Can I use a hard money loan to do a subject-to deal?
I’m still a little green newbie, but I can tell you that with a sub2 you are taking over payments on an existing loan. You do that so as not to have to get a loan. Why would you then need a hard money loan?
Edit: basically Gary the Wizard answered this question the same way in your other thread (where you ask a somewhat related question). I get confused about these things myself, and what I do is re-read what I’ve already gone over in my books as well as articles and older posts here so as to get a clearer understanding of the creative financing, conventional financing and HML.
Agree with deborahwells…Sub2 is supposed to eliminate the need for financing. You take over the existing owners payments. The bank is happy and you’re happy.
The only money you may need is capital for expenses. you do not always just assume the responsibility of making the payments, sometimes you need to give a little for the equity. This is what $Cash$ calls U-Haul money. Also if you do not flip right away you may need money for holding costs, Transfer tax, filing fees, advertising, cleaning, minor or major repairs if needed, back payments.
Most “No-Money Down Deals” usually include some of the above. It might have been no money down but…
So yes you can still need money for the rest. It would be good if you could have someone come to your door and ask you to buy a house subto and they would give you all of the down now before you bought the house. I am being facetious of course but if you anticipated these needs you might be able to find a money partner to help with this part.
You usually need to bring the mortgage current as well. The whole reason the person is willing to subject2 is they are usually behind on payments.
k… I understand the whole point of leaving the note in the sellers name and the property is deeded in my name. My main concern, is coming up with additional funds to complete the deal, arrears, holding cost, taxes, and etc. Do most people use hard money loan to complete the deal if they don’t have enough cash or find a private lender.
Cliff
Use money wherever you can find it. Get a loan from your 401(k), use low or no interest credit cards, ask a relative/friend for a short-term/high-interest loan, etc.