Is taking over sub2 risky if you don't have $ to back up
If you take over a property sub2, but don't have the money to cover the holding cost if you can't find a buyer, is this a technique that may have to wait until you obtain $ to use in case of emergancy? I don't have the reserve to cover excess holding and would not want to make a person's situation worse b/c I didn't pay when I took over. The only thing I can think of is to have a clause saying not a deal until I find tenants (buyers). Is this what people would do in my situation, or would you try to get $ first to be safe? Would this scare off most people willing to do a sub2?
Thanks,
Joe
hartmanjr,
Glad to meet you.
I have focused on Subject To in my investing career and feel that is has been personnaly rewarding to me.
Fortunately when I started I wasn't in "Information Overload" because I never read a Guru Book, attended a seminar, or posted on a discussion board. It has been just a short while ago that I made my first post on a board.
There is a little secret to Subject To investing that one finds when you have done as many deals as I have, I mean you are bound to learn something. Or should say a pattern develop amoung sellers and buyers.
Here are some things that have guided me in investing the Subject To way.
Why deal with pre-foreclosures or foreclosure people. There are to many people current with their mortgage who just need out to be concerned with people in self denial. Besides why make up back payments and cut your profit.
(No door knocking, calling FSBO's, etc.), I know where the thrust of Subject To marketing should be directed and how to deliver the message. When a seller calls through my marketing program, I get the address and listen to anything the seller wants to tell me then set the appointment to meet with the seller.
Why ask personal questions on the phone, like, what is your mortgage balance, will you leave the loan in your name, or all the other punch lines investors think they should ask the seller on the phone.
When I hang up the phone within minutes I know what the mortgage balance is, what the monthly payments are, what his neighbors do for a living, how long the property will be on the market if purchased before it is sold, what to ask down, what to put on the back side of the deal for appreaciation when the buyer re-finances in two years.
After doing my due diligence if the deal would not be right or a win/win for everyone, I call the seller back an politely say " Mr. Seller after a preliminary review of your property it will not fit into my program, but Thank You for your time and I need to cancel our appointment."
Never had a DOS envoked, so this has never been a concern for me, if you make the payments on time and use a Licensed and Bonded Loan Servicing Company to collect from your buyer and pay the lender, you are starting with good business practices. Two months worth of monthly payments out of the down payment when every house is sold should be kept in a trust account for emergencies. This money adds up and gives you a nice rainy day fund.
You should average $25K a deal doing Subject To investing with 3 profit centers, the down payment you get when you sell, monthly passive income from a bump on the interest rate, and the 2 year appreciation you get when your buyer re-finances.
Joe, I started out (as a new person) doing Subject To's and never looked back, I have done Subject To's in Nevada, Arizona, Ohio, California, Florida, Colorado, and anywhere the fishing is good.
It is the guideance you receive from the course writter that makes the difference between success and failure in this business. I can't guarantee everyone I teach will make it, but I can tell you my system works if you do.
Welcome on board this board hope that you seriously take a look into Subject To investing, it is very rewarding.
John $Cash$ Locke
Great post, John.