Real Estate Investor · Atlanta, GA · Member since 2009 · 117 posts · 7 votes
When wholesaling a subject to deal, are you assigning your subject to deed for a fee before putting a tenant in the property? are you finding the deal, then selling your lead? exactly, what is the basic process of wholesaling a subject to deal. ive heard that people do it.
OK, forget about the subject to aspect for a second. You find a deal and wholesale it using an assignment. You (B) have a contract to purchase from a seller (A). Your buyer (C) makes an assignment contract with you for the amount of your fee. You assign your contact with A to C. You take all the paperwork to a title company. C brings the cash. Neglecting costs, this is the purchase price plus your fee. C buys directly from A, as a result of the assignment. A gets the amount they agreed to take. You get the amount of your fee. C gets a deed.
Now, with a subject to, A's probably not getting any cash. C would still bring enough cash to cover your fee. C buys from A, gets the deed and takes over A's loan. You get your fee from C.
Its no different than any other wholesale deal, except for the financing. Your buyer takes the property subject to the existing loan, and pays you an assignment fee.
Its no different than any other wholesale deal, except for the financing. Your buyer takes the property subject to the existing loan, and pays you an assignment fee.
ok, i still got questions. i know this is simple, but bear with me. walk me thru this: i find a subject to deal, at what point do i assign the deal? is it done BEFORE there is a transfer of deed into my name like a normal subject to transaction, or do i complete a normal subject to transaction, then deed it over to a investor ( in this case it would be more of a sale than a assignment).
OK, forget about the subject to aspect for a second. You find a deal and wholesale it using an assignment. You (B) have a contract to purchase from a seller (A). Your buyer (C) makes an assignment contract with you for the amount of your fee. You assign your contact with A to C. You take all the paperwork to a title company. C brings the cash. Neglecting costs, this is the purchase price plus your fee. C buys directly from A, as a result of the assignment. A gets the amount they agreed to take. You get the amount of your fee. C gets a deed.
Now, with a subject to, A's probably not getting any cash. C would still bring enough cash to cover your fee. C buys from A, gets the deed and takes over A's loan. You get your fee from C.
OK, forget about the subject to aspect for a second. You find a deal and wholesale it using an assignment. You (B) have a contract to purchase from a seller (A). Your buyer (C) makes an assignment contract with you for the amount of your fee. You assign your contact with A to C. You take all the paperwork to a title company. C brings the cash. Neglecting costs, this is the purchase price plus your fee. C buys directly from A, as a result of the assignment. A gets the amount they agreed to take. You get the amount of your fee. C gets a deed.
Now, with a subject to, A's probably not getting any cash. C would still bring enough cash to cover your fee. C buys from A, gets the deed and takes over A's loan. You get your fee from C.
ok, thanx. so, before your name ever goes on a deed, you are just assigning your subject to deal for a fee, just like any other wholesale fee. thanx, this clears everything up.
You can do it either way. If you can get a tenant in there it would be easier to wholesale.
Brian Haskins
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so, what you are saying is it doesnt matter if your name is on the deed or not, its the matter of assigning the contract you have with the original buyer to a investor? when you do the original subject 2 deal, you will have your name/ and or assigns on the contract.
Its no different than any other wholesale deal, except for the financing. Your buyer takes the property subject to the existing loan, and pays you an assignment fee.
ok, i still got questions. i know this is simple, but bear with me. walk me thru this: i find a subject to deal, at what point do i assign the deal? is it done BEFORE there is a transfer of deed into my name like a normal subject to transaction, or do i complete a normal subject to transaction, then deed it over to a investor ( in this case it would be more of a sale than a assignment).
You aren't "wholesaling" the deed...you are wholesaling the CONTRACT. You are assigning the contract to another investor for a fee. This can be done outside of closing, but money generally changes hands at a title company for good reason.
If you have the deed in addition to the contract you can record it after doing your research to make sure the seller doesn't get cold feet and run to another investor prior to money changing hands at the formal closing. If your buyer is using financing this may present problems with seasoning so be careful.
The financing and ownership are separate. Don't get confused by this.
I was looking for help on this subject to situation I am in. From some what I read is I just use a purchase and sale agreement, and it is not that complicated, and is fairly easy to use. While others they say the opposite, and that you should put all this information in it. I am confused, and I just want a right answer. I need help working my first subject to deal and I don't know exactly what wording I use, or what to do to make it exactly a subject to existing financing contract. If anybody out there can help without making it more confusing that I am already, I would greatly appreciate it.
Troy,
My only thoughts are to have MASSIVE disclosure to everyone. On a subject to deal, if the people you assign it to go into default, you will be in a freakin mess. Just my 2 cents! :mrgreen:
I agree with Rob. You must disclose your intentions with your seller (I think this applies to very kind of deal). I personally value my reputation too much and would never assign a subject-to deal (for the reason Rob mentioned).. I honestly can't believe sellers allow people to wholesale their existing mortgage when they have so much to lose.
Although, I do pitch Sub-2 on homes that I want to rehab. I also offer to put 6 months of payments in escrow to insure that the seller mortgage will get paid.
What wording needs to be in the contract to make it a subject to deal, is there any particular clauses? Or do I just use a standard purchase and sale agreement and add "subject to " somewhere in there? I'm not familiar with this type of deal, and can't seem to find answers anywhere.
Am I missing a lot of business by not trying to wholesale Sub-2?
Are any of the experienced wholesalers on BP doing these deals?
You could be! Depends Stinson, but if you have the ability to market to such sellers and get them under contract for good spreads for flippers, you could certainly wholesale them and the advantage is that your "all cash" buyer only needs cash in excess of the sub2 loan so there is a benefit for your buyer as well, thus creating a potential for a tad larger spread on your end.
If anyone does get such deals they would like to wholesale, please contact me, I could be interested, but only for flip opportunities, no buy and holds.
I haven't read all of the responses here but I thought I'd chime in seeing how I know a thing or two about my favorite strategy :)
Wholesaling Sub2 deals are extremely easy and really no different than a standard wholesale deal other than some existing financing is staying in place instead of someone coming and paying cash....
Regular P/S assignable contract that states property is being sold with existing financing in place as owner financing. An additional addendum is created(there are simple templates available publicly) disclosing the terms of the existing loans.
You find a buyer who will take your place in the transaction, charge them an assignment fee and complete an assignment contract with them just like you would a standard wholesale contract.
There are a million variations and things you could do with Sub2's which is one of the reasons why I love them. Good luck to ya, hopefully someone else also gave you some decent information.
Anybody every try this with a probate case? I'm going to look at one today, they called the sister asking if she wanted to take over the loan. I'm curious what they do if you just continue payments in the deceased name without ever changing it.
I haven't read all of the responses here but I thought I'd chime in seeing how I know a thing or two about my favorite strategy :)
Wholesaling Sub2 deals are extremely easy and really no different than a standard wholesale deal other than some existing financing is staying in place instead of someone coming and paying cash....
Regular P/S assignable contract that states property is being sold with existing financing in place as owner financing. An additional addendum is created(there are simple templates available publicly) disclosing the terms of the existing loans.
You find a buyer who will take your place in the transaction, charge them an assignment fee and complete an assignment contract with them just like you would a standard wholesale contract.
There are a million variations and things you could do with Sub2's which is one of the reasons why I love them. Good luck to ya, hopefully someone else also gave you some decent information.
Nick, I have a perfect opportunity for one of these deals. I am very lost on it though, some people say it's very easy like you just use a purchase and sale agreement, other articles I've read, tell you to put all these clauses in the contract and extra stuff, and I've read other people to stay away from these kind of deals. I have no idea who to follow, but since you seem to know what you are doing, I'd appreciate any help you'd be willing to offer so I can get this deal done instead of letting go. I understand the whole concept, but I don't know what wording, or where to put the deal is subject to since I've never done one before, thanks and hope you can help.
Have you spoke to your title office regarding sub-to? A good title co. will be willing to walk you through the entire process.
Just make sure that title company is familiar with sub2 purchases and isn't one of the many who say "you can't do that" or "that is illegal" as both of those responses are incorrect.
The main thing to take caution with is disclosure! Make sure that you CYA (cover your azz) with full disclosure to both the seller, your buyer, and in my opinion, to the lender holding the loan.
I am actually in the same situation. I have a seller who has tenants who are constantly not paying rent or is always late and she has a mortgage. I have a buyer for the property but they are only able to do Sub 2 because they are low on cash because they haven't sold their current flip. I have no clue of what contracts to use for how to structure this. I have a normal P&S agreement and assignment contract. I am NC as well. Could someone help, thanks.
I haven't read all of the responses here but I thought I'd chime in seeing how I know a thing or two about my favorite strategy :)
Wholesaling Sub2 deals are extremely easy and really no different than a standard wholesale deal other than some existing financing is staying in place instead of someone coming and paying cash....
Regular P/S assignable contract that states property is being sold with existing financing in place as owner financing. An additional addendum is created(there are simple templates available publicly) disclosing the terms of the existing loans.
You find a buyer who will take your place in the transaction, charge them an assignment fee and complete an assignment contract with them just like you would a standard wholesale contract.
There are a million variations and things you could do with Sub2's which is one of the reasons why I love them. Good luck to ya, hopefully someone else also gave you some decent information.
Nick, I have a perfect opportunity for one of these deals. I am very lost on it though, some people say it's very easy like you just use a purchase and sale agreement, other articles I've read, tell you to put all these clauses in the contract and extra stuff, and I've read other people to stay away from these kind of deals. I have no idea who to follow, but since you seem to know what you are doing, I'd appreciate any help you'd be willing to offer so I can get this deal done instead of letting go. I understand the whole concept, but I don't know what wording, or where to put the deal is subject to since I've never done one before, thanks and hope you can help.
Were you able to get this deal done. If so, how? What steps did you take?
I haven't read all of the responses here but I thought I'd chime in seeing how I know a thing or two about my favorite strategy :)
Wholesaling Sub2 deals are extremely easy and really no different than a standard wholesale deal other than some existing financing is staying in place instead of someone coming and paying cash....
Regular P/S assignable contract that states property is being sold with existing financing in place as owner financing. An additional addendum is created(there are simple templates available publicly) disclosing the terms of the existing loans.
You find a buyer who will take your place in the transaction, charge them an assignment fee and complete an assignment contract with them just like you would a standard wholesale contract.
There are a million variations and things you could do with Sub2's which is one of the reasons why I love them. Good luck to ya, hopefully someone else also gave you some decent information.
Would you have a source for the correct SUB 2 contract to use and the appropriate assignment contract to use?
@William M. did you end up doing the sub-2 deal? I currently have a seller and the only way this deal will work is sub-2...
Also, and this question is for anyone, I want to be very transparent and disclose everything to everyone, but what happens if the bank simply says NO? How often does this happen?
@David Sussman, Have the seller sign a authorization for release of information so you can speak directly with loan company to verify exact balances, monthly payments or whats needed to bring the loan current if its behind or in default. Have the seller also sign a seller disclosure to the effect that their is no bankruptcy pending or contemplated but should it in the future they agree to leave said property out of the proceedings. Have the seller sign a power of attorney that gives you right to sign documents on that specific property only. finally, disclose everything on the CYS (cover yourself) addendum/agreement about buying the property subject to etc. Have it ALL notarized. I personally would never involve the bank since they could care less as long as payment is made on time plus with all loans they could call due at anytime but I have yet to hear the guys with 20 plus years under their belt have this happen. Its a risk for sure. You could include in the CYS disclosure that the seller agree not to notify bank or do anything that will trigger that action and if they did, buyer not responsible. I know people who do that with no issues. That is my two cents.