Posted by dutch on May 01, 2006 at 17:18:43:
What exactly do you want to know? It is not complicated.
Dutch
OKhomesavers
Subject To - Posted by Bill
Posted by Bill on April 30, 2006 at 24:05:26:
Can anyone recommend any good books that explain the subject to techniue?
Thanks guys
Bill
Re: Subject To - Posted by dutch
Posted by dutch on May 02, 2006 at 08:29:30:
Bill, your email bounced, bad address or AOL doesn’t like you anymore.
Ok, I’ll take a stab at it. I have capitalize the words that are important for you to make sure you understand within there context:
You PURCHASE the property “SUBJECT TO” the existing financing. In laymens terms, you take over the payments. You are DEEDED the property, but the NOTE & MORTGAGE (or DEED OF TRUST) stay in the name of the original borrower. But YOU make the payments. You also contract to purchase property subject to other things, “partner’s approval”, inspections, etc.
Taking SUB2 is also a negotiating technique. Not all sellers will go for it, but some will. It is usually best to not talk details until they ask or until at the closing. I just say that I will make their problem go away, and I’ll take care of all the paperwork. You’ll have to work that out for yourself, whatever works. Just remember, too much info too early is not usually a good thing.
You get the deed and record it (usually into a trust). You start making the payments. You change the insurance to the trust as an additional payee, and usually change the policy to a landlord policy. Then you do your exit strategy (different course, or not). I like to sell via Owner Carry using land contract, also part of the same course (see below). But you can sell retail for cash, lease/option, rent, or whatever. The original borrower stays on the note until somebody, you or your buyer, refinances or cashes out the property with a new 1st mortgage.
Lots of paperwork to make it work properly and legal and ethical. There are contracts, deeds, disclosures, escrows and more.
The best course I’ve found which I use exclusively is Bill Bronchick’s course, “Alternative Real Estate Financing”. www.legalwiz.com or you can find it here on CREOnline. All of Bronchick’s stuff is very good. He is a lawyer as well as an investor and knows his stuff. In addtion, his courses are more steak than sizzle and give you all the legal foms you need, including state specific deeds, etc.
Hope this helps.
Dutch
OKHomesavers