Subject To Deals (aka Get the Deed) or Creative Financing as a Niche Investor

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Everyone in the real estate market is chasing the same traditional financing deals. It really can be a dog-eat-dog world. If you want to stand out in this crowded real estate market, you need to be in a creative financing niche.

Subject To Deals aka Get the Deed is a creative financing niche that works in any type of market. It appeals to sellers even in a hot market because it’s a particularly effective way for the seller to receive top dollar for their house.

Using Subject to Existing Financing, the seller can often get top dollar even if it’s not the best house on the local market.

When to Do a Subject To vs. Lease Option

I’m a huge advocate for sandwich lease options and cooperative lease options but there are times when subject to existing financing can be a better niche choice. In fact, subject to existing financing is a companion to lease options because it often works where sandwich lease options are not the best fit.

If the seller is behind in payments and they need you to catch them up, you MUST do a Subject-To and NOT a Lease Option.

There are many situations when Subject To Deals aka Get the Deed, are the right choice. Just to mention a few, here are some of the most common:

  • If there is a divorce situation, try for a Subject-To to avoid a possible messy closing later.
  • If the seller is out of town, it may be safer to get the deed in case you cannot find them later.
  • If the Seller has any kind of “bad debt,” or has lost a job, or is financially strapped.
  • If you feel uneasy at all about the Seller holding up their end of a sandwich lease option.

Subject to Deals work better when the seller is in financial trouble!

Tip: As with any single-family rental property, make sure the house will be appealing to “future homeowners.” Suggestions: stay away from freeway frontage, blight, less than 3 bedrooms, etc.

Subject To Deals aka Get the Deed Have Many Uses

Not only do you not need your own money to invest – but you also don’t even need any credit! How low risk can real estate investing get when you invest nothing and risk nothing?

What you have is pure profit!

You can use subject to deals aka get the deed to own your own home. You can use it very effectively with lease options to complete the purchase at the end of the option period. You can use it with sandwich lease options to encourage the tenant-buyer to complete the purchase. You can use it to become a landlord. You can use it to flip houses. You can use subject to deals aka get the deed to control multiple properties with multiple income streams. All without investing your own money and all without risk!

And I believe in win-win outcomes. This is another win-win when the seller is helped and will thank you! One problem you solve is keeping them out of foreclosure (or bankruptcy). Another is when they need to move for health/job/divorce reasons. But they don’t have enough equity to sell the property and pay off the mortgage. It could be a vacant house and they can’t pay the mortgage. Sometimes it’s the real estate agent commission they can’t afford to pay. Sometimes it’s both the mortgage and the agent costs. Their best option is for you to make the payments on their existing loan in exchange for taking ownership (title).

Basics of a Subject to Deal

When you buy a property subject to the existing loan, what you’re doing is asking the seller who has a property with a mortgage to transfer the title or deed the property to you. They sign over the deed… you take over the property and you start making payments on their existing loan. You’re not going to qualify for that loan, you’re going to take over the loan payments, taxes, and insurance for the property. But you have no credit check, no mortgage application fees, and none of the other costs and hassles associated with taking out a traditional mortgage.

A subject to existing financing deal is based on the fact that the deed to the property and the mortgage are two separate documents. The deed registers the owner of the property with the county and the lender holds the mortgage although it is secured by a note on the deed. With subject to existing financing, the seller transfers the property deed to the buyer but does not immediately pay off the outstanding loan. Instead, the buyer takes over the seller’s mortgage payments. Or they write a new contract requiring the buyer to make payments to the seller and the seller continues making the existing mortgage payments.

A subject to exiting financing deal lets you move in a tenant, and have control of the property for little more than the cost to draw up and file the closing papers. You can immediately rent for a profit or use any other investment technique while building equity and letting appreciation add to your future profit.

A Subject to Deal (aka Get the Deed) can be highly profitable.

Because you now own the house, it gives you all the options of ownership. And because you are an investor, you are aware of even more options than a typical homeowner. You could be a traditional landlord by renting it. You could sell it using seller financing where you collect a hefty down payment upfront and monthly installment payments for several years before receiving the remaining cash as a balloon payment. But of course, one of my favorites is a lease option arrangement. But this time it’s not a sandwich lease option. You are the owner, so all the money flows to you without sharing with a seller in a sandwich lease option arrangement.

You are in complete control. You can do anything that you want with the property!

A Wrap-Around Mortgage is a Niche Inside the Subject to Niche

Motivated investors that are experts in one specialized sector offer value to buyers and sellers alike. In today’s hot real estate market, you need to know about another version of the subject to deal that is known as a wrap-around mortgage. This allows you to use subject to existing financing even when the house has appreciated in value well above the remaining balance owed on the mortgage. A wrap-around also works when the seller has been paying on the mortgage for years and has a significant amount of equity in the property that they rightfully expect to be paid for.

A “wrap-around mortgage” includes making payments to the seller in addition to the existing mortgage payments. Essentially it is a second mortgage. This works when the selling price is higher than the outstanding mortgage. Separate payment is made to the seller to pay for the equity that they have acquired in the property. The buyer and seller sign a promissory note that lays out the terms of the mortgage and then the title and deed pass to the buyer. Though the seller continues to make payments on the original mortgage, they no longer own the home.

The buyer pays the seller a monthly mortgage payment, while the seller continues to pay their mortgage payment to the original lender. The wrap-around mortgage takes the position of a second mortgage.

This can create risk for the investor if the seller stops making the mortgage payments. If the existing mortgage goes into default, the original lender can foreclose on the buyer’s new property, meaning the buyer can lose the house, even if they’re current on their mortgage payments to the seller. Buyers can help prevent this by making their payments directly to the original lender. Something to be aware of is that anyone can pay anyone else’s mortgage. To take over the payments, all you need is the mortgage account number, monthly payment amount, and the lender’s mailing address. You begin making the payments and collecting rent from the property.

All is good in the real estate investment world when you don’t put any money down.

You might be thinking – but what about the qualified assumptions clause in the existing mortgage? The bank requires the buyer to qualify to take over the existing loan as if it were a new loan. There is almost always that clause in a mortgage. However, lenders don’t want to enforce it when the mortgage is kept current.

Subject To Deals (aka Get the Deed) are a terrific way to invest using other people’s money.

The opportunity will never be better during your lifetime to richly profit by investing in real estate. Whether you want to invest using subject to deals or another low/no-cost method with minimum risk, the detailed answers are at your fingertips.

  1. Get the Deed “Subject To.”
  2. Investing In Real Estate with Lease Options.
  3. Advanced strategies for Buying and Selling with Lease Options.
  4. Your Wealth Building Arsenal.
  5. Add Personalized Coaching.
  6. Cooperative Lease Options.
  7. Round it all out by Working with Realtors.

Happy Investing!

Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

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