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