Wholesale real estate “subject to” the existing mortgage
Let’s face it Real Estate Wholesaling is a game… a game of wits and abilities!
There are many strategies that enable you (The Wholesaler) to put a property
under contract and then sell it to a buyer for a profit. This money making strategy is known
as real estate wholesaling and it is quickly becoming very popular in the real estate world.
You search for motivated sellers, build your buyers list and then wholesale
a deal that you created by negotiating with the seller over to a buyer to make them
a profit. This transaction provides great “Cash Now” but what about
“Cash Later”?
I want to share with you a way to purchase these great deals for yourself
through a strategy called “Subject to”. This is where you purchase a
property subject to the existing financing. Often times you can do this with no money
down.
Once the seller agrees to this you have to check the terms of their underlying loan
and get a copy of their note.
Have them sign a purchase agreement for the agreed price.
You then have them amend their home owners insurance
listing you as added insured.
Have them sign an authorization to release loan information. You will send
this to the bank so you can get acurate information regarding their
loan amount and payments.
You then file a Quick Claim Deed with your county Court House.
Get a limited power of Attorney signed by the seller giving you rights over the property.
Once this paperwork is complete you must begin finding a tenant buyer.
Someone that you can put into the property to pay the monthly mortgage
amount with the intention of purchasing the property in a year.
Collect a non refundable security deposit up front from your tenant buyer.
This is money in your pocket since it is non refundable if they default and
if they purchase in a year you will simply deduct this deposit amount from
the purchase price at settlement.
I suggest that you recommend the tenant buyer to a Mortgage Broker
and Credit Repair Agency immediately so they can begin getting their
credit in shape to purchase in a year.
Subject To Checklist:
Check the terms of the seller’s underlying loan – get a copy of the note
Make sure the seller has amended his insurance policy to name you
Have the seller sign a contract – Real Estate Purchase Agreement
Authorization to release loan information form
Quitclaim Deed
Get a limited power of attorney
This is a GREAT way to purchase a property with no money and no credit!
Filed Under: investing in real estate • investment property • real estate investing • realestate investing • subject to financing
great post as usual!
I love the subject too transaction. It is the simplest and often the quickest and easiest way to make money in real estate. Finding these deals can be difficult sometimes though.