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Real Estate Subject To (Existing Mortgage) |
The title to a mortgaged real property is transferred to the buyer but the buyer is not personally liable for the payment of the amount due. However, the buyer must continue to make payments in order to keep the property.
Real Estate Subject-To Overview
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Subject To and Lease Options usually go hand in hand, but are completely separate real estate practices. These strategies are glorified buy and holds, with Subject To being the front end (buying) and Lease Options being the back end (leasing and sales). "Subject To" is short for "subject to the existing mortgage." It is a way to control a property by having the seller of the property continue to hold the financing in their name, but give the interest, benefits, and responsibility of the property to the investor. Lease/Options are two separate documents that are used to lease properties out to people who are willing to do more of the roles of an owner and thus receive an option to buy the property at a later date. |
Pros of Real Estate Subject-To:
- No need to go to a bank for financing
- Ability to pick up low owner-occupied interest rates and lower monthly payments
- Strong tax benefits
- Long-term passive residual income
Cons of Real Estate Subject-To:
- Most deals don't have much equity in them
- More complicated documents
- Most sellers won't qualify because they are way over-leveraged, terms of their loan are not favorable, or they are not motivated enough to keep financing in their name.
Marketing Advice of Real Estate Subject-To:
- Market in areas where there are long days on market and lots of houses listed.
- Neighborhoods that have newer homes or areas where there is still building going on can be excellent areas to find these deals.
- 1.Show credibility with all sellers, but especially with these sellers in order for them to feel comfortable giving you the house but keeping their name on the loan. Joining the Better Business Bureau or local Chamber of Commerce can be great credibility builders. You can also never have enough testimonials from past sellers. Doing honest, ethical win/win deals will help with this more than anything.
Lease Option
Pros:
- Ability to get chunks of cash with NROC (non-refundable option considerations)
- Long-term wealth building ability
- Less tenant management issues than regular rentals
Cons:
- More additional forms and education required than regular leases
- Tenants who are supposed to be doing repairs to property might neglect them and cause more severe problems
Marketing Advice:
- Directional signs at busy intersections near property are very helpful.
- A voicemail system to screen possible tenants is a huge time saver.
- Large colorful signs with Take One boxes hanging on them are huge.
- Use a lockbox instead of showing tenants the property yourself.
Subject-To Real Estate Books
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Investing in Real Estate With Lease Options and "Subject-To" Deals This book shows novice investors how author Wendy Patton and thousands of other Americans-including well-known real estate developers and business moguls-use lease options and subject-to deals to control valuable property without necessarily owning it. The cost of purchasing an option or subject-to deal is a fraction of what it costs to buy a home. That's why these kinds of deals are typically found in every serious investor's portfolio. Sharing the secrets and strategies investors use to profit from low- and no-money-down deals, Patton gives investors all the information they need to succeed. |
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40 Days to Success in Real Estate Investing Many people want to get into real estate but just don't know where to begin. In fact, real estate investor Robert Shemin hears the same question over and over in his seminars-"But where do I start?" Now, Shemin's 40 Days to Success in Real Estate Investing finally answers that question once and for all. It offers a proven, day-by-day plan that covers the basics of real estate investing, helps you set achievable goals, and tells you what actions to take each day to reach those goals. |
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Making Hard Cash in a Soft Real Estate Market Investors can still make great money in real estate even if the market is in a downturn. When the market is soft, they just need new rules and strategies for profiting. There are values hiding in every market, and this guide makes finding those values easy. Readers will learn how to find the next high-growth emerging markets, buy new construction at big discounts, find private financing when bank lending is tight, and find hidden gems with enormous profit potential. |
Subject-To Real Estate Videos
Subject-To Real Estate Resources
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