Buying Property: "Subject To"

I fund this information very helpful for me .Thank you .

To all those interested in Subject to deals in FL, be aware that there are insurance issues with subject tos in the state of FL. As Fellow DGer Gary Ceriani ( DG name GCeriani) discovered, no insurance company will give property or mortgage insurance to a homeowner whose name is not on the mortgage. Your taking over someone's mortgage payments does not protect you from the home owner! Be very careful and check, double check then triple check your deals and policies to make sure you don't get the short end of the stick.

Hope this helps...

Andy Sager
DG's AndyS
CFIC and IE member

Hello all how are you doing? I have one deal going on with FSBO, he is own the 3/1 no mortgage on it. Want to sell it for $74000 then give $8000 whoever buy it as rent for a year. the FMV of the area it's about $66000 which it will be the asking price (74000 - 8000 = 66000) Which he want to rent it for 12 months for $500 (plus the 8000 already paid). Which mean if I took out mortgage for it, payment will be around $500 -600. what do you all think of this deal? it's no equity in if going for $74000 but I don't need any money to purchase, and no cash flow. LOL how to handle this

Found some potential property that we would like to purchase.FSBO,a little over 4.5 acres with MH on property.Owner owes less than 10k an due to health reasons have moved out.Property has been vacant over a 1yr.Owner is asking 28.5k willing to negotiate.How would I proceed in purchasing property?,And relieving owner of property?Need help awesome property can't let slip by.Did walk-thru today,and everything checked out ok besides few minor issues nothing major.Just need direction to move in.Thank you all for any helpful info. This is our 1st deal that we would like to own for ourselves.Have others in the making for profit.Thank you DG Fam....

You can see if the owner will do "owner financing" in the form of a wrap around mortgage.

I don't know how much his loan pmts are, but If it is financially feasible, possibly he could add an amount over and above what his monthly mortgage pmt is so that you are covering his pmt and paying him some of his equity each month?

Karen

PS You will probably get more attention on this post if you start your own thread.

if this is your first deal, why are you trying to buy for yourself? Why not try to do a l/o or wholesale so that you can build some capital ?

Good luck!

Here's the deal:
Owner has a GMAC mortgage of $81K on the home. Homes in the area are in the $65-$85K range- although I'm sure I could get the high end of that. My strategy is a Buy&Hold until I can cash out, or a L/O with a Buyer/Tenant.
The seller's daughter was making mortgage payments while there, she got married and now the house is vacant. Payments are approximately $767.00 per month, not yet certain if PITI. Seller is "tired, old, frustrated, and just wants someone to take it over". (His quotes)
Still gathering info, but my mentor mentioned a Land Trust to avoid the DOS on the loan.
The area is quite good, and I can realistically get $900-$1000 in rent, but my margins are pretty small; about $150 cash flow per mth.
How would a Land Trust work, and based on the info I provided (still unconfirmed), what do you guys think about this deal?
My thought is to market it like crazy, pick up the extra bucks on the side until I can sell.
Btw- Hedge Funds have been gobbling up homes in this market (Charlotte, NC), inventory is down, and I'm banking on getting my asking price fairly quickly.
Any thoughts and/or advice would be greatly appreciated.

Thanks.
Z

I wouldn't worry about the due on sale clause. This is the prime environment for subject to.

doesn't alleviate the DOSC. It just creates an additional layer of obscurity. Current conditions are favorable for "subject to" as banks really don't want to foreclose on performing loans. But always remember they have the right to do so. Structure your investing platform accordingly. For example: I you get a subject to home and then write a lease/option on it and the bank finds out and starts foreclosure proceedings; are you prepared to step up and buy the home so your lease/option tenant is protected? Are you prepared to refund the lease option fee since you can't perform? Are you going to disclose to your lease option tenant that you own the property in such a way that the home could be foreclosed upon? Think these things out before you start down this road. A fully research them. Don't take some guru's word for it because they won't be with you in court when you get sued. Just sayin'.

Tell the bank what you are doing. If they choose not to exercise their option to call the loan due after about 3 months, they can't do it later. It's called acquisition by acquiescence. If they are on the fence about it, ask them if they will consider it if you offer them a $5000 principal pay down which you can get from your buyer or T/B. If you choose to hide it, you need to address the issues Bill mentioned above.

I'd much rather be open about the subject to, and have everyone on the same page- transparency makes me alot more comfortable in this business.
I know Dean had a chapter about this, but can someone give me the shortened version?
I believe his advice was to make a number of payments and THEN inform the bank that you'd done so?
What's to stop them from calling it due at that time? I know they wanna get paid, but the DOSC is there for a reason.
Thanks again for the great responses!

Why would they want to take a property back in this market? Why would they want to call a loan at 5 or 6% to loan the money back out at 4% ? If the payor is having trouble making the payments and you step in and make the loan performing again, the bank wins. If there is equity, the bank is still protected. The Garn St Germaine Act enabled banks to call loans due in a rising interest rate environment. So if they had a loan at 4% and the market was at 6%, they could call the 4% loan due and write a new loan at 6%. We are in the opposite environment now. Don't be afraid of the bank. Have the seller sign an authorization to release information and pick up the phone and give the bank a call.

Yes, I've been doing research and reading up on that as well as other factors.
So, I can see the logic, and also how to protect myself if I pull the trigger.

One final question:
A suggestion was made to simply hand the file (contracts, etc.) to a "3rd-Party servicing company", because they "speak the bank's language", and just have the two of them hash out the details. I can then wait for the go-ahead to start making payments.

This action would probably depend on cost, but it sounds like a fail safe move...just in case.
Thoughts and any suggestions on good companies to use?

Much thanks.
Z

Hmmmm... I'm a newbie and immediately went to how best to organize and plan to close a deal like this one. How do you keep up with your properties? What type of information is good to have when you have someone leasing a house that is owned by the original owner? Do you plan on doing multiple houses this way? Maybe use a property management company? Any other tidbits for this type of seller/buyer?

Make it a sweet day!
Debbie

Well stated Sully nice move, Oh how about if the property is under water what can be done to still buy the property?

Thanks,

Tony

Correct me if I'm wrong deeding means I will get the title turn over to buyers or I can have it since I will get my relatives to option to buy from me.Is there a easy form I can use that you can help dong this??Or I can use realtors hat work for me to do this??

Thanks

I have used this technique twice and here was the situation on both. The sellers were in preforeclosure, i agreed to catch up all payments get the property out of foreclosure and make all improvements sell then give them 10% of my profit it was a win win for all and now am about to take over another property using this same technique

I am new to real estate and I am ashamed to say that I never knew what "Subject To" really was until I read this forum. I have found out some interesting things such as a person or couple who have had some financial woes for a couple of years would actually be considered for a lease with option to buy, I was assumed you had to have good credit even with a lease to buy option. Now I know better this was helpful to me alot thank you sully.

I'm glad I Came Across This Post. So Many Great Ideas On This Post.

I'm about to jot this down and be using this.

Thanks for sharing:)

Three of the most common clauses on an offer to purchase are subject to financing, subject to inspection, and subject to sale:

Subject to financing clauses don’t offer much room for negotiation. Buyers can’t remove this subject clause during the offer/counteroffer process, unless perhaps they have a lot of equity, and don’t really need a mortgage, or require a relatively small and easy-to-get-fast mortgage. Remember, if the buyer didn’t need a mortgage, she likely wouldn’t have made the offer subject to financing in the first place.

Subject to inspection clauses are commonly included in a buyer’s offer to purchase a home. Since it should take no more than two or three days to arrange an inspection, this is an easy clause to negotiate. As with the financing clause, though, you can try to negotiate a shorter time period for the inspection’s completion to speed things up.

Subject to sale clauses can be negotiated with regard to the length of time you give your buyers to sell their current home. Any buyer who already owns a home probably can’t afford to carry the expense of two homes at once. Still, no matter how anxious you are to move, allow the buyer a decent amount of time to list and sell his home.

Usually four to six weeks is considered fair. Most sellers will include a “time” clause, so that if another suitable offer comes along during that time, the seller can activate that clause -- meaning that the buyers with the accepted offer have a set amount of time (often 24 to72 hours) to remove the subject to sale clause or drop out of the contract and let the competing offer proceed.shatch

One of my partners has done over 50 Subject To deals and I just completed one of my first using this method. Study up on it and it can be very profitable for you. I nicknamed it "Reverse Wholesaling".

Has anyone done a complete "subject to" deal in North Carolina recently?

Hey,
I am newbie and looking forward to become a long time user for these Forum but didn't get the Rules and Regulation for these Forum.
Please provide me Rules and Regulation page for these forum.

Look to the top left area "Main Section" and scroll down to Website Rules.

Karen

Buying a home is one of the biggest decisions people face during their lives. When you are ready to purchase, the best decision you can make is to choose a knowledgeable agent to help you find the home of your dreams.The first step is to decide what kind of property you would like to purchase.Once you have made the decision to buy, your agent will help you write up an offer to purchase. Once all parties have signed, this will become a written, enforceable contract.Buyers are required to arrange insurance on single family residential accommodations, and liability and contents insurance on strata-titled properties.

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This is great Sully!
thank you so much for your explanation of what "Subject To" is and the scenario you gave of how this works. I am just getting started...again, and looking forward to trying this method.

Awesome words sully. Totally agree with you !!