Is This Kosher?
I recently acquired a property "subject-to". I reinstated the 1st, shorted the second and a bunch of other liens, had the seller sign over the deed which I recorded at the court house, had her sign a limited power of attorney (just in case), rehabbed the house and currently have it on the market through a Realtor.
Is there any hidden dangers I can fall into? It just kind of evolved and I went with it. The upside is great.
Thanks for the help!
Most of my sub to deals are very low in capital out lays. I pay a little uhaul money and if I need to make up a few payments great but unless there is a lot a equity I make sure it is a good deal first. I would really look at your evaluation process not evry deal is a deal.
You must not have a lot of houses. When you reach a certain point, it becomes harder and harder for banks to loan you money for investment properties. As others said, subject 2 keeps the loan out of your name. If you have someone that has a lot of equity, see if they will hold a second mortgage and pay them as little as possible at closing. Also, finding private lenders will help obtain more houses and works good with subject 2s.
In a "Subject to", few investors realize that such an assumption is with recourse. Should the investor sell the property and the buyer assumes and then defaults on the loan, the investor (and anyone else who previously assumed the loan) may be held liable. How do you protect yourself in such a situation?
[addsig]
Gary,
quote]
On 2006-10-26 09:31, mtnwizard wrote:
In a "Subject to", few investors realize that such an assumption is with recourse. Should the investor sell the property and the buyer assumes and then defaults on the loan, the investor (and anyone else who previously assumed the loan) may be held liable. How do you protect yourself in such a situation?
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You DO NOT assume the loan in a Subject To transaction.
Most Subject To investors today, call or write the lender and get persmission to make payments on the loan, while still holding the deed in their name. Very few if any lenders object to this in the current market conditions.
Also, there is no VIOLATION of the Due On Sale Clause when the lender approves.
John $Cash$ Locke[ Edited by JohnLocke on Date 10/26/2006 ]