BiggerPockets Podcast 070: From Zero to Hundreds of Deals in Under Two Years with Grant Kemp

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On today’s episode of the BiggerPockets Podcast, we sit down and chat with a real estate investor who is absolutely CRUSHING IT in a very unique niche.  Grant Kemp, from the Dallas Area, got his start in real estate only 2 years ago and already has hundreds of transactions under his belt, and regularly purchases 6-15 properties a month!

On the show today, Grant shares with us the dirty details on his business and shows how YOU can start capitalizing on more leads, make more income, and spend less (or even none) of your own money to make it all happen!  The best part is: Grant’s strategy relies on generating profits from leads that most real estate investors simply throw away by utilizing subject-to purchases and mortgage wraps! Don’t miss a second of this incredible interview and prepare to have your mind blown!

Read the Transcript

Click here to read the transcript.

Listen to The Show on iTunes

Click here to listen on iTunes.

Listen to the Podcast Here

In This Show, We Cover:

  • What “Subject To” investing is, and how you can use it to acquire properties for little to nothing down.
  • What a wrap-around mortgage is
  • How to protect yourself from the ‘due-on-sale’ clause
  • How to use sell to the owner-finance market
  • How Grant uses other wholesalers to grow his network
  • Where to find leads for subject-to deals
  • Clarity on the Dodd Frank from someone who actually read it in it’s entirety
  • The importance of full-disclosure when doing subject to
  • Selling via seller financing to get incredible returns
  • And a lot more!

Links Mentioned

Books Mentioned in the Show

Tweetable Topics

“I asked myself, “How do I get into real estate with no money? The answer was subject-to.” (Tweet This!)

“In real estate you just got to do it… it’s the Nike way.” (Tweet This!)

Connect with Grant

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!


  1. Great Podcast Brandon. About a FHA Loan, I found out, yes you do have to have 3.5% as a down payment, but for people who don’t have even that there is a program that most states have as well that can make it a 100% transaction, including Real Estate commissions and Closing Costs. I think FHA also have that program, don’t quote me on that 🙂 I could be wrong on that. My only problem with FHA and its not FHA its the private mortgage companies and Banks. In order to qualify for a FHA Home Loan you have to have a minimum FICO Credit Score of 540, which is a bad credit loan for good people. Ok people wait for it, drum roll please, I have done a bit of research here in my area In order to qualify for a FHA Loan with these lending institutes YOU HAVE TO HAVE A FICO Credit Score of anywhere between 600 and up, which is a Fair Credit Score (not a Poor Credit Score). And nothing FHA can do about it, they can not dictate what a private mortgage company or a bank can or can not do, sigh oh well. I was looking into that because I want to get out of our Apartment, and that is about the time the Banks as well as Real Estate Crashed big time in our area. Sorry, didn’t mean to make a short note into a long story lol. Great Podcast, as well as the rest of em which I have been downloading them so I can listen to them and learn more 🙂

      • No Problem Brandon, I find everything here including the Podcasts very informative. About the FHA I mostly found that out by accident, I was looking for a No-Doc Loan. Hard Money Lenders as well as Private Lenders don’t do Owner Occupied Properties, just fix and flips, so I was looking for something in the lines of my Credit Score which my FICO Score is 545 or there abouts, my wife wants to move in a house with a decent size yard, we just need more room and someplace for our son to play in, we basically have him locked up in the Apartment (no not like that lol), the area we live in is not the best area for a kid, and there is no play area for children here. At least we do have a swimming pool but that don’t open until the end of the school year. I am trying to keep my income to debt ratio down because of my income (which I am sure everyone has seen, I work at 7-Eleven making 10 cents above minimum wage) the very reason I am trying to get back into REI, the main reason why I am here, to learn. The only problem with that is most creditors will only go by my income at 7-Eleven and not my income as a REI, unless I can show 3 years worth of Tax Returns showing my income doing REI, which I can’t right now. And unless I have enough for a Down Payment, most Owner Financing deals are out of the question too, unless someone can show me how I can purchase a house with no down payment for us to move in as well as affordable payments lol, about $400-$500 per month, that is the max I can afford without killing my Debt/Income ratio. Ok, enough of that, Brandon your site rocks and I am learning a lot here, more then I learned in the mid to late 90’s when I did this before. That and I am setting a very good example for my 12 year old son, he is hanging out with the wrong crowd at school who are basically teaching him that one does not need to really learn anything, his grades are failing in all his subjects. So by doing this I am showing him that no matter what, any kind of education is important 🙂 so thank you again for this wonderful site.

  2. Hahaha probably one of the best intros thus far. “We should get out our calculators and figure CAP rates.”


    How did you go about learning the steps in doing a subject to correctly? It seems so dynamic. (Any blog walk-through out there?!)

    I was really impressed with the wealth of knowledge you have on all this with only being in the industry for a few years.

    • I learned by reading and asking questions. When I felt that the internet had given me all it could I went to the most successful local investor I could and bugged him till I got a partnership with him. His name is Scott Horne and he’s a local real estate and title attorney who I’ve been very blessed to have a business with.

      The moral of the story is: find people who know how to do it and work with them. At this level the investors like myself are working on negative time, if you show that you will take the knowledge they can give you and turn it into deals you can gain some very valuable partnerships!

      • Nelya mushiyeva

        Dear Grant,

        not every person is willing to be as helpful as people on BP. I actually have a question, I am currently renting my Coop and people that are currently occupying the place would like to purchase it but they do not have a down payment. Living in NY would I be able to do owner financing on my apartment? if so, can you please walk me through it.

        Many thanks

  3. Great podcast guys!

    I have a question though. Maybe I missed it in the podcast, but if the bank calls the note due after you have already purchased and resold the house with owner financing, who is on the hook for paying off the mortgage? Is it the middleman (you) or the person you sold it to? If it isn’t paid and it gets foreclosed on, can you be sued by the occupants?

    Any input is appreciated!


  4. Lots of great information on this one.

    My questions is what your protocol is when the original seller does not want to wait years for the entire mortgage to be paid off? Certainly there are some people that don’t want this mortgage on their books for the life of the loan even if someone else is paying it off.


  5. Thanks for a great podcast. One question I have is after a subject to how do you get access to the payment records? I’m only half way through the podcast so if you addressed this I may not have heard that part.

    • You get the seller to sign documents which you file with the bank and then the bank will be authorized to release info to you about the loan. It’s part of my initial contract package

        • Being an RMLO has nothing to do with the bank communications. The bank doesn’t ask or need to know why you’re authorized on the borrower’s account. It’s the borrower that authorizes it.

          And there are mechanisms we put in place with sellers that don’t want to hold the long term note that can entice them into doing it with us. It’s just a matter of being creative.

  6. Brandy Cook on

    OMG!!! Awesome podcast! Grant Kemp you just helped breathe new life into me with your wealth of information. Hopefully soon I will get up the courage to take the big leap into getting my first deal. Biggerpockets get ready for me to be posting like crazy on the forums, because I’m going to need some help considering that I’m doing this real estate venture all on my own. Thank you so much for this valuable information.

  7. Kelly Marc Alston on

    Fantastic podcast! Grant is so dialed in to his particular niche, like a Trekkie at Comic-Con (I mean that as a compliment). Thanks, Josh, for asking for clarification on owner financing, now it makes perfect sense. Keep up the great work!

  8. Game show sound for wrong answer!! He says the due on sale clause is only triggered from lack of payment? Hahahaha
    I had one get called and it had NEVER been late. I will NEVER mess with a Sub Too again. Ya’ll can have it.

    • I think he said it differently than that. Its triggered the second the purchase takes place the banks just rarely do anything about it. Yes it happens. But rarely. Ive been shot down for refinance because Ive bought houses on contract for deeds where purchase interest is recorded but deed doesnt go into my name. Doesn’t mean Id never do one of those again. Guess what if it was a subject to deal I would be able to refi no worries (most the time). Lease purchase are same thing refi’s not allowed (with equity pulled out for fha). But subject to meets fha requirements for a refi. So your better off in that instance than doing contract for deed with someone who owns home outright. Or a leas purchase.

      • Thanks rook. In glad that I didn’t glaze over that concept. His response had me worries that I had acted as though it was impossible to have the DOS called.

  9. Hey guys I just wanted to chime in and say thanks for all the kind words. I’m celebrating my anniversary with my wife today so I’ll get back to specific answers tomorrow

    And Ronnie I’m sorry for not stressing more that the bank has every right to call DOS in these transactions. The number 1 reason you’ll see DOS called is due to insurance, so you’ve definitely gotta stay on top of that. But heck, banks can call it if they want to regardless of insurance. That’s a risk everyone has to agree on going into the deal.

    Anyways, I’ll get back to the rest tomorrow!

  10. So I do a bunch of owner finance type deals. Subject to all day long if Im holding long term or flipping contract. Sandwich type subject to deals are a little different. In those I typically do a lease option. My reasoning is this, which differs from what was said in the podcast so its kind of a warning/ at least look into it more.

    So it was mentioned that if the end buyer defaults and you have to foreclose to get the property back (as first purchaser) you can resell and make more money. It is my understanding that this is illegal or at least maybe not allowed. (it is illegal for banks to do) maybe its different for regular homebuyers (let me know Ill change my strategy back to subject to instead of sandwich leas options). I own a car dealership and its the same for that as well. Any kind of foreclosure or reposession has to be sold no profit other than attorney fees etc can be recouped. If you sell the property again for more than was sold to the person foreclosed on then you have to give the old homeowner (car owner in a dealership) the amount above their contract. This is very common in many states but maybe its different with subject to. Id like to know why if it is.

    Now subject to is great for contract assignment or long term hold even if what I mentioned above is true. To get around the above mentioned. I do lease options with me staying in the middle. If the end buyer defaults there are no issues with selling it again for more money. Now banks typically can’t refinance these properties but will still approve a purhase with proven payment history.

    Grant if you know that the laws around subject to for reselling defaulted loans is different than what I mentioned Id love to know. It is a great strategy and better than lease options in my opinion with the exception of that one issue.

    • That’s a great question and may be a local state law but I’ve seen nothing federally and definitely not in Texas that would say you can’t resell the property after a foreclosure. There are laws, however, about profits from a sale of a foreclosure court steps and how those have to be assigned including the person being foreclosed upon.

      I’ve got to have full disclosure on this, though, and say I’ve been very fortunate to not have to foreclose on any of my buyers (yet), so much of what I’m saying here is pure book knowledge and not practical knowledge. I’m leaning on the experience of my partner the attorney when I talk about foreclosure laws.

      • Thanks for the quick response. It might be state by state or just a rule for banks. The rule is to keep banks from just foreclosing as soon as they get the chance because they might be able to turn the property again and make more money. That of course would be more appealing to houses with equity. Similar laws in auto industry. I really have no idea if it pertains to regular investors at all in the few states I do real estate, mostly Washington.

        Question for ya. How does the deed flow in wrap instances does it change names mutliple times. You buy it then your end buyer. Didn’t catch that in the podcast. I am really considering switching over to subject to on the better properties vs lease options.
        Only drawback in Washington I can see is the excise tax due on deed transfer.

        • Yes, deed will transfer to you then to your end buyer. You can close within minutes of each other, just make sure when they’re sent for recording that your AB transaction is recorded before your BC transaction

        • I’d love to see someone that has done a foreclosure on a deal like this chime in with the exact rules.
          My understanding of these kinds of things is that any excess of the monies owed to the lender that are gained at the actual auction would go back to the previous owner.
          If the lender buys it back then they own it for the bid the same as anyone else.
          It isn’t like if we bought something at auction for exactly what was owed then flipped it for more that we would have to give that profit to the person that lost the house.

  11. Awesome podcast! We actually listened to it while heading to the beach on vacation. The discussion was right on time – my husband and I had discussed negotiating a subject to deal on a property in pre-foreclosure. We loved the informative discussion. Within a few hours, we had called the property owner and got started with negotiations. The owner actually informed us that he is looking to sell TWO properties. Very excited to tie these properties up and use what we learned. Thanks!!

  12. This was a great podcast and I loved hearing about how we can comply with Dodd-Frank and do owner financing.

    This is just like the strategy In Wade Cook’s book from way back in 1983 called “How to Build a Real Estate Money Machine”. It’s always been my favorite book, but way, way outdated (in the times of 18% interest rates on mortgages). He did a lot of loan assumptions back then, but it’s not so easy to do anymore.

    I’ve always thought it was a great strategy.

    • Brent Ludwig on

      I loved that book too that’s why this podcast got me so inspired to give this a shot especially after hearing that @GrantKemp found it was the a great way to get started with no money.

    • There’s always the risk that banks will call the notes. We would have to make a case by case analysis at that point and see which ones we’d want to buy with our own cash/financing, we’d also look at refinancing our buyers at that point through bank lending, and then the original sellers would also have refi options as well. It’s always wise to hedge all bets, and be good at other strategies as well in case of situations like this.

      That being said, my partner was doing tons of these deals in the late 80’s and early 90’s when interest rates were huge and they did not have a DOS issue arise for them. That being said, that’s not to say it can’t happen in the future.

      • Great podcast!

        RE: the Due on Sales Clause and the Fear that Rising Interest Rates may induce banks to exercise that option –
        1) Just so I understand the risk – If I were to buy a house with conventional financing and then place that house in an LLC, I also would be triggering the ‘due on sales’ clause, correct? So the risk that the bank may ‘call the loan’ is the same in either situation? So the people who think that Seller Financing is too risky because of this clause would also be against placing properties in LLC for the same reason?

        I just want to know if one action or the other has a higher risk of being ‘called’ by the bank.


    • Interesting thought! Never thought of writing a book before.

      Unfortunately, there’s no telling how long it would be accurate since the laws are so consistently being amended.

  13. Grant,

    Thank you for an extremely informative podcast. I got a lot out of it. I have a few questions though. When you lease option a house from a seller, you have this option for ~2 months, and then sell it to a buyer subject to with a wrap around mortgage. During the show, you said you are on the title, but does the title transfer to the end buyer at some point? Who is responsible for getting insurance? Whose name goes on the policy? Who is responsible for the taxes? Maybe the last question and first question have the same answer.

    Thanks again for a great interview.

    • Title transfers to you or your subsequent buyer whenever you go to closing. If you do a lease option FROM the seller, you won’t hold title until the 2 months is up in your example. Once you find your buyer, you’ll close with them and title transfers to them. Whoever’s name is on title is who is responsible for taxes and insurance. Insurance needs to have the title holder’s name, the original seller’s name, the original bank’s mortgagee clause, and your mortgagee clause (assuming a wrap)

        • Sharon Tzib on

          OK, I feel like Josh now 🙂 So are you saying that you may option the property and never take title yourself? Is that possibility outlined in your option agreement, I assume? So if you do take title, the original seller’s name would be you on the insurance policy; if you never did, it would be the seller who has the mortgage? Sorry, a little confused here. Thanks!

  14. Hi, what about home insurance? who carries that? What happens if a tree falls on the house and destroys the house? who gets the check, the seller or new buyer? if its the seller, then I would have to assume any deposit money is refunded?? (not sure about any saved equity). Being a buyer, I would probably want insurance myself, but not sure if a insurance company would look at the title track and see all the underlying notes and balk at insurance.

    • we always have our buyer come to closing with a 1 year prepaid insurance policy. You just have to make sure the original seller’s name is also on the policy.

  15. Roberto Reyna on

    Great information! ! I went to triple equity. net but got lost afterwards. The information I am looking for does not appear. Where else can a person connect concerning more on this specific podcast? Thanks in advance for your assistance regarding this matter.

  16. The reason many experienced investors don’t focus on buying houses with little to no equity subject to and selling with financing on wraps is because it is way too risky over the long term. I do sub2 deals, but hold them as rentals or wholesale them. I think it is an excellent way to acquire rentals.

    Due on sale is a unicorn in this interest rate environment. Wait till interest rates get to 7, 8, 10%+ and see if those banks are still happy collecting payments on that 5% or less money. Just cuz it hasn’t happened to you doesn’t mean it won’t. When it does, who writes that huge check to pay off the underlying loan? Not your buyer.

    I know a guy in Utah who did this almost exclusively starting about 6-7 years ago. At one point he controlled 250+ doors. Today, he has 6 figure judgements against him and is struggling.

    Brandon’s fashion advice:
    No matter what you ask, the answer is “Flannel”

    • DOS is always there and always something to know about. I will say, however, that even during the huge interest rates in the late 80’s my partner had hundreds of deals that weren’t called. That doesn’t mean it won’t happen in the future, but it’s just something to go off of.

    • Why would he have judgements against him. Im thinking payments weren’t getting made etc. and he just let stuff slip. (maybe not) Everyone should be signing hold harmless agreements in these deals as well as full disclosure docs that explain possible problems with the possible solutions in writing. This will keep the lawyers happy even though its not bullet proof.

  17. WOW!!!!amazing podcast. Learned a lot. I am actually implementing some of the techniques. I have been studying sub2 and owner finance for a while now, and its great way to build real estate wealth. My advice to people who are worried about DOS is don’t let fear get in the way.

  18. Alex Duarte on

    Hey I have a question its not related to the podcast but, I am having trouble playing it on my laptop. Can anyone help me with this issue? Sorry i’m new to the website!

  19. I have a question about how insurance works with the wrap mortgages. If I own a home with a mortgage and you wrap a mortgage around my existing loan to another buyer. Do both mortgage holders need to have insurance on the property? How does that work since the mortgage company makes you have insurance.

    Awesome Episode!!

    • Your end buyer buys the insurance policy. Their name and the original sellers name are named insureds. Original mortgage company and your company are primary and secondary mortgagees respectively.

  20. Ryan Chamberlain on


    Quick question, and this could’ve been addressed towards the end of the podcast as I am being puled away half way through but will definitely finish later.

    Are you buying these subject to as an individual or a Corporation/LLC? My reason for asking is concern that if they were to find out it was transferred to a company would they be any more likely to call it due.

    Thanks for any clarification. Great information in this podcast.

  21. Grant,
    Can you tell us approximately how much money it costs to have you originate a seller financed loan for us? Just the part required by Dodd-Frank, not the rest of the transaction paperwork. I’m located near Houston, could you still work with me?

    • Most definitely! I’ve got plenty of clients statewide and nationally. I’ll contact you separately so I don’t come off as marketing on the forums 🙂

      If you don’t have a colleague request from me, come send one my way ’cause that means I’ve contacted the wrong Leslie A.

  22. Grant, awesome info man, thanks so much! I’ve been focusing on wholesaling but I’m moving into short sales and when I heard this podcast my ears perked up.

    How do you get other wholesalers on boards and do you pay them for the lead or bring them in as a partner on the deal?

    Thanks again Grant and BP for the great interview. Roc

    • We pay them when the lead turns into money. The key here is being known as someone who can close these types of deals. I recommend talking to @Jerry Puckett about getting some marketing out there to look for deals. We can help you handle the leads as they come in, then once you’ve got a few under your belt and you’re a reliable closer is when you can start asking other people for their leads.

  23. Sharon Tzib on

    What a great podcast guys! You had me in stitches a couple of times. So Grant, couple questions.

    1. When you wrap a mortgage, the primary lender is in first position, so do you then file a second position lien for the new mortgage with the owner financed buyer?

    2. How do you comfort the seller that the mortgage, taxes and insurance will be paid every month. I assume via a servicing company where all parties can log in and check status?

    3. You must have to agree to an exit strategy of some sort with the original seller, correct? How many years is that generally?

    Thanks a lot!

    • haha, I’m glad you could learn and have fun at the same time! I sure enjoyed being on the show, Josh and Brandon are great guys.

      1. yes, the bank is in 1st position and we are a junior lien
      2. Using a 3rd party servicer is the easiest way to do this
      3. I never promise anything to any of my sellers. I tell them that this loan could continue to be there for the remainder of their term.

      • Grant:
        The seller will have a near impossible time buying another house with their existing loan in place? Do they know this? They may be okay with it now but in 5 years when they get declined they may not be so happy. I’m going to send you request as i think there is a way we can work together.

  24. This is a great podcast, and I would like to sign up for the Subject To training, however I have a few questions because I could have used this strategy a few years ago with a friend of mine who had two mortgages and had an assumable loan. Since we were both military I could have assumed his loan but the numbers didn’t work,I could have done a subject to and put a tenant in his home in a smoking hot rental market.

    My first question is do I have to be physically in Dallas or Texas to take the training?
    Does it matter where I live. I am military and so far I own rentals in Texas and GA, and I don’t know exactly where I will be living next but I will be doing real estate where ever I go.

    • There’s no need to be in Dallas, we work nationally. Feel free to send me a colleague request and we’ll talk more!

      sidenote: thank you so much for serving. I really appreciate that you’ve dedicated your time and efforts to protecting our abilities to live so comfortably.

  25. Hi Grant. Awesome podcast and it answered a lot of questions I was actively looking answers to. I do have one question that I didn’t get clarity on regarding marketing.

    Does the Dodd Frank or SAFE act present any restrictions around marketing myself as a business that offers loans for people who do not have “great credit”? In the short summary of Dodd Frank act I had read, it stated that if you are going to be marketing that you are offering loans, for personal use, you will need to either be a licensed mortgage broker, or use the services of one. If I do use the services of one, can I market my self as someone who would be interested in providing financing to people who do not have great financing?

    Hope the question is clear. Looking forward to your response!


  26. All:

    I see that some of the members are saying not to buy a property on a “land contract”, because the title does not get registered in your name and therefore you cannot re-finance. Out of curiosity, what kind of a contract would you sell your property on, that you have bought through a “subject to” current seller’s financing? I had imagined you would be selling the property on a land contract, but I don’t know if I am correct in that.

    Please advise!


  27. Thanks for the podcast. It has opened my eyes to looking at different opportunities in real estate. Now I’m working through the previous podcast – what a wealth of knowledge!

  28. This was a great podcast – I listened to it driving across island to a seller appointment and it really helped me work though a property I’m considering purchasing. Right now I’m buying a couple properties on an Agreement of Sale but just with the intention to fix and flip, not to hold onto and wrap to another buyer.

  29. Wow, This one was awesome!

    I’ve been on BP for about 6 months now so I’m fairly new to the forums. I have listened to 80% of the podcasts thus far and this one I especially enjoyed. I’m 22 and live, work, and invest in the DFW area. I do tons of marketing to sellers and wholesale deals, but ave never done this type of transaction. I realize I’ve thrown away plenty of sellers and buyers that fit the subject to, and wrap mortgage situations that you describe. Its great to learn that these types of leads can be converted to profit in some way. Either through learning to structure the deals myself, partnering with someone who can, or passing the leads along as a bird dog can be great ways to add value to leads.

    Grant I think its amazing that you have learned and done as many deals as you have since 2012 in this hot market. I have a ton to learn.

  30. Another great podcast. Subject to purchasing is going to open up a lot of possibilities for me. And thanks for mentioning Podio, my business is growing and I need a better online management system, and I’m pretty excited about its flexibility.

  31. Hi Grant,

    Thanks very much for an awesome podcast! Will be listening to this one again multiple times to make sure I didn’t miss any juicy details.

    It’s a very interesting strategy, a sort of hybrid between wholesale/flipping (chunk of cash NOW, and that’s it) and buy-and-hold (positive cash flow, equity growth). You’re getting a chunk of cash NOW, AND getting cash flow for the life of the loan – although obviously you won’t have the built-up equity in 30yrs as with buy-and-hold, which is imaginary money anyway 🙂

    The discussion in the comments is also quite helpful – one of my questions following the podcast was, how do you ensure you have a recourse in case your buyer (on the disposition side.. hehe) stops paying, which you answered above – junior lien. Great to know that there are some specific exceptions to Dodd-Frank for small investors, also – most of the other discussion I’ve seen tends to be of the Chicken Little “sky is falling” variety, so greatly appreciate your insights here!

    If you wouldn’t mind, I’d like to ask a few follow-up questions:

    1) On the acquisition side, how do you transfer the title even though there is still a lien from the original lender? I was under the impression that this wasn’t possible normally – or is there some special process, and is this why you use an attorney rather than a title company?

    2) In case the original lender decides to call the loan due, what kind of recourse do they have against you as the middle-man in this kind of transaction? It sounds like, they can go after your seller (who is named on the original note), or your buyer (who holds the title), but what legal basis would they have to put in a claim to you? Is it based on the contract that you sign with your seller?

    3) Any specific tips or advice you might want to share with someone who would be looking at subject-to acquisitions purely for long-term hold as rentals?

    It seems to me, as an RMLO, you could also be buying non-performing notes and then working with the borrowers to refi into a loan that you originate on whatever terms make sense to both. Have you considered this kind of strategy?

    Really appreciate your time doing the interview and answering all of the questions also! Thanks a million!


  32. I see that a few people have already asked about insurance. My question though is more simple. If I were to purchase a property subject to the existing financing and NOT sell the property but instead rent it, how would I handle the insurance? Do I have the seller add me to their policy and then call and convert it to a rental policy? Does that then mean that I cannot change insurance companies ever in the future? I may be asking a silly question.

  33. Great podcast, Grant. One question I have about subject to investing is what would happen if the seller dies while you’re still paying on their loan? What happens to the mortgage?

  34. Scott Pigman on

    This was a very interesting interview. Thank you to everyone involved.

    The really interesting thing wasn’t the subject-to itself, but the fact that by using the subject-to and the wrap mortgage to the end buyer you can take a zero equity situation and essentially create equity by marketing to buyers who can’t secure conventional financing and are therefore willing to pay a premium for a property with seller financing.

    Now for some questions:

    • In a low equity situation where market rents won’t cover the payments and that you can secure with subject to, do you have any other exit strategies? Would lease option be a possibility?

    • In a situation where there is some equity and you get seller financing on the acquisition side, could you – and should you – consider wrapping the mortgage to the end buyer?

    • do you put a due on sale clause in the mortgages you write?

  35. Rook is correct concerning collateral and my office in FDIC examined Texas Banks, the issues of seized properties from collateral apply just as well in Texas as anywhere.

    Installment contracts are covered in the Uniform Commercial Code (UCC) as well.

    The claims, exaggerations, implications and misconceptions presented in this podcast are bogus, predatory and if details were better known I’d say my bet would be on illegal.

    When those who obtain just a little bit of knowledge and then get “creative” not only are they a danger to themselves but also to others in suggesting strategies, not to mention the general public.

    You have no idea how really bad this podcast is and my advice is to move on, do not attempt to do this as proposed.

    The claim of having read all of Dodd-Frank is laughable, implying that it was all understood I’d say is has as much truth to it as claiming someone has a pet flying pig they can ride.

    “Naïve” isn’t descriptive enough to describe the positive posts here on this topic.

    Here is a thread on BP about this podcast, suggest you read it. After reading that then go see your attorney! (I know most don’t have three dollars to pay an attorney, most won’t investigate it, for those, go right ahead, if you pull enough off these off or mess with the wrong seller, I’d say your chance of jail time is pretty good!)

    Grant might come back and post here, you’ll see in that thread that Jon Holdman mentioned him to comment, as well as others, and he never surfaced. That might tell you something, tells me he may have found out he was playing with fire trying to be a finance expert. Have a great day!

    • Grant Kemp

      The only reason I didn’t surface is because bill has made the site unusable for me, so I hardly visit any more. I don’t have time to respond to him every single time seller financing comes up, but I understand the importance of discourse on a site like this so fee responsible for giving the other side of the coin when he does inevitably chime in.

      Yes, it’s great to have concerns and to do your research, and I actively encourage that. It should be noted that bill is no longer licensed and active in the lending industry (as far as I can tell). It should also be noted that I, as well as my attorneys and many others I regularly communicate with, have in fact read the *current* laws on this and deem it worth while to keep going with the mode. There are always going to be risks in any investment model, but we feel the risks don’t weigh too much as to keep people out. Again, I can go on forever actually quoting the actual laws on this but it’d be just like every other time I’ve had to respond to the flames bill throws out so I’ve just given up. I only respond so that others down the line read this and understand a little more of the story. Bill very much disagrees with me and that’s fine, he’s allowed to. But before you go on thinking that he’s right because of how confident he sounds, you should read his comment history and note how inflammatory and aggressive he is and understand that he who is loudest isn’t always right.

      Please, feel free to contact me individually if you have any questions or concerns, and as always if you have an attorney you trust contact them as well. You should never go into an investment model without understanding where you’re at and what the risks or rewards are.

  36. Great Podcast!!
    I’m in Birmingham, AL and know the real estate network pretty well. I’m having a hard time finding investors I can work with that know how to do the combination of these strategies. They can do subject-to but they do not combine it with wrapping the mortgage and selling it owner-financed.

    I can definitely find motivated sellers where subject-to is the best option. However I need help creating a wrapped mortgage, and selling owner-financed (I can find buyers too). In Alabama we typically have a closing attorney. Would they create the paperwork for the new (wrapped) mortgage, close with the buyers, and file paperwork with the city/state? How would the title search and title insurance look, and what else is involved?
    Are there any Birmingham Alabama investors on biggerpockets that would know??
    I have thrown away several deals that this would work perfect on.

    – Chad Raggio

  37. Great Podcast…Recently I’ve been getting inquiries about people wanting to sell there homes,(I mainly deal with land) but because a mainly deal with land I was turning people away. With that being said, could I refer them to you?
    Let me know your thoughts.

  38. Ervin Taylor on

    I really enjoyed Grant Kemp, Grant I have a deal I am currently working on and would love to have your expertise. I would also like to know that training program you do is it only in Dallas.

    Thanks and great information.

  39. Hey Grant, interesting strategy but it sounds super risky for me being caught in the middle. So you buy the propery subject to, and take over the payments. Then you sell the house to another person and use owner financing. You get a down payment and the difference in interest rates, but what happens if there is another economic downturn like there was a few years ago, and all of the people you sold the properties to lose their jobs and can’t make the payments. Then you are stuck with a bunch of properties that you have to continue to pay the existing mortgages on, and you have to foreclose and find new buyers. Furthermore, what happens if the housing prices drop and now you houses are worth less than the existing mortgage on the houses? Now you have to find buyers and you can’t sell them for the value of the mortgage and it looks like you are in a lot of financial trouble. This is worst case scenario, but if it were to happen you would be in major trouble. What is your risk mitigation/avoidance plan for this scenario?

  40. Josh Stevens

    Wow, again WOW!
    I listened to this 4-5 months ago and it didn’t really click. I just listened to it two times in a row in the past two days. WOW! I love hearing creative approaches like this. I am seriously interested in trying my hand at this now. Thanks Josh, Brandon, and Grant for sharing this. FASCINATING!

  41. Joshua Durrin

    Hi Grant,

    Great podcast! I’m marching my way up through them all. But this one in particular was quite fascinating.

    Couple of questions I didn’t hear addressed.

    1. In California, I’m under the belief that when you disclose the take over of the loan to the lender that the lender has a certain timeframe in order request to revision of the existing lien. Once that timeframe expires (90 days in CA if I’m not mistaken), then the lender forfeits by default their ability to call the note due to the take over and change in ownership. Is this true?
    2. In the interest of full disclosure, wouldn’t you always want to notify the lender of the subject to arrangement? That would also start the clock ticking for them to “bleep or get off the pot” with their call of the note, no?
    3. Despite the points in question 1 (assuming their accurate), the lien holder often also places restrictions on further encumbering the property, say, with seller financing or a second position loan to cover the equity spread for instance. This too gives them the right to call the note due. I suppose you just work through it with the primary lien holder in that case to either restructure the loan or find alternative financing? Granted, you’d lose the amortization bonus I suppose in that case, no? Restructuring would be most beneficial because they can do so without losing their first position from what I understand. But what is their incentive for wanting to work with me as a buyer to enable this transaction to go forward?
    4. Perhaps most important to the seller, they remain liable for the mortgage on paper… that is, it’ll show up on their credit report until paid in full (or worse, defaulted and written off). This also creates a hardship for the seller in trying to buy their next house and move on with their life. How would you address this hurdle with them? I’m under the impression that there is a document that you can provide to them absolving them of the payment responsibility when they apply for further credit. But doesn’t that have to be also signed by the lien holder too?

    Grant, I appreciate you taking the time to do the podcast. Loved the show. Very inspirational. I look forward to the feedback. Thanks.

  42. Chad Hurin

    Grant, Josh, …whats the other gu…. oh yea, Brandon,
    🙂 JK

    Wow, One of my favorite podcasts. I listened to this podcast at gym so my question may have been answered and I was busy pumping iron and didn’t hear.
    Question 1. When the buyer pays a down payment to you do you as the middle man keep that DP or other?
    Question 2. I re-listened to it, however, to be clear, If house is worth 100k (assuming no equity) but you sell at 115k (30 year term, etc) when the bank loan is paid off there buyer still has a loan with you (middle man), you now keep that who P&I check? I think the answer is yes. Awesome.
    Question 3. Taxes and insurance still being paid by original home owner (one with bank loan)
    Question 4. If and when original home owner defaults and the house is foreclosed, what happens to the last buyers (i guess current owner) beneficial interest and all the money they’ve put towards the house?

    Thanks for all the great info and resources!

    Chad Hurin

  43. Shawn Connors

    Great show. How does subject to financing work for a home owner when they want to get out of their house in order to buy a different house? If I’m understanding this correctly, they are still holding their first mortgage, so how are they able to be approved for a second mortgage for their new house?

  44. Curt Smith

    Grant, I hope you are still around. I do seller financing of cheap houses I buy with cash. To stay Dodd Frank compliant I use a RMLO, do ATR full doc and stay under 3/year.

    How do you and or Mitch Stephens do your/his deals in volumn and still be dodd frank compliant. IMHO your mortgages with occupants are a Dodd Frank/CFPB covered transaction. What is your tactic? Or contact me one on one ([email protected]) tnx.

  45. rich hupper

    Great Podcast!

    Question though,

    Seller A agrees to sell home he cannot afford to investor. investor takes title to seller A’s home subject to taking over the existing mortgage payments. Investor then sells to buyer A with owner financing for 105k with a 5k down payment and a higher interest rate to create positive monthly cash flow.

    What happens if buyer A wants to move to Florida and decides to sell to buyer B who pays 105k for the property using a conventional loan with wells fargo with 5k down.

    Wells Fargo pays buyer A 100k and buyer A then pays off his note he has with the investor. Does the investor now have to pay off seller A’s remaining debt?

  46. Curt Smith

    I’m posting a comment to this podcast so folks are aware of some “issues” with this business model.

    – the above comments focus on the buy side, with subject to. This is NOT the area of legal problems in my view. Due on sale is not nearly the biggest risk.

    – The biggest problem is with Dodd Frank, and recent CFPB refinements on seller financing. For my own business model reasons I have educated myself (as much as one can short of taking the licensing classes for RLMO or to be a “bank” and find the following:

    – you are limited to 3 seller financing transactions per year (to occupants) and find NO way to go beyond 3. No where do I read in DF or CFPB that use of a RLMO on the origination jumps you from the 3 limit to infinite per year. This is the basis of the above business model.

    – Forget the attorneys suggesting to use an LLC for each group of 3, create another LLC move on. That does not pass the DF/CFPB principal quacking like a duck, it’s a duck.

    – I have chatted with Grant Kemp via Linkedin and he quoted some very early statue circa Safe Act not the meat of DF or anywhere near the recent CFPB clarifications (saying: as a mater of course of doing normal business (doing serial seller financings) is not permitted).

    – The principals at SFC (seller financing consultants) refuse to talk to me to give statue supporting “serial seller financing” as a legal business model. So the only other DF / seller financing expert in the market won’;t talk about how to be compliant above 3 per year.

    – Yet folks like Mitch Stephen (a Jack Kemp business associate) is selling courses as of 12/2015 on this exact model. And no where in the course do they mention DF or compliance,,, besides use of an RLMO.

    I have my doubts that this model has a path through DF /CFPB compliance. I would like to hear of one for my own business. But it’s 3 per year and even that is doubtful per the CFPB.

    We are all waiting for a batch of “examples” to be strung up in court so we have some case law to go off. 🙁

    • bryan blancke

      I am also concerned about how to do over three seller financing deals in a year. In my latest MREI meet up one of the presenters covered some changing laws about seller financing that seem to make it much more of a pain for investors to exercise seller financing as an option. I need to learn more about this because seller financing is important for me in how I plan to run my business.

  47. willie morales

    Hi Grant,

    Just heard this Podcast again, i’m interested in this Strategy great info, but my question is how can you assure the seller you will make the payments? do you show proof of funds? That would be a question I would ask if I was selling “subject to”

    Thank you.

  48. bryan blancke


    What a great podcast! It was brilliant and introduced me to such awesome new tools to consider! I hope I really understood this all and when the time comes to exercise this knowledge I take advantage of it.

    I just want to be totally clear. So lets say I have my marketing funnel and im taking calls. A subject-to is a tool I would want to use in a situation where the seller needs out, maybe this person can’t make payments or just wants out of a mortgage for whatever reason, and the seller does not have much equity. I would use subject-to and then wrap this mortgage to someone new? Is this the ideal situation for subject-to? When else is it a good solution?

    Another thing I did not fully understand in the wrap around mortgage was if the original bank loan has, let’s say 10 years left of payments, but you can re wrap that sucker as a 30 year mortgage. After the original loan is paid off you still have 20 years of payments that are full profit?!?! This is just too good! I don’t understand where all this money is coming from? I might have to re listen to the part where Josh made you break it down with easy numbers. It seems to me that after the original bank loan is all paid off, the whole value of the home has be paid. Why and how are the new owners after the wrap making payments to you for 20 more years?

  49. Brian Pleshek

    I know that this podcast is a bit old, but I just listened to it.

    Question: How do I as the small creditor RMLO able to protect my interest? Do I put a subordinate lien on the property? This wasn’t talked about in the podcast. So I do a subject to and wrap the loan like in his example. I am paying Bank A, and my customer is paying me. So, now the guy stops paying me. How do I “foreclose”? Do I hold the title? Grant talked about a case where he got a down payment, started receiving payments and then they stopped paying and he somehow got another down payment and a new guy in there. There was no discussion of how that went. That seems to me to be a huge missing piece of the puzzle. I understand if the guy refinances and pays me off, I can pay off the bank and then pass over a clear title, but in the case where it doesn’t “work” how do you handle it.



  50. Don Spafford

    In the wrapped loans, since you are the “buyer” but sell it to an end buyer, do you count that under your portfolio as property owned and therefore take depreciation? Or does it just count more like property management fees or loan interest or something like that so it is technically not an investment property that takes depreciation. Hopefully that makes sense.

  51. malia b.

    I just listened to this episode and it blew my newbie mind! I cant wait to read all the comments and learn as much as I can about “utilizing subject-to purchases and mortgage wraps.” As a numbers person this TOTALLY makes sense and I see it as something I could absolutely include into my overall strategy. Thanks so much BP for this!. If anyone has any learning recommendations in this area or tips for me to get started I’d very much appreciate it.

  52. Curt Smith

    Malia and others, please read my comment toward the top. The subject to part of this deal is ok, its the suggestion by Grant that Dodd Frank and MORE RESTRICTIVELY your local per state Safe Act allows you infinite number of seller financings. This claim is not true. Some states allow zero seller financings without being licensed as a bank, some 3, some 5. No states allow infinite number even by using a RLMO.

    Search on BP for “is seller financing unlimited number of deals legal” or “problems with dodd frank and seller financing”. Lots of very long threads and you’ll find the experts by reading.

    I don’t want folks to get too excited about Grant’s exit strategy of seller financing. No problem with wrapping, no problem with finding motivated sellers willing to sign over their deed and you take over paying their mortgage. I do this myself, only I keep the deals as rentals. If I do sell, I make the tenant buyer get a new bank loan, I do not recommend that you under write seller financed notes to occupants! Please read up on the risks.

    It is possible to do either zero 0 to some number typically 5 or less per your states Safe Act, and yes you do need to use a RLMO and get an appraisal etc etc…

  53. Brad Swearingen

    Grant, thanks for a great podcast and some enlightening information. I read all these comments and it was informative and entertaining. Seems there is a lot of speculation and I think people just need to find their RE attorney and ask them the questions. I will definitely be using this strategy in my investor business. I am looking forward to an updated podcast soon.

    Brandon and Josh, you guys are awesome. Keep up the great work.


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