Confused, Subject To Uses L/o?
Hello,
I've been trying to understand how subject to works, and I initially thought it utilized a l/o. You purchase the property, then find a buyer for l/o. The more I read I get the feeling I'm dead wrong. What is the difference in terms of the buyer end?
You buy the house sub2. Then you sell it any way you like, including l/o, but "pure" sub2 is selling it to someone else with seller (that's you) financing. After a year or two your buyer refis and buys you out.
Subject To is a technique
On average the goal is $25K profit per deal
One deal per year could be an extra $30K of income
Four deals = $100K
[addsig]
Hi,
How are subject to deals working out for you in Chicago? I don't want to compete for the sellers here, is there an area you concentrate on?
The market in the Chicagoland area is HUGE and with so many newer subdivisions there is enough to go around.
We are just getting started to focus Lease options and Subject To in the suburbs.
[addsig]
Quote:
On 2003-08-26 23:51, AKlein wrote:
You buy the house sub2. Then you sell it any way you like, including l/o, but "pure" sub2 is selling it to someone else with seller (that's you) financing. After a year or two your buyer refis and buys you out.
How is "pure" sub2 selling it to someone else by financing, and having them buy you out in 2 years different from a lease option?
Hi Snek,
I'm pretty new at all of this, too, but I will try my best.
"Subject to" is a way of purchasing property. You purchase the property subject to already existing financing. In this forum, it is used as a real estate investing technique, as a way to put profit in a deal where the seller wants out of their home, but has no equity. I'll leave it to the experts to explain it a little further. John Locke is the expert around here. You can read archived chat sessions with John, that will help make it a little more clear. Go to .articles. in the top of your screen, then .article archives. Go to .Aug 2002. and scroll down to .08/15/02. "chat session with john locke" that helped me some, but I'm still going to have to buy his book. I was just at Barnes & Noble, and the REI books explain alot, but John puts a MUCH more creative twist on the idea from an investor's view. I hope that helps some.
Quote:
On 2003-08-28 01:15, gentleman21jack wrote:
Hi Snek,
I'm pretty new at all of this, too, but I will try my best.
"Subject to" is a way of purchasing property. You purchase the property subject to already existing financing. In this forum, it is used as a real estate investing technique, as a way to put profit in a deal where the seller wants out of their home, but has no equity. I'll leave it to the experts to explain it a little further. John Locke is the expert around here. You can read archived chat sessions with John, that will help make it a little more clear. Go to .articles. in the top of your screen, then .article archives. Go to .Aug 2002. and scroll down to .08/15/02. "chat session with john locke" that helped me some, but I'm still going to have to buy his book. I was just at Barnes & Noble, and the REI books explain alot, but John puts a MUCH more creative twist on the idea from an investor's view. I hope that helps some. <IMG SRC="images/forum/smilies/icon_biggrin.gif">
Hi, good to see other newbies. Yes I understand the initial part of subject to ok. I just want to know about afterwards, profiting from a buyer. How is the l/o different than the typical subject to. It seems to be structured differently.
With the standard Lease/Option, the original owner is still involved. You have the ability to control the property, but the title is in their name until you excercise your option. In "Subject To" You actually Take title to the property. After you acquire the property, your exit strategy, or plan of action could very well be the same as it would be with a Lease/Option
Good Luck,
Jeff
A little confusion I have here is: If investor take the title subjected to existing how will it prevent lender from calling DOS? Any insight please...
One way to do this is to take title in a Land Trust, and not personally.
Placing property in a land trust does not trigger the DOS by itself. People do it all the time for estate planning and other purposes. You can fill out the documents yourself, and have the seller sign them. That way the owners of the house created the trust entity.
Have them sign a "Warranty Deed To Trustee", and have it notarized. When this document is filed, the deed is transferred to the trust. Then have them assign the beneficial interest of the trust over to you, making you the owner of the trust. The only document that gets filed at the County Recorders office is the "Warranty Deed To Trustee", this process essentially shields the transfer of the property to you from the lender. Notice that there was no Realtor, Title Co. Etc involved in the transfer of ownership of the property. Therefore it is a good idea to get a title search, and title insurance policy before you file the Warranty Deed downtown. An IRS Lein etc. can really screw up your ability to pass this property on to another buyer. I guess if you got the property on a good enough deal, you could go ahead and file the Warranty Deed and have a good rental property.
Good Luck,
Jeff
Don't mean to beat a dead horse but let's do this one more time. L/O and "Subject to" are both methods of acquiring property as an investor?
I thought that Sub2 was the method by which the investor acquired the property and a L/O was a method to move a new T/B into a property? The L/O being another "pro" for the current owner to do the deal, a "future" buyer who would already be in the property.
I have John's book, guess I need to read it again.
Thanks
Quote:
On 2003-09-04 16:53, 94nole wrote:
Don't mean to beat a dead horse but let's do this one more time. L/O and "Subject to" are both methods of acquiring property as an investor?
I thought that Sub2 was the method by which the investor acquired the property and a L/O was a method to move a new T/B into a property? The L/O being another "pro" for the current owner to do the deal, a "future" buyer who would already be in the property.
I have John's book, guess I need to read it again.
Thanks
Either method can be used to buy property. If you think about it, if you can sell via L/O, then the inverse buying via L/O is true as well. The reason for buying suj. to and selling via L/O is in the safety for the investor. with a subj. to, you get the deed, so the seller can't harm you, they are out of the picture as far as ownership goes. In a L/O the seller retains the deed until such time as the T/B exercises the option. Keeps the buyer from harming you.
Clear as mud?
[addsig]