All Forum Posts by: Caleb Christopher

(Disclaimer, I do 50+ of these deals per month in the USA, so that's the context I'm speaking from. You should connect with a local RE Attorney, but I can give you some context so you have a more meaningful discussion)

Don't ask the bank. They will tell you "no" if you ask. In most loans transferring title without paying off the existing loan is a default (hence the dreaded due-on-sale clause). HOWEVER, if they're getting paid, there's an extremely low rate of those loans being called due.

In your case, I'd be looking at creating a "wraparound mortgage." You can mark up the interest rate and make a profit on the existing loan as well!

Alternately, you can do a hybrid deal, where you create a separate, 2nd position mortgage for just your equity, while the first mortgage is taken subject to, and the buyer effectively makes 2 monthly payments (one to the bank, one to you).

I just wrote an article to simply explain wraps: https://www.biggerpockets.com/member-blogs/15497/102003-wrap...

I'm speaking from experience, as you requested: I run a team managing 50+ creative-only deals per month.

If I were writing this contract, it would include a price breakdown (along with the many disclosures needed in subto purchases). Example:
Purchase Price $350,000
1st mortgage taken subject to: $268,000 (approx)
Seller Finance: $75,000, with monthly payments of $_____ until paid in full
Cash to Seller at COE: $7,000

I also just wrote an article on BP explaining what the different types of wraps are: https://www.biggerpockets.com/member-blogs/15497/102003-wrap...

Tag me in a reply if you have further questions.

In this case I'd have an attorney send a letter demanding a payoff for the bank's lien against your property.

That said, for future reference and other readers, this is a great case study showing why it's critical to get a good durable power of attorney from the seller when buying subto.

IN MOST CASES YES, but the answer can vary.

Most commonly, title transfers and a new deed is recorded on public record. There are other arrangements in which title does not yet transfer.

Taxation works the same as any other sale. If you bought for $100K and sold for $125K, you have a $25K gain, other than any deductible expenses. Seller would pay taxes on any gains, if they don't qualify for the exemption wherein they lived in the property any 2 of the previous 5 years as their primary residence.

Also consider, if someone refinances, they pull money out tax-free because they haven't sold. But if they refi, then sell subto, they could still end up paying taxes on part of the amount still under financing: Buy $100K, refi 10yrs later to $200K, sell at $225K with a loan balance of $195K, and you have $125K gains to pay taxes on.

Honest feedback from the inside. There are a TON of great people in here. 

It was because of this group I have been able to do several subto deals. I got paid to buy my first investor deal. 

@kevin @mike @michael, what did you all end up doing?

Any company that won't show me pricing is automatically very low on my list. Lead Sherpa has entered this zone.

If I parked and sited my property to fit a nice RV, I have a renter (verbal "yes" so far) so I'm exploring the option

Has anyone done long-term rental of an in-place RV and can share the differences/similarities to single family residence? 

Not AirBnB. Not drive-off rental. Not in-an-RV-park rental.

You've said it better than I have. Thanks for contributing

I don't intend to convince people who don't care about swearing. My only purpose here is to provide feedback to the podcast. We at least found one unintentional oversight (other podcast apps not showing any visual warning for explicit content).

I feel like the podcast used to make specific effort NOT to publish explicit content, and I very much appreciated it.

On a side note, I find it somewhat comical how often someone feels the need to literally promote the use of explicit language in response to feedback or a request for moderation. I understand plenty of people don't mind it. I even worked in a prison for 5yrs and on average, I heard more swearing in one day than I had in the rest of my life combined. I prefer not to be around it if possible. And when people find that out, some invariably insist that there should be more of it as though it's virtuous to specifically use, promote, or at least not avoid explicit content (whenever spoken or otherwise).

It's like picking a table at a restaurant and seeing some dirt on one and saying, "oh I'd like to avoid that table," and someone overhears it and pipes up, "I actually wish they didn't clean the tables at all. If that's how someone wants to leave it, that's up to them. In fact, I think there should be MORE junk on tables and if you don't like it you should leave. Just because you don't like the dirt doesn't mean we shouldn't have a chance to have it."