Subject-To

[Edwin W.]

Hey everyone, 

If you can't wholesale a deal because there is no equity. Is it a good idea to do a subject-to deal for a newbie? I have been listening to a lot of the podcasts by @Michael Quarles and I want don't want to throw a motivated lead away 

[Bart H.]

From my study, subject-to is a technique by which the investor gains the title to a property but doesn't have to get a mortgage on that property he is about to control. So, unless you have someone ready to move in the house to make the monthly note payment, you will have to make it.

If the seller has no equity in the property, then that's good for you.  They are just getting the burden of the house payment off their backs.

We have an investor in my area who basically does subject-to investing and takes control of properties with an earnest fee of $10.00 and then moves a buyer into the home under a lease-option.  The key is to have a buyer in place first who would be interested in that particular property so you would not have to make the monthly mortgage payment.

Most banks will not execute a due on sale clause as long as they are getting paid.  Why go through a costly foreclosure when you are getting paid the monthly mortgage note on time?