deed and control of the property.  No need to think about refinancing in a year, unless you want to.