Subject to (to) Subject to - Posted by Marty K

Posted by Shawna (Newbie) on February 11, 2000 at 09:20:17:

I loved your post. I am a newbie with very little working capital. I just wanted to ask, the 5k that you gave to Harry for his back payments, for someone with very little working capital, could that 5k have come from Susie? Or would you have had to come up with it at closing? I also wanted to know when doing seller financing does the buyer always have to have some kind of down payment or is there another way to get around this? As you can tell I really have little money to work with. I hope I was not too confusing. Thanks in advance.

Subject to (to) Subject to - Posted by Marty K

Posted by Marty K on February 09, 2000 at 13:45:15:

Can a property thats taken subject to, be sold to someone else subject to or is this really pushing it? I know of a guy thats doing this. How do you protect yourself and all of the other parties involved within this deal? This really is getting confusing.

Marty K

Re: Subject to (to) Subject to - Posted by JoeB(Atlanta)

Posted by JoeB(Atlanta) on February 09, 2000 at 14:49:00:

Hi Marty, we have only done this ‘double subject-to’ scenario when we do a WRAPAROUND mortgage, so that we stay in the loop to protect the original homeowner.

Here’s an example: Harry sells his house to me for $50k : $5k in back payment I pay in cash, and subject-to his $45k mortgage balance at $400/mo. I close and sell his house to Susan for $65k: $5k down, and $60k on a wraparound mortgage (ie I added a $15k 2nd mortgage ‘on top’ of (wrapped around) the $45k subject-to mortgage) at $600/mo.

So I profit on the difference in mortgage balance when Susan finally refis/pays me off and on the spread in the monthly payment. BUT, we ‘wrapped’ it so that Susan’s $600 check comes to me each month, and I write the $400 check to Harry’s lender each month. So I’m still ‘in the loop’ and can protect Harry’s credit by making sure Susan (or me) is always paying his mortgage.

That’s the only way we feel it’s ethical and fair to Harry, but I know LOTS of investors who just do a double subject-to and pass along the mortgage to Susan without Harry knowing.

Hope this helps,
Joe Brillante