All Forum Posts by: Kyle Deutschmann

@Andrew Postell I specifically posted this question on BiggerPockets rather than the local "Maryland Investors Network" on Facebook or other local groups because these "sub 2" deals are frequently talked about on the BiggerPockets podcast and in the forums, yet I have never seen anyone truly explain how this works and the legality behind it. @Tom Gimer and @Ron S. you have helped to clarify a lot of my questions on here. I look forward to scheduling some time to chat with you Tom. 

 This is super helpful. Thank you for your insights here. 

Gotcha makes sense. An agent I talked to recently recommended the buyer close in a trust thinking that helps somehow.. any idea if that makes any difference here? How long does the process take when you catch one of these? How long does the buyer/seller have to pay off that loan before the lender files a lawsuit or foreclosure (or whatever legal remedy they have?)

 Thanks for contributing here. Are you a private lender or more conventional? 

That all makes sense - I used to be a conventional LO but never worked on the secondary side or as a private lender. I've been told mixed things on if and when a lender will/won't call a loan due in these types of scenarios. 

A wholesaler showed me his closing docs a while back and it basically made the new owner look like a property manager making payments and the new insurance still included the original mortgagee clause and loan # as far as I know.. think that would help at all? They actually informed the lender upfront who would be making payments, etc. Not sure how that all ended up down the line.. 

@Tom Gimer -  yeah it sounds like it makes sense as a short term strategy. How long would you say it takes for someone like Ron to come in and torpedo the deal? 

Thanks for your insights. I agree that this subject is asked about frequently, but no one on the podcast (at least that I've heard) has discussed how this really works and how they get 'around' the due on sale clause and other obvious things that make this less than an ideal strategy. I have talked to a few local title agents who either do not understand this strategy or don't feel like it's worth the liability when they could focus on regular/retail business. 

I have a few contacts I'm going to discuss this with. Was there anything unique about their situation or commonality such as the particular lender or loan servicer, or a particularly low rate perhaps held by a smaller bank on their portfolio? And how much time do they give you to pay the loan off when they call it due? 

 Thank you.. I hosted a meetup with ~ 30 in attendance this past Thursday. There was only one title rep, and she wasn't super familiar with closing a property subject to existing financing. Have you worked with any title companies in your market who has helped your investor clients close these types of deals? Or from your experience in lending, have you ever heard of lenders calling these loans due on sale? I heard it can take such a long time and cost to foreclose that most of your investors would rather just turn a blind eye and keep accepting the payments as long as they are coming in on time. 

Hey BP community, 

For anyone who has done a subject-to deal in central MD... who is your go-to title company for this type of transaction? 

Also, has anyone had any issues with lenders calling these loans due on sale? How do you get around this and not screw over the seller? 

I understand VA and FHA loans are assumable... This is not what I'm talking about - I'm referring to buying a property subject-to the existing (conventional or commercial) financing. I've seen a credible title company close one of these in Nashville where I used to live, but have never dealt with this in MD where I currently live.

Thank you in advance for your comments and suggestions. BP typically doesn't allow self-promotion, so if you are a title rep who has experience with this, feel free to slide in my DMs. 

Hey Frank, welcome and thank you for your service! This is definitely possible, but it sounds like your DTI might be a bit high to purchase a primary residence unless you use a co-signer or pay off some of your other debts first. However, if you use a DSCR loan for the rental property then you can qualify based on the rents the property will/is currently bringing in compared to the monthly payment (PITI+HOA) instead of qualifying based on your DTI. I've been told DSCR (non-owner occupied) rates are around 8-8.5% last time I checked (probably with a point or 2 upfront I'd guess) compared to around 7.5% for a conventional primary residence loan or ~6.75-7% for a VA primary residence loan.

I'd recommend talking to both a lender who specializes in DSCR loans as well as someone who specializes in VA and conventional loans to compare options. I have some contacts for both in the DMV area if you need a recommendation. 

 I think @Jack Seiden and I were thinking of doing this every 2nd Thursday of the month. If anyone else has any suggested changes or other location suggestions please DM one of us. We chose Laurel since it's roughly halfway between DC, Baltimore, MoCo, and Annapolis. If you know of any local bars/restaurants/breweries in central MD with a space big enough for 25-35 guests we'd be happy to consider other locations.