William Tingle – Why is Any Day a Great Day to Get Started in Real Estate?
It may seem a bit outragous to say that now is the time to make your entry into the real estate market. But when you really consider the possibilities, you realize that “right now” is really the very best time you could ever hope for in the real estate investing arena!
Of course, I’m not talking about the drivel we are getting from the mass media every day on the current real estate market. I agree that sales of existing properties are down in some areas of the US and some people are still of the opinion that there will be quite a while before this situation changes. But “right now” doesn’t refer to that. “Right Now” simply refers to this particular time in your life. We all know that buying real estate as an investment will always offer you a significant return in the future – but that is never something you will realize if you do not jump in – now.
Me, I just spent several days with a student who paid a handsome price to spend the time picking up some new tricks. Now, mind you, this was a well established investor who was simply looking for a few new nuggets to help increase his business return. I spent the week teaching him the details of a new strategy I have put together using my favorite method of investing, subject to (sub2 sub 2) that allows me to buy homes all over the country using little more than my telephone. My student observed while I spent a couple of hours a day on the phone with my “feet on the ground” people. They help me find leads, sort them and evaluate them, negotiate and close them. This guy then went back home after a few days in a tropical paradise with new information that is going to help him build increasing wealth and grow his business like never before. This is the attitude you must take when starting and growing your real estate business. Get in, take action and constantly be looking for new tips and tools. Never be afraid to fail because that failure is simply a part of everyone’s success formula. Remember this because the proper mindset will carry you through and give your success a certainty.
When you make an investment with fairly predictable returns over the years (the stock market, though volatile, still holds a fairly predictable rate of return over the long haul), you realize that any time in your past would have been a great time to invest your money. This is also very true in real estate, the real estate market holds one of the most valuable commodities we have on our planet: space.
Land, like gold, silver, or diamonds, can be a great investment because it’s certainly limited. Until human beings discover how to land and live on Mars, we’re going to be stuck on Earth for a while, and that means everyone will constantly be looking for more space. Land will always goe up over time – so much so that many people simply recommend buying a home simply because it doubles as a place to live and as a long-term investment. Of course there are ebb and flow with real estate as with most any investment but the smart investors know that in the end, the value always increases.
If this makes sense to you, then you’ve most likely got what it takes to be a real estate investor. But you can’t only focus on long-term trends; you have to be willing to see short-term opportunities, sales today that could greatly benefit you if you applied yourself to understanding how they worked.
Here’s one thing about real estate many people would like to keep secret: it’s really not all that complicated. Sure, there is paperwork to complete for each transaction and there are a lot of local laws and ordinances to consider in many cases, but once you get involved with real estate, it’s not quite as difficult or complicated as you might have thought. Like learning an instrument, it only takes a little perseverance before you’re playing the song you had in your head.
For more information on real estate investing and specifically the subject to, sub2 or sub 2 method of real estate investing, join me, William Tingle, at www.Sub2Deals.com.
Get the best real estate investing information ever written HERE.
Admittedly, the title of this article is a bit of hyperbole: you will have to make attempts – in other words, try – to make it in real estate. Making it in real estate doesn’t mean you can sit at home and collect a rent check – at least not until you’ve done your work and put the time and effort in.
But there is good news: success like that in real estate is not only possible, but it happens all the time. Successful real estate transactions still occur frequently in the United States, even if it seems like a slow house market has brought things down to a crawl. What you’ll have to remember is that a big fall in the overall market never means that your individual prospects have to be hurt. It simply requires a change in strategy.
You want to hear about a change in strategy? Five years ago I was living in the US and buying 2 to 4 houses a month. I lived in a 250k house and had a pretty good lifestyle. I traveled 3 months out of the year and enjoyed life. A divorce and a couple of blood sucking lawyers later I live in Central America in a cheaper but much nicer home and travel to the US a few times a year to pick up properties at prices I never dreamed possible before. I live on less but have much more.
If you want to make it in real estate without really trying, you’ll have to put in a little bit of upfront research and yes, hard work. But as you get better at recognizing the good prospects and learn some great maneuvers for making real estate transactions, you’ll begin to feel as though you possess some sort of “cheat code” for making money in this business.
As someone who has gone from having great credit and tons of advantages in real estate investing to having no credit and few advantages, I can tell you for a fact that changes in your situation do not have to limit your deals or opportunities.
I bought hundreds of houses when I had great credit, most of them sub2 which required none of my credit anyway. Now that my credit is shot (a divorce will do that) I am still able to buy like nothing ever happened. In fact my latest purchase was a 2 unit in New Orleans just last week.
Without any further ado, here are a couple of ways you’ll be able to succeed in real estate just like I do without major, overarching efforts:
Subject To Transactions – a Subject To transaction is a great way to make a real estate purchase or acquisition without investing a lot (or any) upfront money. In a Subject To transaction, you’ll be able to find someone who wants to get out of their mortgage payments and help them out by taking over the payments yourself – while investing a small amount of money for making up back payments or fix-up. This amount is usually less than $2,000 for us. No loan bankers, no real estate agents required – unless of course you need to check the laws in your area governing these types of transactions.
Once you’ve completed a Subject To transaction, you essentially have a new piece of property with very little commitment except the loan payments that had to be made anyway. These can be a little more difficult to find these days with significant equity but they are out there.
Private Money – Making a real estate purchase can be a major pain in the you-know-what if all you do is use your own money. No one wants to get involved in a money pit. But if you can partner up with other investors or use private money from a passive investor, you’ll be able to make transactions that you couldn’t have otherwise made, leveraging yourself further and taking a lot of the burden off of your shoulders.
My first New Orleans purchase (completed just last week) was made with private money. Don’t confuse this with hard money where you pay astronomical fees and points, my private investors lend to me at 5-7% with no points at all. Tired of getting 1% in CDs and savings accounts, these guys are loving the rates of return I can give them and it is all secured by real estate bought at today’s rock bottom prices.
My new double shot gun (how folks in New Orleans refer to a duplex) set me back a whopping 10k. Another 15k in fixup and I will have 25k in it all totaled. Now the best part. This property will rent for $750 a side!
My payment on this property with taxes and insurance is less than $300 a month. This leaves me over 1k a month cash flow on one property!
I gotta tell you, managing just a few properties like this is a heck of a lot easier than managing dozens of them like I did before…….and the best part is…….I make more money!
I may not be “lazy,” but sometimes I definitely feel like it.
Get the best Real Estate information ever written HERE.
Willliam Tingle – Sub2Deals.com – Three Ways Unconventional Thinking Can Earn You Real Estate Returns0
You don’t want to go down the beaten path – if it worked so well, we wouldn’t have the kind of downturns like the one we’ve seen from housing in recent years.
In times like these, a real estate investor can really make some good, bold moves that will put him either in position to win big short term, or win big over the long haul. Whatever your investment strategy, remember it doesn’t take a market upswing to ensure you make a lot of money.
How is this accomplished? Through unconventional thinking. If you follow conventional thinking in the tough times, that means you’re living like everyone else in a slow economy – a little trepidacious, a little hesitant. Being unconventional means thinking outside the box and opening up your mind to alternative ways to earn money through real estate even when the market isn’t hot.
How do you do this? We can recommend three ways:
1. First, try unconventional transactions that make sense when people are looking to sell. One such transaction is a Subject To real estate transaction in which you take over the mortgage payments of another person’s home in exchange for a small up-front purchase. This is a great way to avoid real estate agents and ensure that the money you’re investing goes straight into the property you’re looking to buy. If you can become a master of the Subject To deal, you can really find interesting bargains out there that other people simply don’t see. Be careful with it and you’ll be able to do a lot of investing.
2. You can also try using unconventional thinking to make purchases in neighborhoods some people won’t touch. Remember: just because a neighborhood is going sour doesn’t mean that every property there will see a loss in every transaction. By avoiding the competition, you can really get a leg up on everyone else and find those diamonds in the rough. This can require a lot of experience and know-how, but it’s a great way to blaze your own trail.
3. Combining efforts. A real estate transaction doesn’t have to be between two individuals – pairing up and making purchases with partners can stretch your dollars. As long as you have a good working relationship with these partners and can handle yourself should things get sour, you’ll be able to make transactions individual investors simply can’t make.
What does it take to start thinking unconventionally? If you’re really stuck, try sitting down with a piece of paper and simply write ways you could make smart investments without going down the beaten path. You may end up surprising yourself and coming up with a lot of ideas that sound “unconventional” – but may be downright effective.
Get the best real estate investing information ever written HERE.
When thinking about the real estate market today, many people simply shudder.
Really? An investment in real estate? Now?
After all, we’ve undergone a financial crisis, witness all but a collapse of the housing market, and creditors are still wary about making loans these days. But when you closely examine the world of real estate, you start to realize that not any one of these dynamics necessarily means you can’t make a good real estate investment – and soon.
What determines your level of success, then? You do, oddly enough. Getting started in real estate will require some innovative thinking and some bottom-line common sense, but most of all it requires the desire to go out in the world and make good investments happen. If you want to learn how to do that, keep reading.
First, remember that real estate is still one of the most valuable commodities out there. Even in tough times, holding on to a piece of real estate can represent an excellent long-term investment that other investments simply can’t touch. Sure, you’ll witness some volatility like we have at the end of this decade, but that doesn’t mean owning your house is a bad financial decision for you right now.
Land and real estate works so well as an investment because there’s only so much real estate that can be purchased. The Earth has a fixed quantity of land, and as more people come to inhabit it, that means demand will only go up. Naturally, this requires some big and long-term thinking, but you get the gist of it: real estate is fixed.
That means there will almost always be opportunities to make money! Are we saying, however, that you’ll never have a bad real estate transaction? Of course not; anyone who’s telling you that is selling you snake oil. But if you want to try out real estate, there are good ways to do it – sometimes ways that require very little upfront investment at all.
One such way is to try out a Subject To agreement. In a Subject To agreement, you enter an agreement with a home’s owner to take over the payments of that home, essentially acquiring the rest of the loan in exchange for ownership. You’ll also pay a relatively small flat fee in order to make the transaction worth the previous homeowner’s while.
That’s just one of the ways you can get started in real estate – and even get into it when the real estate market appears to be down. When people are looking to sell, it can mean it’s a great time to buy – as long as you know what you’re doing and have the courage to see it through.
There are so many different ways that are taught to buy Sub2. It is really amazing listening to some of the ways the GURUs are teaching these days.
I cringe when I hear of the latest carnival barker on the speaking circuit telling newbies “no equity, no problem” or “some will cash flow, some won’t. The ones that do will balance out the ones that don’t”
What a bunch of Bull Chips!
You make your money when you BUY real estate. That doesn’t matter if you buy for cash or sub2.
For some reason, it seems that people believe that because you are getting the deed or buying subject to, all the regular definitions of what makes a good deal a good deal go out the window. It is as though when you use this method to buy, it waves some sort of magical wand over a deal that under any other circumstances would be a no go. Because the financing is already in place and in someone else’s name, it is all of a sudden good to go.
Let’s see if we can really clarify some of the confusion on this purchase technique…………………………….
Let’s start with what “Subject To” (I call it Sub2) IS:
When you buy a property “subject to,” you are purchasing it subject to the existing financing. Put simply, this means that the loan(s) and any other liens or encumbrances already on the property stay there without any formal assumption on your part. The owner deeds the property to you, and you take the payment book and start sending in the payments just as the former owner did. Simple, huh?
Now……….Is It Legal?
Well, don’t let one of those attorneys or real estate agents you sort through before you find the right one convince you that there is anything illegal about getting the deed. If anyone tries to pull that one on you, ask them about line 203 on the standard HUD-1 form where it says “Existing Loans Taken Subject To.”
Why Does It Work?
“But why would any seller go along with this?” you ask. Good question. In the beginning, I thought this was the biggest bunch of malarkey in the world.
Sellers will GIVE you their house?? Yeah, right!
I’ll say there are as many reasons as there are houses, of which I have had somewhere around 300 deeded to me from sellers in a wide variety of situations.
For example, there was the seller with perfect credit who was being downsized and wanted to stay, as he put it, “ahead of the 8 ball.” He deeded me a beautiful 3 bedroom, 2 bath, 2-story home which was only 7 years old and had well over 25k in equity. He just needed a fast sale.
Then there was the lady who deeded me her house for the loan balance of $14,000. She had owned the house for 25 years but her mother had recently died and left her another house free and clear. Although the house she deeded me needed $10,000 in repairs, it was still worth $70,000 or so after repairs. When I asked what she wanted for it, she said she just wanted to be rid of it.
Many sellers have deeded me properties days and even hours away from the auction block – some with substantial equity, some with little equity but low-interest, 5% loans.
Not all sellers who deed you their property are “unsophisticated” or “down and out.” Some just realize that they have a problem that needs an immediate solution. You just need to know how to provide it.
Sub2 is a great way to build a portfolio of income producing real estate. There are no limits because the loans are not in your name, you never have to qualify so you can buy as many as you want. It is powerful stuff.
Because of this lack of “policing” by banks or lenders, it is crucial that the investor using this technique be well educated and “know his limits” so to speak. As with anything where there are no limits or controls put in place, self-control and common sense are especially important.
So now we know what Sub2 is. Let’s talk about what it isn’t.
Buying Sub2 is not a cure all for bad deals. Buying Sub2 does not license you to go out and sign up no equity deals that put your assets and the seller’s credit at risk. Bad deals are bad deals. Just because you can get a deed doesn’t make the deal good.
Buying Sub2 does not give you the right to walk away if the deal goes bad. Some “teachers” teach this as one of the benefits of buying using this method. I say those “teachers” should be drawn & quartered. When you buy Sub2, you make a commitment to stay in the deal until the loan is retired. The seller entrusts his credit to you and you shouldn’t take that lightly.
No matter what shape the seller let his credit get into, your responsibility here as in the rest of life, is to leave things better when you leave than they were when you found them. This includes your seller’s credit. Walking away from the deal is NOT an option.
Sub2 is a powerful, awesome technique for buying real estate. It can make you very wealthy and I credit it for a large part of my success.
Use it with care and responsibility and know it’s limitations and it will do wonders for your balance sheet.
(c) Copyright 2010, All Rights Reserved.
(c) Copyright 2010, All Rights Reserved.
I am frequently asked how to put together a sub2 deal, so I put together this “play by play”.
When I purchase subject to, this is how it usually goes………..
1. Seller calls me from one of my lead generators. I prequalify them pretty heavily on the phone. They usually have a good idea of what I will propose before I set up an appointment to go out and see them. By this I mean that I have at least introduced them to the idea of me simply taking over payments on their property. I have a “close” estimate of what “they say” is owed on the property. By “they say” I mean that more times than not, I find that there is more to the story than they tell me up front. Not always, but most of the time.
2. I go out to meet with them. I look at the house to see if it “qualifies”. We sign the sales agreement and we are off to the races. If they don’t know the exact amount owed on the loan, that’s ok. I will just put “Approximately $XX, XXX” in the space where it says “Loan balances taken subject to”. They should have an old payment coupon around that will give you the balance, if not, no problem. Since I also have them sign an “Authorization To Release Information” on their loan, I can call and get the balance.
3. Once I have the property tied up, I can check and verify all the info they have given me. Loan balances, liens, clear title, and any inspections I choose to do. Since it is locked up I can take my time with the due diligence and things can progress along at my pace usually.
4. After I am satisfied that all the info is accurate or at least that there is a real deal here, we are ready to close. I have done a few of these so I just print off the trust docs myself and we go anywhere that there is a notary to sign off on them or I can bring my friend who just happens to be a notary.
5. Once the docs are signed, all you have to do is go file the deed at the courthouse and the property is yours.
There are a few other details like getting the insurance squared away and so forth that will have to be addressed later, but at this point the house is yours.
This is how I do it. I am sure that there are as many ways to get it done as there are investors doing it. You CAN use an attorney if you like. It might be a good idea for your first one or two.
Subject to and the insurance question. What do you do?
Guru A says do this, Guru B says do this, Guru C says both of them are crazy because he has done over 500 deals and hasn’t done anything and nothing has ever happened to him.
It all kinda reminds me of what we in the restaurant business used to say, “The restaurant business would be a lot of fun if it weren’t for all those dang pain in the tail customers!”
Wouldn’t taking properties subject to the existing financing be great “if it weren’t for the dang insurance?”
Well folks, if you know how to handle insurance, it is a piece of cake, easy as pie and like taking candy from a baby.
So how do we do it? Depending on whom you listen to, you could do it just about anyway but I am going to assume those of you reading this want to do it right. In this instance “right” meaning that if there is a loss, you will be covered and your chances of the DOS police minimized. These are the ways we are going to cover today. We will let all the Gurus sort the other ways out on his or her own.
First you should know some insurance fundamentals.
- The owner of the property, as named on the deed found at the courthouse, must be listed as the primary loss payee. Failure to make sure this is done after getting those sweet deeds will leave your backside (and your house) dangerously exposed. Exposed ain’t good when it comes to real estate.
- The policy you have in place and are relying on must accurately reflect the current occupancy status of the property. This means if the owner on the deed lives there, the policy must be an owner occupied policy and the owner must be the primary loss payee on the policy. If the property is tenant occupied (as will be the case in most cases here) the policy must be a landlord or “fire” policy and the owner/landlord (or his trust, corporation, LLC, etc.) must be named as the primary loss payee. However legal title is held, this is who must be named as the primary loss payee. The primary loss payee’s name is the name that will show through those mailing envelopes when they send the bills, renewals, etc.
- Most insurance company’s first response if there is a claim is to try to deny it. They look for ways not to pay you. Come on all you optimists out there think about it. How do you think they can insure your 200k house for a premium of 1k a year, have a 50k claim and make money? They can’t so they try to deny. They actively LOOK for ways to deny the claim. Don’t give them a reason to be able to do so.
You will find houses to buy sub2 in 2 different scenarios, those with insurance in escrow and those where the homeowner pays for their policy themselves. How you handle each of them will depend on how great your fear of the DOS police is and your tolerance for risk with it.
Some courses will tell you to send a change of address and info to the insurance company currently on record with the property and try to use that one. I even include such a form in my course (The Ultimate Sub2 Guidebook) for those who want to go this route. Let me tell you from personal experience with over 200 deeds taken to date that doing it this way is a tough row to hoe. I recommend you get your own insurance company agent and spend an hour with him explaining exactly what you do and how you do it and what his role will be in it. This way, when you need an insurance thing handled, it is YOUR guy you are calling. You are HIS customer and that relationship is there.
From my point of view, there are 2 ways to “do it”. Insurance that is.
For Properties with Escrow
The Tingle Way (Maximum Profit & Simplicity)
- I buy a property that has Allstate insurance escrowed in the payment. A couple of days before I take title, I call up MY agent (remember what I told you about YOUR agent?) and tease him about the latest house I just stole…ooops….got the deed on and tell him I will need him to do his thing on Sept 15 with Countrywide Home Loans (the mortgage company on the house). I give him the seller’s name, the loan number and the Countrywide Insurance Department Number.
Actually at this point, I don’t give him phone numbers as he has them all.
- I close on the property. Kitchen table or at my attorney’s office, it makes no difference. By this time my agent has been out and taken his picture and completed any paperwork that needed doing. He knows the date I was closing on so he knows on that date to fax to Countrywide a request for disbursement for payment on the policy and the new policy shows my trust as the primary loss payee, just like my new deed does. Countrywide is of course the lender named as additional insured as well as the seller. The seller added as additional insured will let any mortgage company who may stress over the name on the mortgage not being on the insurance relax a little. It is not always necessary. I didn’t add them for the longest but it just seems to make sense to me know.
No problem with them being on the policy if there is a claim because I use my Power of Attorney I get from the seller to sign for them any check that comes in. Escrow refunds, claims checks, it doesn’t matter. That POA can handle it.
The now useless Allstate policy? I use my POA to cancel that old thing by fax and direct the Allstate agent to send that refund right to Papa.
Papa…that’s me in case you were wondering.
So to recap…………
Get House under contract.
Inform my agent of house and closing date.
My agent issues policy and informs lender of change and need for payment.
I use my POA to cancel existing policy and get refund.
The new policy slides into place where the old policy was in escrow. The seller is happy because the house is sold, the lender is happy because the payments are being made on time in this property and insurance is in place, State Farm is happy because they wrote a new policy on a good property & good customer. I am happy because I just stole…..oooops…..bought another house. Everyone is happy.
Well, everyone except Allstate who just lost a customer.
The Weenie Way (Twice as Expensive Just Cuz You’re Scared)
1. I buy another house that has Allstate as the insurance company. Again, I let me insurance agent know that I am buying a house and will need insurance on Sept 15.
- I close on the property and go to my agent’s office and write him a check for the premium for the policy. He writes the policy for me in the name of my trust and I tell him to name no mortgage company on the policy.
- I leave the Allstate policy in place, in escrow, being paid year after year. I write my agent a check each year, year after year for the second policy. Yes, I am paying double, paying for 2 policies when only one (mine with State Farm) is valid and will payoff in case of a claim. I do this because with no notice to the lender about an insurance change, there is virtually NO risk of anyone ever finding out about a DOS violation.
The cost to do this is small and I am only joking about the “weenie” business. If you need to do things this way to feel comfortable, do it. It just isn’t really nessessary to get things done.
Some people will tell you it is “illegal to have 2 policies on a property.” Bullchips! My agent will tell you unless you intend to defraud, there is nothing wrong about having 100 policies if that is what you want to do. Having multiple policies does not make them all invalid! If there is a claim, you will file on the only one that is valid, your “out of pocket” policy with State farm. The Allstate policy in escrow became invalid once you got the deed anyway.
In case of claim, you will file on your policy and the check will come to you and only you as there is no mortgage company on it and of course, you will do the RIGHT THING and make sure the lender is made whole, right? I thought so.
So to recap……….
- Get house under contract.
- Inform my agent of house and closing date.
- Close house.
- Go to agent’s office and have him write 2nd policy naming no mortgage company. Pay for it out of pocket each year.
- Leave existing escrowed mortgage in place doing nothing.
Make sense now?
For Properties without Escrow
For properties without escrow, the Tingle Way is really the only way to go. Unless you want to actually go out and pay for 2 policies with one in the seller’s name and one in yours you have no choice.
The great news is, 90% of the sellers you deal with will have an escrow so you won’t have many times to have to deal with it.
Remember, all these forms, faxes, etc. all go to people in the basement of some lender hundreds of miles away from where you are. They really don’t spend all their time around the water cooler talking about that investor in Richmond who just tried to slip the old “escrow insurance subject to” trick by them. They have forms with boxes on them that have to be checked off and that is what they do, check them off.
Property has Insurance? Check!
We are listed as lender? Check!
Today is Friday, We get Paid! Check!
And on it goes…………
I hope this answers some of your questions about how to handle insurance on a subject to deal. It really isn’t as complicated as it seems. After your first few, you will be doing it like an old pro.
Learn more about insurance and the Sub2 process of acquiring property with no banks and no credit needed right HERE.
(c) Copyright 2007, All Rights Reserved.
We all know about the bad housing market – how things really crashed in 2008 and how the market really hasn’t recovered much since the. We might be living in a double-dip recession, for all we know, but the key here is not to be worried about the world at large.
Really? Not be worried about the world around you? That doesn’t exactly sound like strong advice, does it? After all, many people are worried about the state of the economy and what it means for real estate in both the short and long-term future.
Well, you should think about these big-picture things, but when it comes to your real estate, sometimes it’s best to simply…well, ignore them.
That’s because what might be a bad housing market for everybody does not necessarily means it has to be a bad real estate market for you. It sounds crazy, but it’s definitely true. Bad business overall does not mean that things have to slow down as far as your bank account is concerned. Why? Because there are plenty of ways to swing real estate deals. There’s more than one way of getting deals done. There’s more than one way for finding people who might be interested in the kind of real estate transactions that you’re looking for.
This, of course, does not mean that you’re free to do as you please – you have to adapt your skills in order to suit the market around you. But even if you’re doing that, learning about tools you can use can be a great idea to really swing things in your favor.
For example, a “Subject To” agreement can be a great way to swing a business deal without the usual cast of characters involved. In a Subject To agreement, you essentially pay a low up-front fee to acquire a piece of property, thereby taking on the expenses of that property. Someone looking to ditch the property gets an easy way out and you get an easy way in. Without the usual real estate agents and loan officers getting in the way, it’s a great way to pull off an old-fashioned deal without necessarily worrying about where the market as a whole might be.
Look – it’s important to understand long-term thinking and why it’s important. But fear in a market does not necessarily mean that low overall performance should mean low performance for you.
(c) Copyright 2010, All Rights Reserved.
There are a lot of different types of real estate transactions – some of them good, some of them bad. Some of the might be good for one party and some might be good for both parties. Or a transaction could end up being bad for both parties!
You get the point. One specific example of a real estate transaction is what’s known as a “Subject To” deal. In a Subject To deal, you’re typically talking about an investor (the buyer) and a homeowner (the seller) who are both looking for something quick. In the investor’s case, a quick “takeover” of a house and its payments is in order. In the homeowner’s case, a quick way to get out of mortgage payments might work out just fine.
A Subject To deal is one in which the buyer agrees to take up the mortgage payments of the home in exchange for a far lower up-front fee. The house ownership is transferred, and the seller might not get a great deal in terms of a flat fee, but not having to pay those mortgage payments anymore can be a real breath of fresh air.
As you can probably figure out on your own, the Subject To transaction cuts out the middle man. Real estate agents and loan officers don’t really have a big impact on this kind of decision – it’s essentially an old-fashioned trade between two parties. As long as the contracts are drawn up properly and everything is squared away with the paperwork, these transactions can be great deals not only for the buyer, but for the seller as well.
What does this mean for you if you want to get into real estate?
Well, for one, it’s another tool to consider when you’re thinking about what you might be able to do with potential real estate acquisitions in your future – but that’s if you’re already in real estate. If you’re looking to get into real estate, it’s a great way to simply open up your mind to the different types of possible ways you can get great deals on homes without putting a lot of upfront money into every deal that comes your way.
Of course, the downside to a Subject To agreement is that you’ll have to take over the long-term payments, but for a creative, outside-the-box real estate investor, this isn’t necessarily a problem. If you view these expenses simply as another variable to consider in your real estate ventures, you can really get the math to work in your favor.
(c) Copyright 2010, All Rights Reserved.