Posted by becky on August 29, 2001 at 23:50:31:
for more information on getting the deed go to www.getthedeed.com
Subject to question - Posted by Tim (CT)
Posted by Tim (CT) on August 24, 2001 at 13:29:05:
I’m going to look at a house tonight. The value of the house is around 125k. He owes 84k and wants 90k for it (he basically already told me that he just wants to get rid of it - hence, the asking price of the house). The property just needs some cosmetic cleanup (maybe a total of $1,000, tops). Now, from what I’ve read (and, please correct me if I’m wrong), aquiring a property ‘subject to’ just means that I basically take over his payments. No money exchanges hands. When I sell it through conventional means or maybe a L/O deal, I just pay off the loan and then keep the remainder for profit. I’m going to assume this is correct so far. If the current seller doesn’t go for that because he’s not getting any dollars from it, is it practical to sign a promissory note that says I will give him, say, 2000 from the profit, this, obviously being contingent upon the sale of the home? I expect to sell the home in a year or two for probably somewhere around $135,000. With the larger profit, I can sacrifice 2k to make sure I aquire it with nothing out of my pocket.
Has anybody done this? Am I way off? Should I just walk away if he says no? There’s definately alot of money to be made on this deal and I’d prefer to get in without any money out of my pocket, if possible.
Any thoughts would be appreciated.
Thanks.
Re: Subject to question - Posted by JohnBoy
Posted by JohnBoy on August 26, 2001 at 03:21:27:
You can give the seller a note and make it due and payable upon you reselling the house as you suggested. Or you could give the seller a note and make it payable in monthly installments over x number of months, with 0 interest or whatever intereast you and the seller agree on. Or you could offer to give the seller some cash, due and payable when you secure a tenant/buyer for the property. Then you can use some of the money you get up front from your buyer to pay the seller so he gets all or some of the cash he needs now.
Instead of wording the note to be contingent upon the sale of the home, word it to state the note is due and payable upon the sale of the home. More than likely the seller is going to want a specified time that you have to sell the home or pay the note by. You could say due and payable upon the sale of the home or within 60 months, whichever comes first. Otherwise the seller could have to wait forever if you never sell the home. I doubt that would be acceptable to him.
If he NEEDS the cash now then use the cash you get down from your buyer to pay him with. Or just structure the deal to where you can make payments. Unless he’s willing to wait until a later date to get paid in a lump sum then that will work as well.
Re: Subject to question - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on August 24, 2001 at 19:11:58:
You talk about possibly creating a $2,000 note that the seller could get later. Now when the collection of the funds is contingent on the sale of the house which you are doing, you are getting pretty close to “for another and for a fee”. While I don’t think that you are exactly there you are pretty close.
This is what a Real Estate Broker does. He sells property “for another and for a fee”. He needs a locense to do this. Take care not to get into that position.
Re: Subject to question - Posted by Bob at Get the Deed
Posted by Bob at Get the Deed on August 24, 2001 at 16:54:00:
You’ve got a real good start. However, be sure to GET THE DEED. You want control of the property. Have the seller deed the property to a land trust that you’ll create (he’ll be the beneficiary of the trust, you name the trustee as someone you trust). Then have the seller assign his beneficial interest in the trust over to your company.
Sounds like you’ve got a motivated seller.
Oh, by the way. Before you create and take the deed, be sure to run a title search to be sure that the seller owns the property and that there are no unexpected liens or second mortages.
Good luck. I’m sure you’ll find lots of previous posts on subject to on this site.