Sub2 Clarification...
Ok...for a moment there I thought I had understanding of Sub2's.
What I'm getting confused at the moment is, I heard someone say that the seller gets the tax benefits. A few minutes ago I read from one of the articles here that the if an investor purchase a property as a sub2, then the person is the owner leaving the mortgage in the sellers name...However, the owner/investor can get the tax benefits.
Also, someone had sent in a post recently discussing an issue about them contacting the insurance company and he believes that he has opened a can of worms. Then from another source, its recommends that you send a letter to the insurance company notifying them of the new purchase and to have the home insurance switched to the new owner...leaving an option for the original seller to be left on the policy???Something like that.
So, as you can see the confusion here...What is the correct way of doing a subject to deal?
Your help is greatly appreciated!
As far as taxes go: the person paying the interest gets the writeoff.
As for the correct way to do a sub2, get John Locke's book. It's available through this website!
When you get the house using the sub to method, when you ie. the investor makes the payment, you get the write off. If you sell on a land installment contract, CFD, your buyer gets the write because they are making the payment.
As far as the insurance goes, you are going to hear a lot of mixed messages, because people will do what they want to do and different people teach different things. What is the correct way to skin a cat? See my pooint.
On the houses I pick up sub2, I don't tell the lender anything. I have the buyer take out an insurance policy and have them name me as an additional insured on the liability end. Others may disagree and will point out whats wrong with doing that, but like I said, how do you skin a cat?
And yes, buy John's course or maunal.
The owner of a property, whether they paid cash, got seller financing, or bought sub2, gets the tax deduction for insurance.
Handling the insurance os a different story and different investors do it different ways. Some get a new, seperate policy, some change the existing policy to a landlord policy, some leave things exactly as they were and hope for the best.
However you handle insurance, just know that whoever (or whatever) is on title had better be the same as who or what is listed on the policy as the insured if you want a claim paid. Once the seller has sold to you and is no longer on title, their old homeowner's policy is no good as they no longer have an interest in the property.
William Tingle
WilliamGA