Possible Subject To Deal
I'm new to the Subject to arena and might have one staring me in the face right now. A client 4 months delinquent of course wants to keep the house, has about $60k inequity. Now if I bring them current, receive deed to the property, and sign a lease option with the owner, is that how "subject to is supposed to work? I don't like going into any situation without being well educated ahead of time. I'm considering splitting the deal with a more experienced investor in this field. Any input greatly appreciated.
Thanks,
Bob
If he can't pay the bank, what makes you think he's going to be able to pay you?
If they don't pay, I have title and can sell or lease/option to someone else. Again I'm new to this technique so I may have it all wrong.
Thanks,
Bob
If you decide to go ahead with this deal be sure to get everything in writing and get an attorney to review your contract to make sure it's complete and legal.
It's very likely the owner can turn nasty when they realize they might loose their house after all.
To the point nebulousd raised, what makes you think they will be able to pay you? Were they laid off and have since gotten a job?
All subject to means is that you are buying the house SUBJEC TO existing financing. The current lender can call the loan due if they choose (it's in the mortgage for sure these days) but often times do not since rates are so low anyway. This just means you would need to get a new mortgage in your name. There are ways to slow down the mortgage company from finding out the property has changed hands, someone wrote an article on it - I don't remember where.
There are many many options on what you can do in a subject to deal. It all depends on the particular deal - like you haven't heard that before
Thanks for the input. The owner has no problem making the payments and has documented income to prove it. My thoughts are that if I bring the loan current, the bank would be happy and not press the issue. Typically when I flip I hold the deed without recording until closing or else I use a land trust to satisfy DOS clauses. I'm curious if i'm pushing too hard to create a deal here or is this the norm for "subject to" investing.
Thanks,
Bob
Greetings BuyerBob,
I sent you a private message. You should see a little "blinkie" in the upper right corner of yuor screen.
To mean this just screams out to me "I'm a big disaster waiting to happen!" Of course every obstacle presents an opportunity, so it's very possible this could turn out well for you. However I'd ask alot of questions. Such as, why don't the owner's refinance? Like nebulousd said, if they didn't pay the bank what makes you think they will pay you? They have verifiable income. Big deal, they had to have that in order to get the loan to begin with. Also you could run into MAJOR trouble if they stop paying you and you try to take them to court. Reason being that they could claim you took advantage of them and you run into major problems with ownership of the house because they owned it, were getting foreclosed upon so gave you title and you rented it out to them. A judge might say they still own the house. I'm not saying it would go down that way, but it's possible. As a rule of thumb I wouldn't let owners of a foreclosed property stay in the property.
Ryan J. Schnabel