Explain Insurance with a Sub 2

When I get a sub 2 deal and put in a lease option tenant, who pays the new insurance, Me the buyer?Shouldn’t the original loan have most of this in escrow and won’t it change since it will not be my primary residence? Do I get a new ins policy and how do I get whats already in escrow to put towards the new one?What all do I need to cover myself with these deals?

Evidently, nobody is going to answer this…?

What happens with any escrow funds is up to you to negotiate.

I take what I can get. If the bank is escrowing money for taxes and insurance, I want these assigned to me without prorations, as a condition of the purchase.

If not, it depends on how good the deal is, whether I ask the seller to bring everything current as a condition of the sale.

In a naked Sub2 situation, you will want to simply take things ‘as is’, without getting all hung up over shortages (overages are great) in escrow.

Meantime, you are going to need a new landlord policy in your name, or trust’s name regardless. Whether or not, you effectively pay for any of these costs depends on the payment you’re able to achieve from either your end/user/buyer, or your tenant/buyer. Either way it’s about knowing your market, the rents, the going interest rates and what the market will bear.

If you can’t service a negative cash flow, you should not buy the property in the first place. It’s not a good enough deal ‘for you.’

Hope this still helps. :beer