Investor · Toledo, OH · Member since 2012 · 292 posts · 35 votes
Hey guys; when you take a deal subject to, do you offer to pay the 2nd also? Most 2nd are taken to finance personal expenses (cars, vacations etc) so I'm thinking of offering to pay only the 1st, but I'd like to hear what other investors have to say.
All liens and title issues have to be dealt with in a sub2 deal. If you get the deed, you take a property subject-2 everything on title. All mortgage, property taxes, IRS liens, HOA fees and liens, utility liens, child support judgments, credit card judgments......shall I go on? :) So you offer and negotiate a deal that works for your purchase price and exit strategy. That may mean negotiating discounted pay-offs with creditors, it may mean the seller bringing cash to the deal, it may mean that the deal isn't worth doing. Be sure to study up on all the things that can happen in a sub2. Make sure you understand due on sale clauses and have a back-up plan if a lender calls a loan due. Lots of fun research in your future!
A second can still foreclose, if not paid. Doesn't matter where the money went. A lot of money from firsts went to toys, too. If you don't deal with the second (and ALL other liens),the holder can foreclose and take your property.
All liens and title issues have to be dealt with in a sub2 deal. If you get the deed, you take a property subject-2 everything on title. All mortgage, property taxes, IRS liens, HOA fees and liens, utility liens, child support judgments, credit card judgments......shall I go on? :) So you offer and negotiate a deal that works for your purchase price and exit strategy. That may mean negotiating discounted pay-offs with creditors, it may mean the seller bringing cash to the deal, it may mean that the deal isn't worth doing. Be sure to study up on all the things that can happen in a sub2. Make sure you understand due on sale clauses and have a back-up plan if a lender calls a loan due. Lots of fun research in your future!
This may not be the most aggressive perspective relative to subject2 deals, but my conscious does not let me do one unless I have the money in the bank to cash out any and all liens if things go sideways. You don’t have to do that. If the seller signs, it is caveat emptor so long as you’ve made proper disclosures. But things do go wrong at times and as such I would not want to leave the seller hanging. In this business, your word is your bond. Something to think about…?
I'm just about to get my first deal under a sub2 deal. I plan to wholesale it so the lender calling the mortgage due is not my immediate concern, but I don't want to screw over the end buyer and having him/her slandering my name. What are the benefits of putting the property in an LLC or trust?