Subject to deals or double closing

2 Replies

I'm a Realtor and my husband & I are looking to get started in RE investing.  I have a seller that wants to get from under the home.  She has a tenant that pays here & there. The owner stated she pays the mortgage one month and skips a month due to the way the tenant pays her. She owes about 41k, she's not quite sure how the homes like on the inside now.  I pulled comps for the area 2 homes sold within the last 4 months. One home for 57k and the other 69k. I'm not sure with a situation like this if I should do a subject to or double closing.  A friend of mine has an investor that loves to buy in that area because they own several homes.  They also have the cash money to buy now.  Can someone let me know the best route to go?  We do not want to make the wrong decision.


Hi @Kanekalon Kindle and welcome to BP! Sure, you could buy the house subject to the existing mortgage, then sell to your friend's investor on a wraparound mortgage. You'd stay in the middle, collecting payments from the investor while making payments on that underlying loan. (All this assumes that existing mortgage terms are viable for Sub2.)

That said, I would not recommend this path since you are just getting started in REI. There are just too many moving parts and too many ways things can go wrong.

Instead, if your seller really just owes $41K (verify it!) and truly just wants "to get from under," then I strongly urge you to get this puppy under contract for what she owes on it. Then, present the deal to the investor at a cash price that works for them and gets you paid. If it doesn't need a ton of work, maybe you get $3-5K out of the deal.

And yes, do a double closing with an attorney who works with investors! Don't sweat the cost: You want the experience right now. Get a referral from an experienced wholesaler in your area.

Go get 'em and good luck!

If she is contacting your for REALTOR services then you should list it. You should not try to buy the house. The owner can make a claim that you took advantage of her situation and you could lose your real estate license.

Instead list the house and then send an email out to your wholesale list (investor buyers list). See if you get any bites. Also make sure its on the mls to get a bidding war. Remember you represent the client if you have a listing agreement signed as seller agency. Or you can be a transaction broker immediately.