Is Subject to a Good Idea as a Seller?

Question

I have a rental property and I'm wondering if doing a Subject To is a good idea if my renter wants to buy the property from me. She is an amazing renter and this could save us both some money. Anything I should be concerned about?

Eliott Elias · Answer

If they can put a sizable down payment, it is a good deal for you. Otherwise, I would do some kind of lease to own or owner finance scenario with a higher interest-rate.

Irving Casas · Answer

@Rebecca Van Diest

Keep in mind that most loans have a "due on sale clause". It's unlikely however if the lender learns that the loan is being paid by someone other than the borrower, the lender can call the total debt due. There are insurances you can purchase for this type of situation.

Aakash Kommineni · Answer

How can we avoid due on sale when getting into sub2 contracts?

Tom Gimer · Answer

There is no insurance for due on sale. Whoever told you that is full of it... pretty sure we all know who that is.

Scott Trench · Answer

I would not hand over the possible control of my credit to a buyer of real estate, on a note with even 3 or more years left on it.

I might seller finance a deal, but I would have to be truly desperate, with no other realistic options, to allow a buyer to take over a mortgage in my name.

Aakash Kommineni · Answer

Does title insurance protect from due on sale? Or what are the ways to work around that

Wayne Brooks · Answer

@Rebecca Van Diest No way! Assuming your tenant has the cash down payment for your equity, sell on a wrap mtg. This way, You have a mtg you can foreclose on if they stop paying. With a straight sub2, you have no mtg to foreclose on and You are the one that gets foreclosed on if they stop paying.

Nicholas L. · Answer

Got it - in that case, selling subject to doesn't get you the equity.

Rebecca Van Diest · Answer

I want to use the equity to buy at least one more house if not two. And it's in an HOA that is not doing well financially.

Is Subject to a Good Idea as a Seller?

Is Subject to a Good Idea as a Seller?

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