Sub2 pitfall scenarios?

1 Reply

I'm currently working out the numbers on acquiring my first rental property through traditional financing. However, I've also been looking into 'creative' financing to add 2-3 additional units quickly in succession, and feel that Subject To deals may be a prime tool to make this happen.

Generally speaking, my area has a good amount of original owners who are now getting to their 80s+. If the opportunity to execute a Subject To deal comes, could anyone bring up potential issues if say, a family member takes over their estate through power of attorney or if the seller passes on? I don't want to get all morbid, but I feel the bank would be a bit concerned if they got word their lendee is no longer with us, and it was almost an issue when we bought our PR last year.

Obviously I understand that if my renters don't pay, then I'm on the hook to pay out of pocket to keep their mortgage current. But is there anything else someone can think of?



If somebody's in their 80s chances are it's a free and clear house

Houses without mortgages are prime for installment sale purchases, where the seller gives you a private first mortgage with a payment that will cash them on a rental

Go to and learn about installment sales

Also regarding death and estate planning, you can have the person doing installment sale say that the payments will continue upon death 

I would check out their will and see who the heirs are and have the heirs sign off on the plan

Last time I checked was about 35% of all houses have no mortgages and installment sales are wonderful compared to reverse mortgages, and I use the analogy of an annuity

@Brian Spatz