Investing in ‘Subject To’ Properties


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Let’s face it; real estate investing can be confusing at times.  Investors are always searching for a better, more efficient way to do business and the ‘Subject To’ concept accomplishes this pursuit.  The ‘Subject To’ allows a seller to sell a property to an investor but keep the loan in the seller’s name.  An investor then sells a property to a new buyer without having to get a bank or lender’s approval.

Sellers who are in the market for a ‘Subject To’ deal are usually desperate and are looking for a way to get their mortgage paid.  They are looking for anyway to maintain their credit rating.  An investor effectively finds someone else to pay for their mortgage and some.  After a seller agrees to a ‘Subject To’ deal they transfer the title to the investor through a Grant Bargain & Sale Deed.  These documents are state specific so be sure to get the appropriate ones.  Then the investor offers the seller a bit of money for agreeing to this unique selling option.

Now consider different ways to sell the house and at this point it may be best to consider owner-financing options.  If using an owner-financing option it is beneficial to secure a 10% down payment.  Also consider increasing the value of the house by 10% to make the most out of this investment.  Then add a few points to the interest rate of the original loan and make a decent monthly income off just one property.

Obtain a loan servicing company to collect and split the payments.  Advise them to send the lenders their share and the rest to your bank account.  Also make sure to set up a trust fund with the loan servicing company that has enough money to pay for the payments if the new owner defaults.  This will give you enough time to remedy the problem and possibly get them replaced.

Most of the people that are buying a house in this fashion don’t have perfect credit and are not able to obtain a bank or lender approved loan.  Let them know that by making timely monthly mortgage payments they are effectively increasing their credit rating.  They may have the possibility to refinance the loan with a bank in two to three years.  During this time an investor collects a great deal of money and helps the original owner by keep the loan out of default.

Asking questions with these few tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us at Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business.  Come see us for more information.

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