A Subject-to Deal, whether you’re doing a flip or keeping the property as a long-term hold, is an incredibly creative way to fund your next real estate investing deal.
So what, exactly, is a Subject-to Deal? Usually, when you buy a property, at the closing table, the property’s title transfers to you and the seller’s mortgage is paid off. With a Subject-to Deal, the title still transfers to you, BUT the seller’s mortgage remains in place and you agree to make the SELLER’S mortgage payments on the SELLER’S mortgage for the SELLER!
Is this the same thing as a loan assumption? Nope! With a loan assumption, the seller’s mortgage transfers into YOUR name. With a Subject-to Deal, the mortgage remains in the SELLER’S name!
Subject-to Deals must be illegal, right? Nope! Look on any HUD-1, lines 203 and 503. What does it say? It says: Existing loan(s) taken subject-to. Did you know that for decades, on every HUD-1, there’s been a pre-printed line for Subject-to Deals?
If you’ve not done a Subject-to Deal, you’re probably saying, “No seller would EVER agree to it!” Are you sure about that? Are you willing to bet the ranch on that? Truth is, Kim and I have been doing Subject-to Deals since 1998 – our ranch is a Subject-to Deal!
At February’s meeting, we’ll show you WHAT a Subject-to Deal is, HOW it works, the RISKS and REWARDS, and most importantly of all, WHY a seller would agree to do a Subject-to Deal! We’ll do this by using real-world examples of deals that we, and a number of other investors, have done.
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