Flipping "Subject-to's" Question

[Jerry Kisasonak]

I heard of the strategy of flipping subject-to's. My understanding of the concept is to identify a motivated seller with a nice property with a good loan with little to no equity. Offer the seller 1-2K to get out of property and the payments, and then locate an end buyer who will agree to the same terms of the buy-side contract except for the downpayment amount. They will put up 10K instead of the buy-side 1-2K. At Closing, the middle man (me) will pocket the difference of 8-9K.

So here's my question: If it's a 100K home, and I put up say 2K on the buy-side, that would leave an amount of 98K due (which would be the mortgage balance that would be "an exact wrap of the existing note"). On the sell-side on this 100K home, if the end buyer put up 10K that would leave an amount of 90K. I am not understanding how to write these contracts up so that the numbers make sense. From my understanding, the buy-side and the sell-side contracts are identical except for the downpayment amount. But I don't know how to write this out on the contracts where the purchase amount, the note balance, remains the same. Any help would be GREATLY appreciated!

[Jon Holdman]

I don't buy subject to. I think its a risky strategy. Might be OK for doing fix and flips, but not long term holds, IMHO. I know people who do it, though. I really don't like this in-the-middle strategy. If anything goes wrong on either end, the other end is coming after you.