Is it a feasible strategy to put under contract a piece of property that has little to no equity as a Subject To deal, then assign the contract to another investor who does Lease Options?
Here in California, I run into a lot of preforeclosure prospects that have little to no equity. And instead of doing a short sale, I was wondering if a Subject To would work. There might not be any money to be made by buying a Subject To in this scenario but if it is Lease Optioned, I’m thinking that’s where the real money is to be made with the Option money, higher interest rate then selling it via the option.
Would investors be interested in a contract structured as a Subject To in this way and have it assigned to them or am I just daydreaming?
that’s why sub 2 is so good because you can get this properties with little or no equity and still profit on them. just depending on how much the back payments are ( if is preforeclosure).if that’s the only exit stragedy you have for these properties, then I would get a list of investors if you don’t already have it to assign these deals to. maybe some one more experienced can shime in on this.
Investors will be interested if the numbers and location are right. Just because you get a property sub2 doesn’t make it a good deal. Also, keep in mind if you do assign to another investor and he defaults the homeowner will be looking for you not the other investor. If it’s a good deal why don’t you sub2 and sell on a lease option yourself?
You cannot assign a subject 2 contract freely like you can a sales agreement. The subject-to agreement relies on you personally to perform, the seller would need to approve and sign on the new person.
Also, if you’re going to assign it, you’d have to spend money doing certain things to get it ready, right? How much would you be charging as an assignment fee, to profit yourself after paying back your expenses? How much does that realistically leave the assignee?
You can assign a sub2 if you have that option in your contract. As far as how much does that leave the assignee, that all depends on how much you got the property for.
I think the OP is speaking of properties with little to no equity, so thin stuff to begin with and I’d imagine pulling any satisfactory assignment fee out for rkmin wouldn’t leave a lot of takers for that property.
If there is little room for an assignment fee, couldn’t you finance your assignment fee to the investor-buyer? So they would have to pay a small monthly fee with interest for a specified period of time so that they don’t have to come up with a bulk payment upfront?
but whether they pay now or commit to a payment stream (which has an equivalent present value), where does that extra cash come from when purchase price is ~ market price? I just don’t see where the cash is coming from to benefit one person, let alone two.