Sub2

General Real Estate Investing
1

Has anyone used or have opinions on the Marko Rubel “system”. We’ve studied up on S2 and believe that’s where our future…investing future lies, but a little leery.

2

Hi,

Taking over subject 2 or wrap financing is fine, just use a title / escrow company servicing account to ensure payments are made.

I have put cash down and taken over existing financing and have gotten homes no money down by taking over existing financing.

Most all conventional loans have a due on sale clause so a servicing account makes the property appear to be paid by the original borrower.

If your intending on flipping and reselling these properties you need to make full disclosure to your seller and to your end buyer as this is what has gotten investors in legal trouble, make sure these parties acknowledge on paper and is recorded with the deal so there is no question down the road.

             GR
3

Thanks GR, I appreciate the info. Any thoughts on Rubel or did you just read these forums?

4

Hi,

I actually have no idea who Rubel is, I don't think he was around when I started investing in 1979! There have been a lot of guru's come and go but it's the theory and principle of subject 2's and wraps that have surpassed time.

I don’t remember who was teaching sub 2’s or wraps in the late 70’s or early 80’s but I probable went to their seminars!

         GR
5

I’m familiar with Marko Rubel’s marketing, but not his ‘sub2’ training specifically.

In the late '70’s and early '80’s there was no such thing understood as “subject to.” It was all about loan wraps, AITD’s, including finding and assuming non-qualifying FHA loans.

My first technical ‘subject to’ deal was taught to me by a commercial broker, who was as desperate as I was to close on two board and care facilities in So. California, as I was.

My bank had refused to lend on my deal, despite my huge down payment, good credit, and what not. So, my agent suggested and structured the deal so that I had control of the mortgage, insulated the title in such a way that the bank couldn’t call its loan due, and delivered the administrative rights to me at the same time. ‘Sub2’ was a completely unfamiliar arrangement for both me and the seller, but it allowed us to close immediately and on our terms.

Once I saw how sub2 worked, I started buying apartments the same way. After that, I started doing ‘sub2’s’ on single family units. It was pretty much like assuming non-qualifying FHA loans (which were petering out just about the time I started doing ‘sub2’ deals on houses.

Non-qualifying FHA assumptions were glorified ‘sub2’ deals in the first place. The title changed, the buyer took over the payments, and the buyer’s payment history still showed up on the seller’s credit report for two or three years after. Who knew?

FWIW

6

Thanks GR and Javi!