Real Estate Broker · Hinesville, GA · Member since 2015 · 15 posts · 0 votes
There has been a lot of discussion about "subject to" investing and im just curious how the get paid off this deal and how it works seems like a creative solution to get some deals done
Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
11y
That's a good question and a lot of people don't understand subject to, or taking title subject to existing financing.
I train in subject to and I like to use sub2 if I love the house and it's in perfect shape, and the PI TI payment to the seller for the mortgage company is less than market rent giving me a reasonable cash flow
Marketing I go after expired listings and I give the seller either a subject to offer, a wraparound mortgage offer, or a lease option assignment offer
Realize if you buy or acquire the property on subject to or wraparound mortgage, you have a title, and you can sell it. This works better with you owning title versus assigning a contract, in many states.
The downside or warning about subject to is that you need a plan in case the loan gets called due to the due on sale clause, if the mortgage co decides to call the loan due.
What I do is I give the seller a quick claim deed in escrow in case the loan gets called due and I need to give the property back.
I also stipulate that if I'm more than 60 days late with paying their existing financing, then they get the property deed back
Rookies in real estate need good training in sub 2 and a great contract attorney.
Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
11y
That's a good question and a lot of people don't understand subject to, or taking title subject to existing financing.
I train in subject to and I like to use sub2 if I love the house and it's in perfect shape, and the PI TI payment to the seller for the mortgage company is less than market rent giving me a reasonable cash flow
Marketing I go after expired listings and I give the seller either a subject to offer, a wraparound mortgage offer, or a lease option assignment offer
Realize if you buy or acquire the property on subject to or wraparound mortgage, you have a title, and you can sell it. This works better with you owning title versus assigning a contract, in many states.
The downside or warning about subject to is that you need a plan in case the loan gets called due to the due on sale clause, if the mortgage co decides to call the loan due.
What I do is I give the seller a quick claim deed in escrow in case the loan gets called due and I need to give the property back.
I also stipulate that if I'm more than 60 days late with paying their existing financing, then they get the property deed back
Rookies in real estate need good training in sub 2 and a great contract attorney.
Stoneham, CO · Member since 2012 · 52 posts · 5 votes
11y
I have also been looking into this. I have another investor that is maxed out on his number of mortgages so was looking for someone who could offer him this. I hadn't heard of putting a quit claim deed in an escrow, but I like that idea. I am confused as to the difference between subject to and a wrap around mortgage? Could you clarify that @Brian Gibbons?
I have also been looking into this. I have another investor that is maxed out on his number of mortgages so was looking for someone who could offer him this. I hadn't heard of putting a quit claim deed in an escrow, but I like that idea. I am confused as to the difference between subject to and a wrap around mortgage? Could you clarify that @Brian Gibbons?
Hi Austin,
Sub2 = you get the deed, you pay PITI, give your word, the promise to pay is not legally binding, it is a moral promise, loan can be called if payment is not paid or mortgage co finds out title has been changed, you own it and can resell it for cash or rent it out or lease to own.
Wrap = you get ownership but not a Warranty Deed, It is called a AITD or all inclusive trust deed or mortgage, you pay PITI, directly to seller or note servicing co, loan can be called if payment is not paid or mortgage co finds out title has been changed, you own it and can resell it for cash or rent it out or lease to own.
I always do not plan to own a sub2 or wrap long.
5 year Private Lender Mortgages for long term hold and rents.
There have been promoters of sub2 and exit on a wrap, or wrap and wrap again (double wrap) , I would NEVER do that.
Englewood, NJ · Member since 2017 · 3 posts · 0 votes
9y
@Brian Gibbons do you know any great attornies in NY area? :D
I want to invest in Subject To but I'm still new and I agree with having a good attorney on my side. I would hate to get burned doing this strategy without doing my due diligence.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Rob Beland subject 2 is totally legal. Why would you suggest otherwise?
You're buying a house just as anyone else would. You're just leaving the existing lien in place and subtracting it from the price.
What about that would the government have issue with?
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Brian Gibbons another case of my differing from most on here. I've done wraps and sub2 (it was the only way I could buy when I started). I never used or felt the need to hire an attorney.
Title did all the paperwork. Seemed like easy-peasy to me.