I recently have been researching the Carlton Sheets No Money Down course. I am trying to learn all I can about Lease Options/Lease Purchases. I have not heard the term “Sub2” so far in the manuals…what does that mean?

sub2 is when you take over someone elses mortgage and any ecumbrances that come along with it. it is usually done in the preforeclosure stage but can can be used in many other situations, i.e. someone paying two mortgages.

:smiley: ok thanks mesha. So its basically another way of saying “assumable” mortgage I take it…

I have another question if you dont mind…I have read in some of my research (not from Carlton, tho) that there is a “cap” on how much rent credit can be applied to the purchase price of a house when exercising a lease option. Some banks will only let you apply so much rent credit towards the purchase price/down payment…is this true?

hi trecey, i cant really help you on that one, but I would NOT reccomend getting the Carleton Sheets course, a realtive bought and hated it. if you want some consumer reports on good courses, goto two that i would reccomend on there are chuck smith quick cash ultimate real estate system or sub2 is what i do by John $Cash$ Locke.


I don’t know about a cap - but too much in rent credits can cause an “equitable interest” problem for you if your T/B feels he has been harmed by you i.e. evicted, won’t sell to him based on lease violations, etc.If it gets to court, and your T/B claims an equitable interest, A judge will then determine if the contacts were really a lease/option or an installment type contract based on the terms.


KEC is right again. If you want to give them a rent credit, what I would do is have your set price for the house and the end of your term, say you wanted to give them a $200 mo credit, just add it up for the term length(2years(24X’s $200=$4800), reduce this from your starting price. This way they are not actually gaining equitable %. Explain to them that the contract is simpler this way but they must abide by all the terms of the lease to get this price. J

I agree with realg07, KEC seems to hit it right on the nail with his answers, but I do appreciate everybody’s responses, everyone is so helpful!!! Thank you all :smiley:

Back to the Sub2 question…I downloaded Peter Conti & David Finkel’s ebook yesterday. They seem to bring me another explanation of the “subject to” question. When finding a motivated seller, Can you present them with an offer, and “subject to” finding a tenant to lease the house, sign a contract to buy the house? and then if you are unable to find a tenant, just walk away from the deal?? Is that how that works?
So you can actually avoid buying the property if you are unable to find a tenant to move in?? Is this done all the time?? Thanks for any help…

Hello Trecey,

To answer your question. Yes. You just stick in your contract “Approval from Partner” to protect yourself. And in the mean time you grab a T/B for yourself that you have in your data base…

Than with the option money you pay their past due payments etc…

so yes you are correct and it is done all the time. You just want to have that DATABASE of T/B lined up so the process dosn’t take that long, If you know what I mean!! :wink:

Good luck!


Thanks so much for the info. Can you explain the “Aprroval from Partner” clause that I would have to put in the contract? I have never heard of that. Also, I don’t have a database of t/b’s. What is the best way to get one or build one before I try to sub2 a property? Thanks again :slight_smile:

Hello Trecey,

You as the investor always want to add in your contracts this little Clause;

This offer is subject to approval of Buyer’s (Partner, Wife/Husband, etc…) within (How many days?) days of acceptance.

I also stick this little clause that allows you to show the place;

Buyer reserves the right to show property prior to settlement for the purpose of either renting it or reselling it. and Seller agrees to permit access to Buyer at any time from date of this agreement up to the date of settlement.

Remember, REI is not only making money, its about protecting yourself. and any CLAUSE you can stick in the contract to protect yourself is a whise idea!!

For T/B data base. When you do alot of L/O’s and you are showing the properties. You have the people looking at the property sign in. You then take this list of SIGN IN’s and make a data base with it. Than when you have another property… You call this list up and let them know you have another property they might be insterested in if they are still looking. Than you have another showing on the property with a SIGN IN etc…

Thats how you make the data base :wink:


You have helped me so much, thanks for your time!! :smiley: