One of the most important concepts that I stress and believe in is controlling property without ownership. When it comes to Subject to Existing Financing, I need to expand on the control versus ownership concept a little more. This is the ultimate in controlling real estate properties without investing your own money. In fact, the concept is to assume ownership without investing your money.
“Subject to” is short for “subject to existing financing.” No financing — just take over payments! No qualifying! No income or credit checks!
Subject To Deals aka Get the Deed are about assuming ownership!
Here you’ll find some of what I’ve written previously about putting these subject to deals together: Type of Owner Financing.
Subject To Deals aka Get the Deed Have Many Many Uses
Not only do you not need your own money to invest – you 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 so the end buyer completes 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 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, or they don’t have enough equity to sell the property and payoff 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 company and the agent costs. Their best option is for you to make the payments on their existing loan in exchange for taking ownership (title).
Subject To Deals – What These Do For You
Your goal as an investor is finding these motivated sellers. You make money by helping others solve their problems. Sometimes a lease option deal is converted into a subject to deal aka get the deed. On a good day, a subject to deal comes along that is immediately ready to close.
In subject to deals, you’re taking full ownership of the property. Your name (or business) goes on the title.
Ownership brings you important benefits:
- Great ROI. (return on investment)
- Tax Advantages. Including write-offs for depreciation, property taxes, maintenance, management expenses, advertising costs to rent or sell, and insurance premiums.
- No New Loan Costs. You don’t pay fees for loan application, points, loan origination, appraisal, document preparation, or any other fees that may occur. This can easily total $3,000 to $6,000 in savings.
- No Need to Qualify. for a new loan.
- No Personal Liability. for financing.
- Better Interest Rates.
- Sometimes you get paid to take ownership!
These deals are sweet. But you need highly motivated sellers. Typically, sellers behind on their payments and headed toward foreclosure. Or sellers with little or no equity. You make money from both scenarios.
These sellers are ready to turn the house over to you just so they can stop making payments. Believe me, plenty of these people exist.
How Subject To Deals Are Different From Sandwich Lease Options
Occasionally, you might need to pay the seller some small equity – but not with your own money. Instead, you write them a promissory note for the equity. The note is only due after you make your profit or from cash flow. You put a tenant/buyer in the property. You pay the seller’s equity from the purchase option fee or when the buyer closes the deal or from the monthly rent.
Subject To Deals are a win-win-win for everyone!
Subject to Existing Financing is different from a lease option. Specifically, you take full ownership of the property from the beginning. You own the property because the seller deeds the property to you and records the deed with you named as owner. You do this without paying off any loan the seller has on the property and without formally assuming any debt.
You will owe the seller whatever price the two of you agree upon. However, you don’t need to apply for a mortgage. You don’t have to qualify for a mortgage. Nor do you have to pay the high costs associated with a mortgage. There is nothing deceptive about doing this but you do want to do it in a way that minimizes your risk.
I use and firmly believe in lease options and sandwich lease options. Both are very powerful tools. However, subject to deals eliminate any possible conflicts or disagreements that can potentially come up during a lease option period. Rarely do problems come up but there is a chance the lease option seller could go bankrupt. Or take out a secret secured loan before you complete the purchase. They may also try backing out when they see how much money you are making through appreciation, rents, and reselling the house. Finally, you don’t gain tax write-offs from the lease option until you complete the purchase.
There could be dozens of subject to deal aka get the deed waiting for you RIGHT NOW in your own town – dozens of sellers desperate for buyers, and YOU CAN HELP THEM!
By Wendy Patton
For more than 35 years, I’ve used the Sandwich Lease Options 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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