How To - Decide Bank Loan or Subject To

[Ken M.]

When I'm looking at a property, I always like to start out with asking the seller what he would like to accomplish. 

After I have heard his goals, I can get an idea of how flexible he is and I try to craft my offer to be as close to those goals as my goals allow. 

Some things, like capital gains, are worth a quick mention, say he is a contractor so he likely already knows more details about his situation than you can guess. He needs "belly to belly" discussion at this point and don't tell him it's your first REI. ;-) Keep in mind that he may have a project in mind that requires the funds from selling this for cash.

That being said, I'd probably try to buy it Subject To with cash to him for the equity if you have the cash available. 

Or, a Lease Option with an Option amount that makes him smile. 

Either way, you need to know in advance what your "exit strategy" is before you can really know what the best course of action is. 

Run the numbers and make sure they "work" before you make an offer. 

Plenty of people have taken over loans Subject To and lost money because they didn't have a plan for what to do with the property that "made sense".

Whether you're a new or experienced real estate investor looking for cash, private lenders, or creative financing, consider asking the seller to become your private lender through seller financing, owner financing, or other no-bank financing strategies.