How to pull equity out of a subject to property?

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How to pull equity out of a subject to property?

David Abarca
Rental Property Investor · Baton Rouge · Member since 2018 · 35 posts · 10 votes

I have a question for all the subject to people out there.  How do you pull your equity out of a property that is subject to?  I have a property that we took over payments of the loan on and it has a 3% interest rate on it.  I would not like to refi it since rates are around 7% as of this writing.  Is there another way or company that allows you to pull that equity out?

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Matt Devincenzo
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
2y

Technically yes you just get a 2nd position loan e.g. a HELOC/HELOAN.

In reality probably not...the issue will be that any lender you approach for the 2nd will ask about the first. When they do there will almost 100% be an issue in underwriting because of the loan not being in your name. Maybe its not a specific guideline, but it is definitely not what they typically see and they will likely not be able to move the file along. So that leaves you with private money 2nd, but then you're probably at 12%+ which makes the blended rate high enough that a cash out refi is probably a better option. 

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  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    2y

    Technically yes you just get a 2nd position loan e.g. a HELOC/HELOAN.

    In reality probably not...the issue will be that any lender you approach for the 2nd will ask about the first. When they do there will almost 100% be an issue in underwriting because of the loan not being in your name. Maybe its not a specific guideline, but it is definitely not what they typically see and they will likely not be able to move the file along. So that leaves you with private money 2nd, but then you're probably at 12%+ which makes the blended rate high enough that a cash out refi is probably a better option. 

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  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    2y

    @David Abarca yes, a 2nd lien is what you would do.  Some times you need private people to provide that 2nd lien and sometimes you can go to a lender (but not all lenders will do it).  

    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @David Abarca:

    I have a question for all the subject to people out there.  How do you pull your equity out of a property that is subject to?  I have a property that we took over payments of the loan on and it has a 3% interest rate on it.  I would not like to refi it since rates are around 7% as of this writing.  Is there another way or company that allows you to pull that equity out?


    You might be able to pull this off with a DSCR second lien, with an exception of the first mortgage not being in your name. They may request bank statements showing that you've been paying the note on time

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    2y

    Obvious answer: sell it

    Reason: subto is not a viable long term hold solution

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    • Mark Klinkov
      Member since 2025 · 8 posts · 1 vote
      1y
      Quote from @Tom Gimer:

      Obvious answer: sell it

      Reason: subto is not a viable long term hold solution


      Based on WHAT? I just closed on, renovated, and rented out a SUBTO deal that cashflows $500/month. I walked into instant equity well over $50K. My CoC is in the double digits, and my property is appreciating over 3% per month. In my opinion, SUBTO, and Seller Finance deals are the ONLY VIABLE long term hold solutions that are scalable.

      0Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Mark Klinkov:
      Quote from @Tom Gimer:

      Obvious answer: sell it

      Reason: subto is not a viable long term hold solution


      Based on WHAT? I just closed on, renovated, and rented out a SUBTO deal that cashflows $500/month. I walked into instant equity well over $50K. My CoC is in the double digits, and my property is appreciating over 3% per month. In my opinion, SUBTO, and Seller Finance deals are the ONLY VIABLE long term hold solutions that are scalable.

      First thing, you want to be taken seriously change your profile picture.
      Second, properties do not appreciate 3% per month.

      Lastly, you have 4 posts and have done one real estate deal and now are claiming thats the only way - why? Because thats how you did did it.

      Back to original post - as Ken mentioned no institutional lender will let you pull money out o a sub2 deal.
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    • Tom GimerBusiness Member
      DMV · Member since 2017 · 3k+ posts · 3k+ votes
      1y
      Quote from @Mark Klinkov:
      Quote from @Tom Gimer:

      Obvious answer: sell it

      Reason: subto is not a viable long term hold solution


      Based on WHAT? I just closed on, renovated, and rented out a SUBTO deal that cashflows $500/month. I walked into instant equity well over $50K. My CoC is in the double digits, and my property is appreciating over 3% per month. In my opinion, SUBTO, and Seller Finance deals are the ONLY VIABLE long term hold solutions that are scalable.

      Based on the reasons I've provided in this thread and elsewhere on this site. Aside from the obvious "due on sale" issues which are in play for the life of the loan, you also have wildcard sellers who can decide at any time to blow up your deal. And the odds are when they discover they don't qualify for a new loan or start whining about the equity they believe was "stolen" from them (rightly or wrongly), they will. My opinions are based upon closing actual subto deals and watching the events unfold, not on speculation.

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  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y

    Hey David ! What is the property subject to ? 

    0Reply
  • David Abarca
    OP
    Rental Property Investor · Baton Rouge · Member since 2018 · 35 posts · 10 votes
    2y
    Quote from @Jacob Sherman:

    Hey David ! What is the property subject to ? 


     The existing mortgage

    0Reply
  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    2y

    No HELOC, no bank. Probably only a cowboy hard money lender at 50% for a year with usury rates. The first can call the note when they feel like it or when you change the hazard insurance, giving you 29 days to sell or refinance.

    1Reply
  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    2y

    @Jacob Sherman, this is a strategy where the seller agrees to leave their mortgage in place. The handful of houses I got sub2 (short-hand version) were houses that were going to foreclosure, and the sellers were motivated to sell quickly. Sub2 is very fast, as we needed to record the deed, get insurance and were off to work on the house. We rehabbed and sold after a few months.

    In this situation, the OP would like to tap equity.  Refinance or selling are the two ways forward, as I see it.

    1Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Kerry Baird:

      @Jacob Sherman, this is a strategy where the seller agrees to leave their mortgage in place. The handful of houses I got sub2 (short-hand version) were houses that were going to foreclosure, and the sellers were motivated to sell quickly. Sub2 is very fast, as we needed to record the deed, get insurance and were off to work on the house. We rehabbed and sold after a few months.

      In this situation, the OP would like to tap equity.  Refinance or selling are the two ways forward, as I see it.


      this is the proper way to use sub too.. get in title rehab flip.. long term hold on sub to becomes a can of worms many times
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  • Diya Shenme
    Handyman · Member since 2018 · 31 posts · 7 votes
    2y
    Quote from @David Abarca:

    I have a question for all the subject to people out there.  How do you pull your equity out of a property that is subject to?  I have a property that we took over payments of the loan on and it has a 3% interest rate on it.  I would not like to refi it since rates are around 7% as of this writing.  Is there another way or company that allows you to pull that equity out?


     may I ask, How did you find this property? 

    0Reply
    • Mark Klinkov
      Member since 2025 · 8 posts · 1 vote
      1y
      Quote from @Diya Shenme:
      Quote from @David Abarca:

      I have a question for all the subject to people out there.  How do you pull your equity out of a property that is subject to?  I have a property that we took over payments of the loan on and it has a 3% interest rate on it.  I would not like to refi it since rates are around 7% as of this writing.  Is there another way or company that allows you to pull that equity out?


       may I ask, How did you find this property? 


       I get all my subto and seller finance deals from my wholesalers. I get an incredible amount of dealflow (deals sent to me) on a daily basis. DM me if you need help with this.

      0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Tom Gimer:

    Obvious answer: sell it

    Reason: subto is not a viable long term hold solution


     I am almost laughing at the question itself. Who on earth would give their money to second position sub-to ?

    1Reply
    • Mark Klinkov
      Member since 2025 · 8 posts · 1 vote
      1y
      Quote from @Carlos Ptriawan:
      Quote from @Tom Gimer:

      Obvious answer: sell it

      Reason: subto is not a viable long term hold solution


       I am almost laughing at the question itself. Who on earth would give their money to second position sub-to ?


       It's a VALID question. I have over $50K of equity on a SUBTO property I acquired 3 months ago. For every problem there is a solution! And if there isn't one then the people who ask these questions while you laugh at them are the very people who will create these solutions.

      Stop shaming ppl for asking questions. This is a community and we should be helping each other. If you don't have anything positive to add...ZIP IT!

      0Reply
    • Ken M.
      Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
      1y
      Quote from @Mark Klinkov:
      Quote from @Carlos Ptriawan:
      Quote from @Tom Gimer:

      Obvious answer: sell it

      Reason: subto is not a viable long term hold solution


       I am almost laughing at the question itself. Who on earth would give their money to second position sub-to ?


       It's a VALID question. I have over $50K of equity on a SUBTO property I acquired 3 months ago. For every problem there is a solution! And if there isn't one then the people who ask these questions while you laugh at them are the very people who will create these solutions.

      Stop shaming ppl for asking questions. This is a community and we should be helping each other. If you don't have anything positive to add...ZIP IT!

      .
      Your comment: "Stop shaming ppl for asking questions. This is a community and we should be helping each other. If you don't have anything positive to add...ZIP IT!"

      Helping ppl commit fraud is not helping them.

      **********

      2Reply
  • David Abarca
    OP
    Rental Property Investor · Baton Rouge · Member since 2018 · 35 posts · 10 votes
    2y
    Quote from @Diya Shenme:
    Quote from @David Abarca:

    I have a question for all the subject to people out there.  How do you pull your equity out of a property that is subject to?  I have a property that we took over payments of the loan on and it has a 3% interest rate on it.  I would not like to refi it since rates are around 7% as of this writing.  Is there another way or company that allows you to pull that equity out?


     may I ask, How did you find this property? 

    MLS
    0Reply
  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    2y
    1Reply
  • David Abarca
    OP
    Rental Property Investor · Baton Rouge · Member since 2018 · 35 posts · 10 votes
    2y
    Quote from @Andrew Postell:

    @David Abarca yes, a 2nd lien is what you would do.  Some times you need private people to provide that 2nd lien and sometimes you can go to a lender (but not all lenders will do it).  


     That's what I figured.  Does anyone know any national lenders that do 2nd position loans up to 75% ltv?

    0Reply
  • Courtney Allen
    New to Real Estate · DMV & NYC · Member since 2021 · 8 posts · 7 votes
    2y
    Quote from @Tom Gimer:

    Obvious answer: sell it

    Reason: subto is not a viable long term hold solution

    Hi Tom- can you please elaborate on the issues with sub to as a longterm hold solution? How does selling work (seems like a complicated sell). 
    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    2y
    Quote from @Courtney Allen:
    Quote from @Tom Gimer:

    Obvious answer: sell it

    Reason: subto is not a viable long term hold solution

    Hi Tom- can you please elaborate on the issues with sub to as a longterm hold solution? How does selling work (seems like a complicated sell). 

    Because on at least an annual basis, the lender could discover the transfer and invoke the due on sale clause. I discuss that issue in a series of articles I wrote... here is a sample:

    https://gimerlaw.com/the-dangers-of-subject-to-part-2/

    Hence I only recommend this strategy to those who have access to funds for an immediate full payoff or use subto for savings on transaction costs in connection with buy/rehab/resell.

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  • Ken M.
    Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
    1y
    Quote from @David Abarca:

    I have a question for all the subject to people out there.  How do you pull your equity out of a property that is subject to?  I have a property that we took over payments of the loan on and it has a 3% interest rate on it.  I would not like to refi it since rates are around 7% as of this writing.  Is there another way or company that allows you to pull that equity out?

    .
    Your Question: "How to pull equity out of a subject to property?"

    You can't, without going to jail.

    0Reply
  • Mark Klinkov
    Member since 2025 · 8 posts · 1 vote
    1y

    Its a photo of my 11 year old son! And I swear on my mothers life every reply from this community has been: "We love your photo".

    2nd my property and you can DM me has appreciated over 3.5% per month, and thats without me getting it reappraised after having completed a very expensive renovation.

    This community feels toxic when an admin tells me he does not approve of me posting a photo of my son. I am a single father, we were evacuated from a war zone by the state department. I lost my wife, my houses, my businesses and my dogs. I came to America less than 2 years ago with no money. So, yes its my first deal in America, yes the photo is of my only surviving son.

    0Reply
    • Tom GimerBusiness Member
      DMV · Member since 2017 · 3k+ posts · 3k+ votes
      1y
      Quote from @Mark Klinkov:

      Its a photo of my 11 year old son! And I swear on my mothers life every reply from this community has been: "We love your photo".

      2nd my property and you can DM me has appreciated over 3.5% per month, and thats without me getting it reappraised after having completed a very expensive renovation.

      This community feels toxic when an admin tells me he does not approve of me posting a photo of my son. I am a single father, we were evacuated from a war zone by the state department. I lost my wife, my houses, my businesses and my dogs. I came to America less than 2 years ago with no money. So, yes its my first deal in America, yes the photo is of my only surviving son.

      The picture of your 11 year old with cash bills spread out like a drug dealer sucks… with or without a back story. 

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  • Laura Navaquin
    Investor · Member since 2024 · 83 posts · 58 votes
    1y

    Hey David,
    Great question, and you’re not alone! A lot of investors are facing the same challenge with these low-interest "subject to" deals.

    You're right, refinancing and giving up that 3% rate would be a disadvantage currently, so here are a few alternative options to consider for pulling equity without touching that primary loan:

    1. HELOC or Second Position Loan – Some lenders are open to issuing a HELOC or second mortgage, even on a subject-to property, if there's enough equity and the property is titled in your name or trust. These can be harder to find, but they’re out there, especially local credit unions or portfolio lenders.

    2. Private Money – You could work with a private lender who’s comfortable with a second lien position. You’ll likely pay a higher rate, but it keeps the original mortgage intact, and it’s often quicker and more flexible.

    Happy to chat more about what might work best depending on your situation. There’s definitely more than one way to tap into that equity!

    0Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Laura Navaquin:

      Hey David,
      Great question, and you’re not alone! A lot of investors are facing the same challenge with these low-interest "subject to" deals.

      You're right, refinancing and giving up that 3% rate would be a disadvantage currently, so here are a few alternative options to consider for pulling equity without touching that primary loan:

      1. HELOC or Second Position Loan – Some lenders are open to issuing a HELOC or second mortgage, even on a subject-to property, if there's enough equity and the property is titled in your name or trust. These can be harder to find, but they’re out there, especially local credit unions or portfolio lenders.

      2. Private Money – You could work with a private lender who’s comfortable with a second lien position. You’ll likely pay a higher rate, but it keeps the original mortgage intact, and it’s often quicker and more flexible.

      Happy to chat more about what might work best depending on your situation. There’s definitely more than one way to tap into that equity!


       one thing we are forgetting here is in the event of a default the original seller is totally screwed unless they did a wrap and have the ability to foreclose out thier sub to buyer.. as the first will HAVE to foreclose to wipe out the second.. jsut a bad play all around.. there are going to be so many screwed up deals with all these folks thinking sub to is great for long term hold ( which it is not) IMHO

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