In order to be successful you have to know how to close multiple types of deals. You have to know how to wholesale, you have to know lease options and also subject-to’s. You also need to be smart enough to figure out what type of deal applies to each type of selling situation.
For instance, when the market was hot, it was a lot more difficult to get a landlord to do a subject-to. Landlords would do lease options but they didn’t want to give up ownership of the property and the tax-write-offs.
When the market turned and people became desperate, as many still are today, landlords were a lot more willing to do a subject-to deal. That is the main reason I am closing a lot more sub-2’s these days. Landlords are more willing to do them and in my opinion, a subject-to is much better than a lease option deal almost any day of the week.
With a Subject-To you own the property. You get the tax benefits and since you’re the owner, you don’t have to worry about a middleman. You don’t have to worry about some dishonest seller trying to squeeze you out of a lease option. And you don’t have to worry that he’s going to see you make $40,000 from the option and freak out.
Truth be told, I have never had a problem with a lease option seller, but I have heard horror stories of sellers trying to breach option agreements, Especially when the market was hot and they realized their house had increased thousands of dollars in only a few months’ time. But I’d still rather be safe than sorry, and sub-2’s are safer in my opinion.
Another reason that I love subject-to’s is because you own the house and don’t have to get your own mortgage on it; the loan remains in the seller’s name. Therefore, you don’t need to find cash to buy the house and you don’t have to worry about filling out 10,001 loan documents.
There have been many times in my life when I have picked up a subject-to deal and the only money out of my pocket was between $150 and $250 dollars. I was able to do this because I negotiate everything during my deals and try to get the seller to pay all closing costs and even the home inspection if I can.
The fact is, I plan to take advantage of closing as many sub-2’s while the market allows. But if the real estate market starts booming again and I have to adjust my tactics and start doing more lease options or even wholesaling, I will do whatever deal makes me money. In other words, even though I love sub-2’s if they aren’t working well in a particular market, I’m not foolish enough to keep trying to close them.
That’s why you must be a versatile investor and try not to fall in love with a particular investment strategy, because the best strategy is the one that makes you the most money in the current market.