When's the best time to buy Sub2?
Hi guys, I've researched the Sub2 concept fairly well, and believe I understand most of the benefits of buying Sub2, but correct me if I'm wrong:
I find a motivated seller that deeds me his property. The contract contains the "Sub2" contingency. Now then, which scenarios are best suited for this type of deal? For example, a house that has a mortgage of 100K that is 6 months in arrears would have the weight of, say, 6K in back payments due. You wouldn't do a Sub2 deal on this, would you? I mean, what's the point of shelling out all of the back money even if I get the mortgage discounted by 10-15%? Isn't the Sub2 strategy used when there is a bit of equity in a home? If so, what parameters are best suited for this technique vis a vis flipping it quickly to a wholesaler for a double-closing or assigning it? Thanks for entertaining my newbie question in advance. 
Go for it ,You from what i understand from your post you have exactly hit the point . Im a newbie as well, but i think its true when i tell you; YES go for the deals that have little equity, the newer homes . Mostly keep posting and learn . jerr
Eric,
I'm not sure I'm following you with the "Sub2 contingency"? What do you mean by this?
I agree that shelling out 6k in arrears plus closing plus..plus...is not worth it for a mere 10% to 15% discount, unless you already had take-out financing through an end buyer. Even then, it's probably too thin to mess with.
My belief is that it makes absolutely no sense to buy low equity or no equity deals using Sub2. If you're committing yourself to the property through ownership, then make sure you have an equity cushion just in case your town heads south economically.
A well-planned L/O is a better technique for the riskier, low equity deals in my opinion because you can always give the property back when renewal time rolls around.
I also don't understand "If so, what parameters are best suited for this technique vis a vis flipping it quickly to a wholesaler for a double-closing or assigning it?" What do you mean here?
If you're buying with enough equity to flip to a wholesaler, then a Sub2 purchase would certainly be a decent technique. It's not a good idea to pass the Sub2 on to someone else without full seller written consent.
Please help me understand your questions a bit better. Thanks.
Jerr,
Perhaps posting this topic in "Subject To" forum would land you more complete and more competent responses.
[addsig]
I believe you can do a Sub2 even when there is little or no equity from what I'm reading on other posts. Your profit is from deposit money from your buyer, monthly spread (if any), and the difference between your buyers purchase price and what you are agreeing to pay. I have not done a Sub2 deal but this is my understanding of the concept. Correct me anyone if I am wrong. Not sure on your other questions. [ Edited by iamhappy on Date 01/06/2004 ]