"Subject To" advice please

Member since 2020 · 101 posts · 34 votes

I could use some quick advice on a "subject to" since I have never done one before. This is a killer deal that will last less than 24 hours. I have a wholesaler that found a subject-to at a great price. There will be some cash up front by me, but I will take over the loan. The seller keeps the loan in their name, the deed goes into my name, but I have power of attorney to pay the loan. Tell me what to look for and which questions to ask. Any advice is welcome. Thank you.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Quote from @Ralph Pombo:

Quote from @Stephanie P.:

Quote from @Ralph Pombo:

Lots of pitfalls on this one.

If the deed is going in your name, the due on sale clause will be triggered. This isn't a case where the owner has an single member LLC and needs to transfer it from himself to his LLC, he's trying to sell you the property with financing that's not his to give. Ultimately, you'll have to qualify to take over the loan; it's not a given. The power of attorney will have to be approved by the lender.

Just one girl's opinion.

Stephanie

So then what if you are buying under a trust? I have heard of people that do sub-to purchases all of the time without triggering the due-at-sale clause. If you are keeping up with the payments and no red flags are ever raised, why would they ever call the loan. They want to be paid and that is the main goal isn't it?

Keep in mind what you have in 95% of mortgages are events of default and one event of default is alienation of title which happens when you do a sub too. Now the lender at the Lenders SOLE discretion can then call all sums due and payable and or enter into a foreclosure. Other events of default are non payment of property tax's Waste and a few others.. but you get the drift. in reality you as the buyer has no real risk other than the few bucks your putting up to buy it.. the real risk is on the seller.. the risk of their credit getting trashed if yo dont make the payments and they dont have the money etc.

Most sellers should NEVER EVER do a sub too deal because of risk.

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Joseph Tjader
Investor · Milwaukee, WI · Member since 2016 · 20 posts · 15 votes
3y
@Joe S.
It's literally the first result on google.
https://www.watsoninvested.com/
He uses self directed Roth IRA's and Roth 401k's for subject to deals. You're welcome.
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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
3y
Quote from @Ralph Pombo:

I could use some quick advice on a "subject to" since I have never done one before. This is a killer deal that will last less than 24 hours. I have a wholesaler that found a subject-to at a great price. There will be some cash up front by me, but I will take over the loan. The seller keeps the loan in their name, the deed goes into my name, but I have power of attorney to pay the loan. Tell me what to look for and which questions to ask. Any advice is welcome. Thank you.
Your biggest risk is that you don't know what the wholesaler told the seller and what the seller thinks they heard. You weren't in on those conversations.
It's a very big deal when you are explaining or trying to explain that to a judge.

Make sure you get everything in writing and provide proper disclosures.
Here are a few tips:
Using Subject To, to Get "Free" Properties

https://www.biggerpockets.com/forums/311/topics/1060320-using-subject-to-to-get-free-properties-a-quick-guideline
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