All Forum Posts by: Brett Goldsmith

@Brett Goldsmith Really depends on your investing goals right? I'm looking for the highest possible cash-on-cash return.

Let me illustrate the power of buying a home with no equity by giving you an example of a sub to we're closing on this month.

The Situation

Seller bought the place last year with a 3.25% fixed interest rate, 30-year am, and a PITI of $1,503 a month. The seller bought the place in decent condition, but wanted to fix it up himself to build equity as he had done a few times before. However, he got a great job offer in Colorado and needs to sell. He can sell the property for about what he bought it for, but he's on a tight timeline, doesn't want to keep paying the mortgage and property expenses through a traditional sales process period (60 - 120 days), and by the time realtors get paid out, he'd have to cut a check to sell the property

How Sub To Works for the Seller

The seller has actually sold sub to before (he's even had a loan called via the due on sale clause) and thought this would be the best way for him to net money on the sale. Additionally, he doesn't mind having someone else paying down his mortgage as that can benefit his credit. Instead of cutting a check to sell and pay thousands in holding costs, he'll be able to net $18,000 at close and close in under a month without having to show the property.

How Sub To Works for the Buyer

For this deal, we had a few exit strategies. Ultimately, what we plan to do is resell the house on seller finance to an end buyer by 'wrapping' the existing loan. We'll get a downpayment of at least $20,000 so we're $0 into the deal, have a 3-4% interest premium as our cash flow, and give someone the opportunity to buy a house when they normally wouldn't qualify.

In summary, $0 into the deal and cash flow way beyond a traditional rental. If the buyer defaults we can resell the house on a wrap to someone else.

As far as the due on sale clause is concerned, the way in which we structure our purchasing entity makes it extremely difficult for the note to be called due on sale. Additionally, this is a federal loan so it's been sold off and repackaged, which makes it very unlikely that any lender would ever notice that the property has been sold

That my friend, is the power of Sub To :)

Hi Brett,

I respectfully disagree, I've found the best time for subject to for both the buyer and seller is when there is no equity in the property and the seller is looking for a way to be relieved of the mortgage obligation without having to cut a check to sell the property.

@David Caradonna Perhaps I'm reaching out a little too late here, but this sounds like a great opportunity to save the seller's credit and put a little bit of cash in their pocket. Subject to needs to be done very carefully in how you structure the deal. I'll dm you, but my partners and I specialize in these types of transactions.

@Olivia Radziszewski I am open to any market that makes sense. I am from Los Angeles and a first time homebuyer. I am looking for out of state property that will produce a minimum of 10% COC return in an area of that wil appreciate. Again, I am new on this journey and will do a deal in a state that makes sense.

can someone give an example of a subject to deal that they have done?