Subject To? You Bet!!
This month I closed a subject to deal. I know that a lot of people are hesitant to take over existing loans so I wanted to share this success story. I will keep it short.
I purchased the home subject to for 0 money down. The house was in pretty bad shape but had strong bones so I was up for the challenge, or should I say the risk. I purchased it for 91k and sold it conventionally 1 month later for 99.5k. After closing costs and one months mortgage payment I made 7k. Not bad.
I originally marketed it as owner carry, and got a lot of interest. I was asking for 10k down, a payment that was 100 more than my PITI, and a 3 year balloon, possibly a 5 year. I planned to do a contract for deed and hold it in a long term escrow (some may call this a wrap). However when I got the cash / conventional offer I decided to take it because of a couple of reasons. One, it was a sure deal, and two I felt an obligation to get the mortgage paid if I had the chance to benefit the seller.
I have 2 other houses in my portfolio that are also subject to and they will both create great returns!
Most Popular Reply
I've done many sub2s
I approach sellers all the same way, cash or terms
Light rehabs I do a JV w seller: buy on terms, fix, resell
Example seller owes 50, ARV 200
JV rehab 20 in rehab mat and labor
Costs to resell 10% or 20
My JV fee is 15k in this ex
So
Sales price 200k - costs to sell 20 - repairs 20 - 1st Mortg Val 50 = 110 to seller in a note w balloon in 4 mo
Buy, fix and resell, pay off note
Compare that w wholesaling
.7 X 200 - 50 1st - repairs of 20 = 70 to seller
Seller makes more money w my plan
Use private lender for light rehabs, 10% interest for 4 months use of money
Negotiating w sellers - search BP
"Brian Gibbons negotiating"