BiggerPockets

I usually wholesale subject-to's. Most of the time they are easiest to sell since the buyer generally doesn't have to worry about financing or having enough cash to buy. If you are able to cash flow quite a bit and there is lots of equity I would suggest keeping it yourself though.

To determine what to wholesale it at, I just basically do what I do with any other property and base it off comps and repairs needed. I just add my fee on and have the buyer put down that and any amount of payments the owner is behind on (and if they have tons of equity and are getting something out of it, their money too).

You should find that if the price is right (and maybe even a little higher than most deals because of the terms) subject-to's and anything with owner financing will be the easiest to get rid of.

Hope this helps!
Stephanie

Yes that is true. I have had someone who was able to put $50k down though (he was a very experienced rehabber). But in most cases they will probably only be able to come up with a smaller amount.

Stephanie

I am so glad I found this thread! I had a couple of Oppertunities to Wholesale "Subject To's" and I was so scared that it wouldn't work out that I "Chickened Out" at the last minute! So, Investors DO Wholesale "Subject To's", Well i guess it's back to the Drawing Board.

Since writing this thread a while back, I'm trying to get as much access to private money as possible so I can keep sub2 deals for rental properties and just wholesale the cash fixers.

So how would you set up a sub2 flip anyway?

So how would you set up a sub2 flip anyway?

What I do is look for a seriously distressed seller, who is willing to let his property go for what he owes. If that's the case, and his existing loan, interest rate and monthly mortgage payment are favorable, I contract on the property the same as I normally would, and then assign it to a buyer. The title company will take care of everything. I use the same purchase contract. I only fill it out slightly different.

I've never done one myself, but have coached individuals in flipping sub-2's. There was never a hint of anything we could get in trouble with. No court dates, and no judges. We contract and assign, the same way we normally would. However, instead of putting a purchase price on the contract, we put their existing loan amount in the subject to line, and then add to the notes a few lines regarding their loan and payments.

I have no clue what you mean by foul language. In my 4 years flipping and coaching, I've never even sniffed a court room...

Originally posted by Andrew Massaro

So how would you set up a sub2 flip anyway?

What I do is look for a seriously distressed seller, who is willing to let his property go for what he owes. If that's the case, and his existing loan, interest rate and monthly mortgage payment are favorable, I contract on the property the same as I normally would, and then assign it to a buyer. The title company will take care of everything. I use the same purchase contract. I only fill it out slightly different.

Nice so what happens if say your buyer backs out what is a good way to get out of it if you can't do the sub2 yourself?

Stephanie and Andrew,

I'm just digging into the subject to arena and was wondering if you could clarify the process. Is there any need to put the property into a land trust?

Guys,

Everyone is making it much, much too complicated. The process is for flipping/assigning a sub-2 deal is the same as a regular flip. The same purchase contract and the same assignment contract. The only difference is, instead of putting an offer on the contract, you list the seller's payoff on the "subject to" line. Your purchase contract should have a line for this, or at least a box under how you plan on paying (cash, financing, subject to), that you can check off.

Once under contract, you market it as a sub-2 deal, and disclose the seller's loan type (fixed or adjustable), interest rate and monthly mortgage payment. And, of course, your fee. Once you find a buyer, you collect a non-refundable deposit of $2k (or whatever), have him sign the assignment contract and forward both contracts to the title company. They will take it from there, and pay you the remainder of your fee at closing.

If the buyer backs out, you keep the deposit, and either cancel your sub-2 contract with the seller, due to a failed inspection, or if you have time, you begin to market it again for another buyer.

All of this is the same as a regular flip. The only difference is how you fill out the purchase contract. However, it should still be the same contract.