BiggerPockets

How would I analyze a deal looking at using subject to and a note for the seller, vs just wholesaling the house.

my thoughts so far...

wholesale = $5k (assignment )
Selling L/O = down payment + cash flow spread 1 or 2 yrs + cash out spread at the end of 1 or 2 yrs = better investor

So what am I missing ?
Is there pro's or cons I should be aware of investing subject to ?

It seems the downpayment with my end buyer is as ggod as an assignment fee but then I get a little bit of spread on mo.income vs. mo. debt and I get the spread of the sales price when the end buyer cashes out so it sounds really good but what am I missing?

your thoughts ?

Thanks
Jeff

Douglas,

How do you avoid the due on sale clause when taking a property subject-to?

Have you actually done this before yourself?

There's not much equity at all, but the house is in good condition and in a good area. Do you think an investor would take it? Simply because it's an assumable loan and they don't need to qualify?

I haven't done any Sub2 deals. The info I passed on is based on what I've read. Get a deal under contract and advertise it. See if there are Buy & Hold investors that would be interested. If you wholesale a deal, you can always ask for a non-refundable deposit, which is part of your assignment fee.

The short answer is you can wholesale any deal of any type, IF you have enough equity in your deal to give the person you wholesale it to a fair profit.

I prefer subject to and lease options to wholesaling because I get more paydays. If I wholesale a deal, I get paid once after doing the work to find the deal. On a subject to or L/O, I do the work and get paid multiple times; including what the seller may give me, what the tenant buyer may give me, my backend profits and the tax advantages (on a subject to).

They are just tools in your toolbox and you should be familiar with as many as possible to make as many deals as possible. Talk to a seller, find out what motivates them and solve their problem in whatever way they need. That is what it is all about.

Alex,
you will have a hard time wholesaling a subject to deal with no equity to pass on. A subject to is not the same as an assumable loan. With an assumable loan, to assume it you would have to qualify at the bank to take it over. With a subject to, you are just taking the deal subject to the original financing. That is a big difference.

Most who have a subject to deal will sell it via lease option (my preferred method) or owner financing of some kind. You could wholesale it to another investor, again, if there was some equity, but I would rather keep a juicy one for myself. I have thus never wholesaled a subject to myself for the above reason, but you could.

Remember almost all contracts are assignable unless specifically forbidden in the contract but I would add to your contracts that you could assign it to be safe.

Good investing

Mike C

Sorry to be bringing up an older post but I have a newbie question.

I see someone asked how you avoid the due on sale clause from the mortgage company and the answer given was the mortgage company rarely goes through with it. But it does happen, correct? And if it does happen, what do you do?

Also, in subject to, who pays the mortgage company? The original owner or the one that bought the house subject to? If the original owner, how do you as the subject to investor insure that they pay the mortgage?

What is L/O?

Thanks.

thanks Nick J

That seems risky, especially if it's not the right time to sell. I would imagine most peopler that do subject to do it because they dont have a lot of cash on hand........and wont be able to payoff/sell..