My first Sub2 deal. I Need Help.

9 Replies

I found a property thats going into foreclosure Feb. 6 and I believe its a good deal for a sub2 (details below). The homeowner has accepted my offer and we're getting contract signed today. Since this the first time I have tried doing this type of deal, I'm not really sure what i should do after i have contract. If you have any experience with sub2 your advice would be greatly appreciated thank you.

San Antonio, TX 78229

3/2 ARV 110-120k rent 1,000-1,200

Loan owed 86k @ 5% (maturity 2041)

Mth Pmts. $825 (tax/ins incl.)

Balance to bring loan current $5,600

I have no experience with Subject to deals, but these numbers don't bode well for a successful investment. At best you are cash flowing $375 before expenses, at worst $175. This could very easily turn into a negatively cash flowing property. I would be sure the numbers work before continuing the deal. Just my 2 cents

I've done a few of these before, but I'm no guru.  That doesn't sound like a bad deal.  What are you planning on doing with it? Holding onto it or flipping it?  If the first then you're just giving up cash now for cash flow long term.  If the latter then does it need any work?   I would make sure you're still able to save the property.  Feb 6th seems a bit close.  Again, not an expert.  

personally I would only do this is you can flip it quick and make 10K other wise I don't think it has enough equity and payment is too high for a rental.. you know how tax's go up there and cap ex in Texas can be high .. but if its a way to get in the game with 5600.. you can give it a worl.. but you will have another 1200 or so in closing costs.. and of course the minor risk of the note being called upon the transfer..

I have done a ton of these over the years but however I always wanted at least 30 to 35% equity ..

Thank you for feedback, I felt that numbers were a little tight but I am thinking of holding property long term and I might house hack this one because im currently renting and my rent is 1,200 for a duplex. I can rehab property myself and convert garage into more sqft and bring ARV closer to 130k but will run numbers again. But is there anything I can do to push foreclosure to the following month to be able to do more due diligence.

Aww I left San Antonio like 15daya ago. I miss it. I wish I would have known about this when I lived there...great market. As to your question....let me read the rest... sorry

Can the owner and you go to the bank and ask for it to be pushed for a month or so?

Newbie so most likely I am wrong. Banks don't really like to foreclose...maybe there's a way that you can prob put a deposit and somehow work that into your contact.

Hey @John Martinez pm me and I’ll tell how to push the foreclosure. It’s a good deal depending on any repairs needed to get it rent for the $1200

Originally posted by @John Martinez :

Thank you for feedback, I felt that numbers were a little tight but I am thinking of holding property long term and I might house hack this one because im currently renting and my rent is 1,200 for a duplex. I can rehab property myself and convert garage into more sqft and bring ARV closer to 130k but will run numbers again. But is there anything I can do to push foreclosure to the following month to be able to do more due diligence.

Sure...write a check for $6K give or take (Or whatever the reinstatement figures are). That will surely push the foreclosure out. Short of that, there is no incentive for the lender to stall the foreclosure as you are doing a subject to deal and not an open market transaction...at least from what I'm reading on your post. the lender has already run the numbers and from what you posted, they are in the driver's seat with minimal risk for loss and have the potential for full recovery if not at the time of sale, subsequent to the foreclosure sale as an REO.

How did this turn out? Were you able to make contact with the trustee to get the foreclosure stopped? What are you doing with the property?

Any updates?  

I'm curious to know how others would negotiate this type of deal. Do you offer a certain amount upfront and then take over payments?  Or just take over payments?  Also, what are the legal parimeters for this type of transaction in Texas?  

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