What Exactly Is Sub To? Besides
What exactly is sub to? Besides purchasing houses subject to the existing financing. For example, I would like to buy a 4plex,and live in it . It is a pre-forclosure . From what I have read on this site, subject to's are meant to be turned around and sold. So does this mean I can't subject to, the property im looking to purchase for myself?
If not then what would be a better way to purchase for as little down? I'm a bit lost any info would be greatly appreciated. Thanks.
Look at the FAQ's
So then by what the example means below is that you basically buy the house for 90,000 . And the sell it for 113,000? to make a 19,000 profit?
Besides that does this mean I can still live in a house that I purchased subject to even if i dont make a bigger profit by turning around and selling it?A pre forclosure at that?
quoted
"·How does a Subject To purchase work?
Sub2 example:
Property FMV = $100K, seller owes = $90K.
To sell conventionally thru an agent would be: 6% commission = $6K, negotiating loss = $3k, closing costs = $3k, holding costs = $4k (650x6mo) TOTAL = $16K to sell. Seller would owe $6k at closing.
Sub2 sell: Investor buys property subject to the existing financing. Gives owner $10 for 'equity' at the closing where title is transferred to the investor. The investor will then start making the $650 a month payment on the property.
How does investor make money?
Investor sells on a Contract for Deed or Lease-Purchase/Option on a 2yr deal. In 2 years the property should be worth about $106K (3% appreciation per year). So sells for $3K down, $800 month, balance due at term = $103K
Profit = Upfront $3K - $10 = $2,990; Thru term = $800 - 650 = $150 x 24 = $3.6K; backend = $103K - $90K = $13K TOTAL PROFIT = approx $19.5K "[ Edited by AWard on Date 10/13/2003 ]
Hi AWard,
Purchasing a property "Subject to" is just that...a purchase. What you do with the property after you purchase it "Subject to" is up to you.
If you want keep it, resell it, or rent it. You now have the deed. Just make sure you keep the mortgage payments current.
Best of luck
John (LV)
Thanks for clearing that up. It may have been a silly ? to most of you, but i was clueless. I am learning though. I just wasn't sure if there was some law, that wouldn,'t permit me to buy subject to without selling it again.
Thanks again.
the sub to flue
As easy as it is to get your first home. Keep it or not I bet you do it again.