Quick sale and assuming mortgage rate

Madison, WI · Member since 2024 · 13 posts · 4 votes

Hello gang. This little gem in Alabama just fell in my lap. A seller is looking to get out of their house ASAP. The mortgage is 4.8%, $50k left on the note, seller wants $25k and to be free of the place.

I'm new to this and have read up on Subject-to, Assuming loan, hard money, etc. My thought is to pay $25k, have the deed titled to me, pay off remaining loan through rent, keep the rate and gain an asset at 12% CoC with a $200 cash flow

. If you've done this before, I would love to hear what you did, what you learned from it, and what you would avoid.

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John Leland

Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 136 posts · 43 votes

Quote from @Yahya Radman:

That is a great start. I plan on an attorney. As for the insurance, I assume a simply landlord insurance would work. I don’t understand the close through escrow bit. Based on the current mortgage payment, I should have plenty of reserves for two years.

Is this something along the lines where the mortgage stays in the sellers name and I pay it off while the house is deeded over to me and my company?

Maybe I misunderstood but when you mention the favorable interest rate, my assumption was that you are going to try to keep that rate. There are ways to do that which we get incolved in and help others do, but if you simply are using new money it doesn't apply. If you don’t understand the close through escrow bit, certainly involve someone that does understand it. That's the whole legal part. It helps keep you out of trouble.

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John Leland
Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 136 posts · 43 votes
3d
Quote from @Yahya Radman:
Hello gang. This little gem in Alabama just fell in my lap. A seller is looking to get out of their house ASAP. The mortgage is 4.8%, $50k left on the note, seller wants $25k and to be free of the place.
I'm new to this and have read up on Subject-to, Assuming loan, hard money, etc. My thought is to pay $25k, have the deed titled to me, pay off remaining loan through rent, keep the rate and gain an asset at 12% CoC with a $200 cash flow
. If you've done this before, I would love to hear what you did, what you learned from it, and what you would avoid.

When you say the mortgage is 4.8% it implies there is a pending Due on Sale you need to be aware of or it could be invoked if you're not careful. Get written disclosures.

I've often bought with the situation you describe, so it's very doable. Just don't listen to anyone that tells you that it is risk free and always make sure to make the payment on time.

There are certain things that you must do and certain things to avoid. You don't need a realtor but since it's your first transaction I would use someone who knows what they are doing or an attorney. You want to handle insurance properly, close through escrow, record the transfer and have reserves to cover the mortgage in the event you need to. Use comps to decide how much the house is worth.

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- Yahya RadmanPro Member
  OP
  Madison, WI · Member since 2024 · 13 posts · 4 votes
  3d
  That is a great start. I plan on an attorney. As for the insurance, I assume a simply landlord insurance would work. I don’t understand the close through escrow bit. Based on the current mortgage payment, I should have plenty of reserves for two years.
  Is this something along the lines where the mortgage stays in the sellers name and I pay it off while the house is deeded over to me and my company?
  0 Reply
- John Leland
  Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 136 posts · 43 votes
  3d
  Quote from @Yahya Radman:
  That is a great start. I plan on an attorney. As for the insurance, I assume a simply landlord insurance would work. I don’t understand the close through escrow bit. Based on the current mortgage payment, I should have plenty of reserves for two years.
  Is this something along the lines where the mortgage stays in the sellers name and I pay it off while the house is deeded over to me and my company?
  
  Maybe I misunderstood but when you mention the favorable interest rate, my assumption was that you are going to try to keep that rate. There are ways to do that which we get incolved in and help others do, but if you simply are using new money it doesn't apply. If you don’t understand the close through escrow bit, certainly involve someone that does understand it. That's the whole legal part. It helps keep you out of trouble.
  1 Reply
LaTarence Dunbar
Lender · Washington DC · Member since 2026 · 78 posts · 22 votes
3d
Quote from @Yahya Radman:
Hello gang. This little gem in Alabama just fell in my lap. A seller is looking to get out of their house ASAP. The mortgage is 4.8%, $50k left on the note, seller wants $25k and to be free of the place.
I'm new to this and have read up on Subject-to, Assuming loan, hard money, etc. My thought is to pay $25k, have the deed titled to me, pay off remaining loan through rent, keep the rate and gain an asset at 12% CoC with a $200 cash flow
. If you've done this before, I would love to hear what you did, what you learned from it, and what you would avoid.
Hi Yahya, this sounds like an interesting opportunity, especially with the existing 4.8% mortgage rate. As a private lender, I’d be interested in connecting with you and learning more about the deal to see how I can help you structure the financing and make the numbers work.
Before moving forward, I’d want to review the property’s current value, rental income, expenses, and the existing loan terms. I’d also make sure the seller understands the difference between a formal loan assumption and a subject to transaction, including any due on sale risks.
Feel free to connect with me. I’d be happy to discuss the opportunity with you, explore your financing options, and see how we can position this deal for a successful acquisition.
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Divin KanyamaBusiness Member
Accountant · Seattle, WA · Member since 2025 · 481 posts · 202 votes
3d
@Yahya Radman The numbers may be attractive, but subject-to is not simply paying the seller and taking over the mortgage. The loan remains in the seller’s name, and transferring the deed may trigger the due-on-sale clause. You also need to confirm title, liens, taxes, insurance eligibility, loan status, property condition, and whether the projected rent and $200 monthly cash flow survive vacancy, repairs, capex, and management.
Before moving forward, have an Alabama real-estate attorney review the note, mortgage, contract, disclosures, deed, servicing arrangement, and exit provisions. Use a reputable title company, obtain written seller consent after full disclosure, and consider third-party loan servicing so every payment is documented. I would also maintain substantial reserves and a backup plan if the lender accelerates the loan or the property needs a major repair. At only $200 per month, one surprise could erase a year of cash flow, so the legal structure and downside analysis matter more than the headline return.
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Yahya RadmanPro Member
OP
Madison, WI · Member since 2024 · 13 posts · 4 votes
3d
This is community. This is exactly what I’m talking about. Thank you all for your help and guidance. Stay tuned for what happens next.
Are there any recommendations in the Tuscaloosa, AL area? PMs, lawyers, title companies that have been good to work with?
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Hossein Sharifi
Investor · Member since 2023 · 108 posts · 52 votes
2d
@Yahya Radman quick check on the math. $200 a month is $2,400 a year, which is 9.6% on $25K, not 12%. You might be counting principal paydown, which is fine, just track it separately since you can't spend it.
The bigger number is your basis. You'd be in at $75K total, the $25K plus the $50K note, so the deal really depends on what the house is worth. I'd pull sold comps before anything else. If it's worth $130K, you're buying real equity and the due-on-sale risk is easier to live with. If it's worth $80K, you're taking that risk on for very little cushion.
Also ask for the loan's current escrow statement. Taxes and insurance on an existing loan are sometimes underfunded, and that shortage becomes yours.
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- Yahya RadmanPro Member
  OP
  Madison, WI · Member since 2024 · 13 posts · 4 votes
  2d
  You're math is right. I misspoke. In general I look for 12%. This deal is valued at $128k. The taxes and insurance bit you mentioned are great help. Totally didn't think of that. Thank you Hossein.
  0 Reply
Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
1d
This one's pretty simple: $50K left on the note, seller wants $25K, so total acquisition is $75K on whatever the property is worth.
The 4.8% rate is decent but not the reason to do this deal. At $50K remaining balance, the payment is probably under $300/month regardless of rate. The math here lives in the equity and cash flow, not the rate.
The real question is what the property is worth and what it rents for.
If you assume the loan, you're taking over the $50K balance at 4.8% with lender approval. That's the clean route. The other option people consider here is subject-to, which keeps the loan in the seller's name and transfers the deed to you. Both can work. Assumption is cleaner legally and the lender is fully in the loop. Sub-to carries more risk if the lender calls the due-on-sale clause (FHA and VA loans are specifically exempt from that, conventional are not).
For a $50K remaining balance, assumption processing runs about $750 and takes 45-90 days. The $25K to the seller is paid at closing.
Run the rent comps first. If it cashflows after PITI, taxes, insurance, and vacancy, it's probably worth doing. The rate is fine but it's not the headline here.
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- Yahya RadmanPro Member
  OP
  Madison, WI · Member since 2024 · 13 posts · 4 votes
  1d
  That’s a great way to look at it. Very clean and straight forward. Cash flow is good and return is solid. Thank you Ryan.
  0 Reply
Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
1d
Quote from @Yahya Radman:
Hello gang. This little gem in Alabama just fell in my lap. A seller is looking to get out of their house ASAP. The mortgage is 4.8%, $50k left on the note, seller wants $25k and to be free of the place.
I'm new to this and have read up on Subject-to, Assuming loan, hard money, etc. My thought is to pay $25k, have the deed titled to me, pay off remaining loan through rent, keep the rate and gain an asset at 12% CoC with a $200 cash flow
. If you've done this before, I would love to hear what you did, what you learned from it, and what you would avoid.
You may not be able to have the deed put in your name as this may accelerate a due on sale clause with the seller's lender. Here's what we have done in the past:
1. Ask the seller for a copy of his loan documents then have it reviewed by an attorney
2. If there's a due on sale clause then consider pivoting to another strategy such as a lease option. You can still provide the owner with the $25K and your lease price will be the payment amount necessary to pay off the remaining mortgage. You'll need to make sure your agreement has terms so the seller can't sell the property from right out under you. Essessntially somthing recorded showing that you have equitable interest in the property
3. Inspect the property. While it may seem like a great deal based on the sales price you may find from an inspection that it's not and you may have to spend a lot more thant $25K
4. Determine the market or After Repair Value of the property. Make sure you're not paying more than the property is actually worth
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