Could someone explain to me what are SUB2 is?? Kind of new to this
So from the definition it would be an instance where SELLER has come on bad times… possibly close to foreclosure or some emergency. as the BUYER you take the Mortgage, the SELLER gets to live in it and continues to pay on the mortgage? When would this be a great deal, if the SELLER has come on hard times and is going to lose it for financial reasons why would someone take a Sub2? Is it best used in flipping or the rental aspects?
Can someone who has done this give an example of a Subject To: type encounter?
Howdy v_1dllvl:
I will share some examples that I have done. A recent one in Killeen, Tx is a vet who moved away to MI and has been renting their house for several years because they could not sell for what they owed. They are now again trying to sell for the loan balance. I offered to buy it sub2 but they are not interested in basically owner financing the sale and want cash to pay off the loan. This may be OK for a retail deal but not for me to pay cash when there are better cash deals out there. I did want it for basically 0 down and take over payments.
I do not know where you got the idea that the seller will still be living in the house but that is not the idea at all. In fact most buyers would want the sellers out of the house.
Another example is one I bought to rehab and sell. They were $10K behind and had moved. The house needed $30,000 in rehab. I borrowed the funds from my dad and brought the payments current and got the deed from the sellers and rehabbed the house. It took too long to sell and we lost money on that one, one of my first.
There was a time here in Austin when I did about 25 of these zero down and take over payments and leave the loan in our name deals before it was known as sub2 back in 92 actually. I was getting calls asking me to take their house please and I did. I could not hold on long enough because of the negative cash flow. If I could have I would have 25 houses that I bought for $70,000 and are now worth $140,000 plus. It would have been a great return for zero dollars down.