I'm seeking advice on how to approach an investor in my hometown who's looking to sell a list of properties, some of which are near one I already own. However, the investor owes more on the mortgage than the properties are currently worth. I believe creative financing, specifically subject-to, could be the solution. Any tips on how to present this to the seller? This would be my first subto deal.
Also, I'd appreciate any recommendations for title companies and transaction coordinators experienced with subto deals in Mississippi.
Real Estate Broker · Biloxi, MS · Member since 2016 · 170 posts · 92 votes
2y
You'll definitely want to spend a serious amount of time with the seller. Obviously, this is a big ask of a stranger. You need to get them on your side, show them the value of a subto deal for THEM not you. They will need to know, like and trust you to the highest degree. Try thinking of the situation in their shoes, why would you let Timothy have this house for free and keep the mortgage in your name?
You'll definitely want to spend a serious amount of time with the seller. Obviously, this is a big ask of a stranger. You need to get them on your side, show them the value of a subto deal for THEM not you. They will need to know, like and trust you to the highest degree. Try thinking of the situation in their shoes, why would you let Timothy have this house for free and keep the mortgage in your name?
Where in Mississippi are you?
I am in Meridian. My dad knows the owner as he does landscaping for some of his properties. So, that’s a plus that I’m not a complete stranger but none the less still a stranger (I’ve never met the owner but met his property manager when I was home for Christmas last year)
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
2y
I would agree with @Michael Smythe - the only way a seller comes around to a sub to transaction is when they have no other options or are uninformed. If the market shows him that it is worth less than what he owes, then he may consider it. Until then, it's not gonna happen. Even if he is upside down on it, he has to then not have the resources to cut a check at closing to get out from under it.
We don't say it out loud very often, but a sub to transaction is a bad deal for a seller. To make it work, you have to find someone with a problem or situation bad enough that it makes keeping a loan out on a property that he does not own seem like a good idea...or maybe the best bad idea.