Feedback on Subject-to - Posted by Christie (TX)

Posted by Houserookie on July 15, 2003 at 01:33:29:

fails to make payments buyer will have breached a contract.

Feedback on Subject-to - Posted by Christie (TX)

Posted by Christie (TX) on July 14, 2003 at 23:33:39:

Met with a realtor today on a house. Built in '57, original owner passed and house was deeded to son. Realtor says son originally planned to rehab and sell, and gutted the kitchen. Then he got tired of it and now just wants to get rid of it. Gutted kitchen is killing the resale, realtor says make an offer, any offer, seller is getting desperate.

3/1, 1200sf, huge cul du sac lot in transitional area
Comps in area sell for $135-150K
Home needs $20-30K repairs (kitchen, flooring, cosmetic, privacy fencing)

I was actually looking to buy a house in this neighborhood and just happened to stumble upon this opportunity. I would like to make an offer, and if it works out, it will be my first investment! I have lots of options–they are open to owner financing, but I have also already qualified for a bank loan. I could try to flip it or live in it and rehab it myself, then sell it or rent it out.

Since my options are wide open, any suggestions? Ya’ll rock!

TIA, Christie (TX)

Now that I know what subject to is… - Posted by Christie (TX)

Posted by Christie (TX) on July 15, 2003 at 08:45:02:

Any suggestions on the situation? I was thinking of suggesting a purchase price of ~$80K subject to the owner carrying the note for 15yrs, and then trying to find a lender to carry ~$30K for the repairs and misc. expenditures. That puts my purchase at $110 and it would easily sell for $135-140K. If I can’t find a lender for the repairs, then I could try to flip it or resell it. Am I on the right track?

Re: Feedback on Subject-to - Posted by js-Indianapolis

Posted by js-Indianapolis on July 15, 2003 at 24:06:11:

Subject To what? Built in 1957 and deeded to son hints towards no mortgage on the place. You wouldn’t be doing a subject to deal.

You need to tell us more about what is owed, and what the seller wants. Well, what he wants aside from a quick offer. some cash, all cash, any payoff of any liens or loans, or anything in his mind he wants to pay off? What?

Re: Now that I know what subject to is… - Posted by TC

Posted by TC on July 15, 2003 at 21:33:50:

Christie, First off I would like to say congradulations on getting out there and finding this one.

In my opinion I would suggest that for a first time , you should probably need to give yourself alot more of a profit margin.
You will always have alot of unforseen things in a house that is this old.Here are just a few

Electrical (Does the home have central heat and air and if not will the electrical need to be upgraded?)

What shape is the foundation in?

What shape is the plumbing?

What shape is the roof in?

Just these three alone could run into major $'s.

You will also have insurance,mortgage payments ,
utilities , advertising cost ,Realtor fees (If you list it on MLS) and closing cost.

You may have already accounted for these cost but I have done a several rehabs and I have learned that you have to have a lot of room there for the what if’s so with all that being said I would probably offer around $50-60k.Once you have made a high offer it is hard to get the price lowered but you can always increase the price a little.

Not trying to burst your bubble here but just trying to
give you a little insight from experience.If I had not been able to do a lot of these things myself I would have lost money.

Good Investing to You!

TC

Re: Feedback on Subject-to - Posted by Christie (TX)

Posted by Christie (TX) on July 15, 2003 at 24:59:30:

There are no liens on the property. Subject to…

… an inspection?
… owner carrying the note?
… am I misunderstanding the term “subject to”?

Re: Feedback on Subject-to - Posted by Heather_Tx

Posted by Heather_Tx on July 15, 2003 at 01:14:29:

Christie (TX),

Sub2 in the terms we investors speak, means sub2 their exisiting mortgage. We take over their mortage payments.
Don’t get this confused with the clauses you use in a contract to get out of if you must the Sub2 existing financing, Sub2 inspections and so forth… totally a different thing.
What part of Texas are you in ? I’m in Houston and working on one rehab, but looking for another… if the numbers are right and you would want to flip it and are near Houston … I would take a look at it if you would like. If you are near me and want to rehab yourself, I would still be glad to lend my advice on the current market and Repairs and so forth for you, no prob. Good luck with this one :slight_smile:

Heather_Tx
Heather Zaal
webuyhouses@houston.rr.com

Re: Feedback on Subject-to - Posted by Houserookie

Posted by Houserookie on July 15, 2003 at 01:26:41:

Heather,

You said,

“Don’t get this confused with the clauses you use in a contract to get out of if you must the Sub2 existing financing, Sub2 inspections and so forth… totally a different thing.”

Well it’s not much different at all.
A subject to purchase that shows up on HUD1 line 203 or 503 says the seller is selling and buyer is buying subject to the current loan staying in the seller’s name. If the loan does not stay in the sellers name then the seller has breached a contract.

This is not much different from buying subject to loan approval, inspection, appraisal, etc…

Subject to existing financing is a contingency nevertheless.

Cheerz,