All Forum Posts by: H. Jack Miller

I looked into it a few years back and decided it was too risky for me.

Don,  great points as usual from my cheap seats what I see coming down the pike and have personally experienced over the years in Sub to is this new crop of Guru pitching this form of acquiring real estate.. As such you have quite a few under capitalized Rookie investors jumping into this.  As well as Sellers simply are not informed of the risk of devastating impacts to their credit scores and what equity they may have had in the property if the transaction fails.

For a well capitalized Investor and or company and a fully informed seller these can be structured as you note with a Wrap that keeps the seller with  some control or ability to get the property back.

What I personally experienced was the under-capitalized beginners running out there talking multiple sellers into doing this.. Then the properties did not perform the buyers were counting on a little cash flow Delta that over time evaporated they had no ability to refi they were underwater on the exit  IE sales cost and bringing loan current exceeded equity thereby needing cash to close.. And since the loans were not in their names and as you note Sellers did not know to ask for PG ( although in these cases PG is worthless) These folks walked and left the sellers in a very bad way.. Got turned into the AG and one group got nailed criminally I also had FBI in my office about another investor who did this as a financial predator he got prison.

So in my mind this is going to  play out again with Sub to being taught to the masses and people being people vast majority are honest of course but there will be predators mark my words on that. And Sellers will continue to do these deals without advice of council.

I don't even know if this post is serious. Of course things can go wrong. It's usually things that people believe will go wrong in the future, but haven't gone wrong yet that is named .. There are certain individuals that are in your face selling their products/training and it has caused a negative reaction on Bigger Pockets if certain individuals were promoting Sub2. You'll get a lot of posters saying what could go wrong, but what could go wrong and what has gone wrong is not one of the same. If you don't think it's a good method, then don't do it. 🧐
If you don’t get enough response from this thread, simply reread some old threads they can get pretty long.

Yes this was meant to be serious that's why I asked it

90% of the risk is to the seller..  buyer has basically zero risk..  Lender has risk if as @Chris Seveney mentioned buyer puts a second behind your first  this causes the first lender to have to go through a full foreclosure to remove the second in a default scenario. 

 Jack,

since you run Gelt and do private lending, think of being in first position on a loan with a private lender and that lender just randomly assigns the loan to someone else without advising you. Then that person sells the property to someone else and slaps a second on it.