assuming vs subject 2

  1. Whats the difference between assuming a loan and taking it over subject 2?

  2. If you conduct a deal subject 2, who owns the property? As far as I understand the original homeowner does. Is that correct?

  3. If so, can you rent it out for more then what the payments are? What’s the best way to make a profit in this situation.

I was going to but I cant… Visit a rei club the night they are talking about subject 2… I have a feeling that if we start answering your questions there will be more questions coming… Sub 2 investing is simple and difficult… You need a great understanding of the purchase and exit strategies.

Are you a flipper or a passive income earner? Are you wanting to earn off of the note or the property?.. Are you going to be both a flipper and a passive earner? Are you going to use two entities to buy within? What does your prospect look like? How are you going to persuade them to call you. What presentation are you going to use? Are you using cash?

There are courses written on this stuff… One by one of the moderators here…

Michael Quarles

Strange name…

Anyway, I’ll try to answer your questions…keep in mind though, as the previous response indicated, subject to investing does have some details to it…and they cannot be addressed in a post, thread or forum.
Get yourself some good educational materials to learn the method…lots of courses/books out there to choose from.

Now, your questions:
Difference between ‘assuming’ and buying subject to?
Assuming, means you will be most likely, qualifying in order to assume…which makes no sense, and most loans are not assumable without having to qualify.
when you BUY subject to, you are taking title (ownership) of property, and leaving the loan in place, without qualifying or having the mortgage or note put into your name.
The confusion for most folks comes from a basic misunderstanding of real estate terms.
Sadly, many people in the world think that whoever has their name on a mortgage against a house, is the owner.
Not true, whoever HOLDS TITLE is the owner.

Second question:
like I said, please, PLEASE buy a book, for reference and learning, and read more here.
NO, when you BUY a house ‘subject to the existing financing’, you OWN the house.
Again, see above…he who is on TITLE is the owner, not just the person who signed for the note/mortgage against the house.

And the third, too general a question frankly.
Can you rent a house for more than the house payment?
If market rent is $1200/month, and the payments are $1800/month…probably not.
So, the numbers need to make sense, in order for a deal to work.

How do you PROFIT from a subject to deal?
The same way you would ANY other real estate transaction.
Buying subject to the existing financing, is merely another way to get the deal done.

No matter what method you use to purchase property, cash, conventional, subject to, seller financed, some now, some later, whatever…you MUST make your money when you buy.
That is investing…any other way, is speculating…I don’t do that.

Jim FL

Michael & Jim,

Are you guys kidding or what, who in the hell in their right minds would keep the loan in their name and give someone the deed so that they owned the house???


Both Michael & Jim are course writers well versed using the Subject To method of investing and for anyone to try an explain the proper procedures in a post would be hard pressed to answer all the elements that go into this great creative investing method.

I will basically touch on the question of renting the property out. First I do not use the Tenant/Buyer method, I sell the house to a buyer using a Contract for Deed. This gives the buyer a sense of owning the Great American Dream and if he lives up to the terms of the contract he does.

With the tightening up of credit, now is the perfect opportunity for this method of investing as you are the person who qualifies the buyer and if they put “enough money down” and have a heart beat (pulse) then they are qualified in my opinion. This further leads to setting the monthly payments, which have nothing to do with rentals in the area, but have everything to do with the feeling of home ownership for a family.

In other words if the buyer has had some credit hiccups, I work with them to help straighten up those problems so they can qualify for a new loan when the time comes to refinance the property I sold them. It reminds me of the car advertisements where they say 0% interest, even the ones who do not qualify for 0% because of credit issues, will normally still purchase at 21% because they want the new vehicle in our case they want the American Dream and understand they have to pay for it on our terms.

If someone beefs about the interest rate I am charging, then I say hold on I will go to my car and get a credit applications and we can lower the interest. Never had to go to my car yet for that application. The buyer understands that they will pay more for their past credit actions and since we take the risk, we need to build in a cushion for those contingencies as anyone loaning money does.

As I just read in an email from someone holding a Subject To seminar :rolleyes, there are three profit centers in a Subject To deal, the down payment, the monthly passive income and the back end of the deal, been doing that way since 1992 and it works for me and my students.

John $Cash$ Locke

John. We both know that people don’t sign over the deed because the mortgage company is ready and waiting to accelerate the DOSC. Happens every time unless you put it in a trust and disguise the transfer…

Thanks for your feedback everybody.

So for the most part, is seems this a great no money down techinique. Is that the case or is there really no such thing?