how feasible is "subject to" mortgage? - Posted by John

Posted by John Corey on May 17, 2006 at 05:15:24:

  1. It is possible. It is done by a number of people. I have no idea as to the ratios. This particular method of investing works best when you have a focused marketing approach. It also is more common when the seller has few choices. I speculate you see a higher success rate in markets where appreciation is not rapid so that people can not wait for buyers to start bidding war.

  2. If you believe there are no possible deals out there you will tend to find evidence to support your view. The majority of the residential sales are between owner occupants with the prior debt being paid in full.

  3. Lenders might care more than you think. People who buy subject-to rarely try to notify the lender. It has been debated many times on this forum if a lender will invoke the DOS clause. For the most part on-time payments are the biggest priority to a lender. Just be prepared to refinance or otherwise deal with the loan if a lender calls it due. When you take a property subject-to you make promises to the existing borrower and you have to honor those promises. One state’s attorney general said subject-to if legal but not living up to the agreement with the seller/borrower can be fraud depending on the intent when you struck the bargain. In the specific case the buyer of the subject-to failed to keep up with the payments and had a pattern of doing the same with multiple sellers.

John Corey

how feasible is “subject to” mortgage? - Posted by John

Posted by John on May 16, 2006 at 08:46:25:

Where can I get more info? Thanks

Re: how feasible is - Posted by PF

Posted by PF on May 17, 2006 at 06:57:28:

Hey John,

You may be thinking of a rehab loan. These loans are issued on properties that need renovations. In this case a lender will give you the money needed to do the renovations as long as you provide contractor quotes. You may be purchasing a property for $100,000 but need $50,000 for rehabilitation. The lender looks at the after repaired value (ARV) and determines what the value of the home will be after it is repaired. This is done with a “subject to” appraisal. Once improvements are complete, you will be carrying a mortgage for the acquisition cost plus improvements, in this case $150,000. Hope this helps!

Re: how feasible is “subject to” - Posted by John Corey

Posted by John Corey on May 16, 2006 at 14:20:38:

There is no such thing as a ‘subject-to’ mortgage given how most people the phrase.

In most cases when someone is buying a property ‘subject-to’ they are buying from a seller and will purchase the property with the present loan left in place (purchase subject-to the present loan).

In an odd way you could say that any 2nd loan is subject-to the 1st but I do not think that is what you are talking about.

What have you been reading?

Try searching the forum and the success notes/how-to sections for ‘subject-to’.

John Corey

Re: how feasible is “subject to” - Posted by John

Posted by John on May 16, 2006 at 23:22:28:

I am wondering specifically: Can “controlling” a property by taking over the owners mortgage be done…and that means is it realistic…not a 1 in a million chance? Can these owners be found? Will the mortgage holders generally be ammenable to this (i would imagine they don’t care as long as they get paid, especially in the face of losing their shirt.)Burned in my mind is "you sell, you HAVE to pay the mortgage off. I’m just looking for the straight talk. You can make a million dollars at the slots but how realistic is it???