A legal alternative to "subject to" -> 0% down investment props

[Chris Mason]

I've been sharing some of our cool niche products and programs for the last few weeks, most recently two of our <1 discount point alternatives to hard money: bank statements for income and the property cashflow based product.

This week, I'm sharing our alternative to "subject to" that avoids all the legal questions and complications. The scenario cannot involve the seller receiving any net proceeds inside of escrow, this is for those distressed property owners that just want out, you're just the hero to save the day, and they also want the existing mortgage taken off their credit report.

Introducing our "Save A Distressed Property Owner" program. 

Here are the bullet points...

• Agency 30YF rates you are used to.
• You obviously must basically qualify for the mortgage. As always with our team, rental income is qualifying income and can solve many DTI issues.
• The property must be in financeable condition. Functional kitchen, functional bathroom, etc. This not a fix-n-flip mortgage program.
• Assuming the other party has equity in the property (normal appraisal-based LTV requirements apply), no down payment will be required. 
• Loan limits apply: for high cost of living areas like the Bay Area, LA, San Diego, etc, they are... $636k for a SFR, $814k for a duplex, $984k for a triplex, and $1.2m for a fourplex.
• If we get surprised by a low appraisal or go over the above limits, the 'no down payment' thing may go away.  
• The seller can not net any proceeds inside escrow.
• Call me 30 days out (if not months in advance to lay the groundwork, before you have a property identified), do not call me 6 days before the other party is going to have their property go to auction, or that "agency 30YF rates you are used to" goes right out the window. Time = money = time.
• Current mortgage can have lates, current owner's credit can be trashed, etc. We don't want to see that credit report, and do not care. We're saving them using your credit and qualifications, not theirs. 
• Any time someone talks about something that appears "too good to be true," it's not at all crazy to involve a lawyer. I will happily go over details and logistics (and, frankly, guideline loopholes) with a real estate lawyer of your choosing once you have a property identified and a committed distressed property owner that you are saving. 
• This is a full doc loan program. All that paperwork you are used to, will be needed for preapproval.
• This isn't a "subject to" thing. At the end of the day, the mortgage and title will be in your name, and the seller will be off title and off the mortgage. This is a far better outcome for distressed property owners than the standard "subject to," this also does not violate the "due on sale" clause. 

For those of you sending out mailers and looking for off market deals, this web page right here is something you need to immediately bookmark. Every real estate investor needs this tool in their toolbox, and should be working with a lender that makes such tools available. You never know what's going to come up, but you need to be ready & in a position to adapt!

California real estate only. In places with high transfer taxes like Oakland, Berkeley, Sacramento, Alameda, Los Angeles, and San Francisco, that local transfer tax will be applicable but (along with all other normal closing costs) it can be included in the loan balance assuming there is sufficient equity in the deal for that to be possible.

Minimum loan amount $250k unless you are past customer or an employee of a company signed up for our Corporate Care mortgage savings program (hint hint @ HR managers, CEOs, board of directors members, etc).

Equal housing lender. This is not a commitment to lend or extend credit. Restrictions may apply. Rates may not be available at time of application. Information and/or data are subject to change without notice. All loans are subject to credit approval. Not all loans or products are available in all states. Bay Equity LLC, 28 Liberty Ship Way Suite 2800, Sausalito CA 94965.