Need Subject To Deal Structuring Advice!

1 Reply

Good Morning Everyone! 

I want to start by saying I have never done a subject to deal, I have done some research and am currently digging even deeper as I think this may be a good strategy for a deal I am working on. 

I have found a deal that is currently off-market (was on the market but taken down, still under contract with the selling agent). The property is a legal 2-family but is currently being used as a 3-family, making it almost impossible to finance. I had the seller verbally agree at a price of $205,000 cash. I was going to bring in a private investor who was going to loan me $100,000 and I was going to pay the other $105,000. Unfortunately, the investor pulled out because he thought it was "too much work".

I have been thinking for a few days now and I think a subject to scenario may work out well. Here are some details about the property. 

Asking Price: $205,000
ARV: $350,000
Repair Costs: $50,000
Current Loan Owed: $150,000

My ideal plan would be to take over the loan payment, pay them the equity, do the rehab and convert it back to a legal 2-family, and then refinance it into my name for a long term rental pulling out my initial (or at least a large chunk) of my investment. Somewhat of a Subject-To / BRRRR.

What advice can a experienced subject to investor share? Where do you think I might run into problems? Would the sellers agent still get a commission during a subject to deal, if they are technically in a contract with the seller?

Thank you!

Hey @Christian Ferreira , regarding your subject-to opportunity, there's a bit more information needed:

  • What is the mortgage payment, ideally broken down by principal, interest, taxes and insurance?
  • What's the interest rate on the loan, and is it fixed or adjustable?
  • What's the amortization period and how far are they into it, to date?
  • What's the total monthly rent you expect to collect?

Knowing these numbers will help determine the overall quality of this deal.

And yes, as long as the seller is currently under contract with a listing agent, the seller will be responsible for paying a commission upon sale.