Long term Subject To deals for real? - Posted by Ed Eaton

Posted by Doug on August 13, 2003 at 20:00:17:

Proof to sellers new loan company that payments are being made:

2 ways

a land contract…dated the day before the deed…it’s actually null and viod by the time the bank sees it, as we already have the deed and own the property… the seller never sees or touches the land contract…fax it directly to the seller new lender when and if they contact you about the outstanding loan

or in our most recent case all the bank wanted was:

a lease with a payment equal to or greater than the underlying loan payment


Long term Subject To deals for real? - Posted by Ed Eaton

Posted by Ed Eaton on August 13, 2003 at 09:57:23:

There’s something I just don’t get about Subject To deals - I just can’t see too many sellers agreeing to a long term Subject To deal unless they are incredibly desperate. Sure, 6 months while the buyer fixes up the property and flips it, or a few years at most, but I just can’t imagine doing these long term subject to deals I keep reading about in courses. These courses talk about buying a property subject to and selling it on a L/O or on a wrap, etc. but why would any seller agree to such a long term subject to deal where the darn thing stays on their credit, etc. for 5, 10 or more years. It just seems that no one would agree to such a thing. Do these type of deals really happen? Or is the whole subject to thing just getting hyped up by some people just to sell more courses, etc etc as is often the case?

Yup, they are… - Posted by MatthewC

Posted by MatthewC on August 15, 2003 at 12:25:54:

The problem you are having is that you are influenced by YOUR preconceptions. It may be a situation where you have to see it to believe it. Unfortunately, you may never get to that point unless you believe others or have faith it does happen.

There are all kinds of reason besides “desperation”. Some people actually just don’t care. They are simply happy to be gone and having someone else make payments.

The reality is, when I take over payments, many people’s credit actually IMPROVE because having one mortgage on a credit report is actually a sign of stability. Not only that, timely payments are on a mortgage are revered in many creditors eyes.

Re: Long term Subject To deals for real? - Posted by Russ Sims

Posted by Russ Sims on August 13, 2003 at 12:45:03:

We have purchased scores of homes ‘subject to’. At first we told sellers we’d have them paid off in 2-4 years, and we even put it in writing. Stupid. We now know that if we don’t even make an issue of getting them out of the loan within a certain time, the seller usually won’t bring it up. I know it’s hard to believe, but if a seller is motivated enough to allow the ‘subject to’, they usually won’t make an issue of how long they’ll let you keep it ‘subject to’.

What we are finding is that in this environment of low interest rates, we can refinance many of our subject tos at 80% LTV (the ones that our tenant/buyers haven’t been able to buy), pull some cash out, lower our interest rate and payment and get the original owner out from their loan.You may find that even though you may be able to keep a ‘subject to’ home indefinately, it may make sense to refi, pull cash out to fuel other deals and move on.

Re: Long term Subject To deals for real? - Posted by Doug

Posted by Doug on August 13, 2003 at 11:14:21:


I don’t sell courses. I invest. I own 3 homes I bought subject to. In all 3 cases, the sellers know and knew at the time i took over thier loan, that the loan remaines in thier name until the balance of the 30 year mortgage is paid off. That means with 29 years left on the loan, it will be in thier names for 29 more years, unless i decide to pay it offf early, which I won’t unless my tenant decides to buy.

All 3 sellers were not super motivated:

one couple wanted to move in with mom and dad to save for a bigger house

one single mom wanted to move in with her new boyfriend

one couple coudn’t afford the house anymore and moved in with grandma. that couple has already, just 90 days later, bought another house with an in law suite for all 3 of them. I provided thier bank with proof that the payments were being made, which relieves them of the monthly debt, so ANYONE can buy a new house, car, etc. regardless of how long the loan stays in thier name. The sellers know this when I buy…they don’t care about the loan in thier name, just that they can borrow again if they need to

Stop debating it and go out and do it. They need you more than you need them. By the way, the last seller PAID US $13,000.00 plus 1 months payment to buy the house,


Re: Long term Subject To deals for real? - Posted by Brent_IL

Posted by Brent_IL on August 15, 2003 at 20:46:24:


You are right-on. Thanks. When we give out too much information, the seller will know that he doesn’t know what we’re talking about, and assume that it must be of such importance that it?s necessary to get counsel from the mavens. The mavens know that they can?t get in trouble with ?No? advice, so there goes our deal.

If we don’t make a big deal out of it, the sellers will not make a big deal out of it.

Re: Long term Subject To deals for real? - Posted by lil-pa

Posted by lil-pa on August 13, 2003 at 14:40:18:

Hello Doug,

What proof do you provide the bank that the payments are being made?

Thank You
Lil sweeney

Re: Long term Subject To deals for real? - Posted by Terry (Houston)

Posted by Terry (Houston) on August 13, 2003 at 16:50:31:

I am not sure what you mean by “proof to the bank?” The bank gets paid and they have proof.

Are you asking about the seller and what proof they have that the loan is getting paid?
They can call the bank or get online information anytime they wish.