I’ve done plenty of Sub2 deals and I’ve always used the strategy as a short to mid-term strategy. If I plan on keeping it(the property), I’ll pay off the mortgage in 9 months on average and end up owning it free and clear.
We all know the elephant in the room ‘Due On Sale’ clause and chances are, you’re probably not getting called right but don’t you think the chances increase in the coming years?
I’m not doubting Sub2 at all, its still a favorite of mine and I’ll continue to do what I do, I’m just curious if you guys continue to hold them long term, push a L/O tenant/buyer and how has your strategy if long term worked for you so far?
Short of Seller Financing Sub2 is a great tool… As someone who would rather make MASSIVE amounts of money then passive amounts of money I try and not keep my deals that long… However with that said I never allow a restriction within the agreement that calls for a payoff earlier than the last payment as outlined in the note. And I don’t disguise who the owner of the property is to the lender… Certainly there are those that preach a Trust… However it hasn’t been an issue…
I think what makes it a NON risk issue is that I don’t invest as a strategy into Sub2 deals where the margins are created by reselling the deal on time… If one of my sub2 deals are called there is plenty of equity to place new financing without the worry of values. With that said I totally see value in a non equity sub2 purchase and Land Contract or Wrap, especially in a market there equity deals are few and far between.
I will never pass a Sub2 onto a buyer without staying attached to the property until the buyer performs… But that just me.
Sub2 Investing has to be the most secure method of investing when not wanting to use your credit or cash.
BTW welcome to the board I have enjoyed reading your posts…
thanks for the compliment on my posts.
I agree with you in your saying not hiding the owner. I am and get just as annoyed with those that preach that crap.
I certainly wouldn’t mind holding a Sub2 longer especially those that I place a L/O tenant in but I think it’s just been my style not to hold onto the very long without selling them for profit (retail) or paying off the mortgage myself and collecting the entire cashflow monthly.
Who knows, maybe I’ll change my mind soon, I’m just curious if others are holding them. I’ve got a friend that has a dozen or so for over 10yrs and he’s just letting the mortgage get paid down but his ultimate long term strategy is different than mine so I see why it works for him.
My interest is in long term holding so that I can owner finance nonequity property. I agree that if u are holding long term, it’s best to let the lender know there is a new owner making payments, because contructive notice combined with then receiving payments and accepting payment can be looked at as their acceptance of new terms of the original contract.