Hi Folks,
Yup, I’m new here and new to investing. I have a few questions regarding “subject to” deals in Texas.
Let me lay out the scenario:
Firm up a subject to deal
Close with seller
Find buyer (owner financing)
Close with buyer (AITD)
Celebrate!
My questions are as follows:
It would seem that there are two closings in this scenario. How do you seasoned REI vets work this? Do you get the seller to pay the first closing costs and the buyer to pay the second? Any tricks of the trade on this issue?
About how much do your closing costs run?
Do you close with an attorney or title company? About how much does that cost?
Is there a certain amount of free equity you shoot for before you decide to take a deed subject to?
“Get into real estate with no money down.” This really doesn’t take into consideration closing costs, title checks, insurance, attorney fees, etc. Do you experienced pros use your own money to cover these “costs of doing business” or do you borrow money from a hard money or private lender?
Thanks so much to the REIClub community! What a wealth of information!!
If you buy sub2 you own the house so you can put private loans against the property. You could get a loan to pay for closing costs, give seller some cash at closing, and use the private money to buy hazard and title insurance at closing to protect your lender.
For minimun equity… it really depends on your market and whether you want to cash out or lease/option. If you want to cash out in a few months after you buy… then you need to make sure theres enough equity so that when you sell you can pay back your private lender with interest, pay closing costs, holding costs, marketing costs, and minimum profit to you. Don’t forget about capital gains taxes too.
I’d like to poll the investors here and ask how you folks work out the closing costs when you sell? Is it possible to push the closing costs onto the buyer and have them finance it with their mortgage?
Thanks again for all of you RIEClub readers! I’m aggressively pursuing my first deal and the information provided here has been invaluable
Is it possible to push the closing costs onto the buyer and have them finance it with their mortgage?
Everything is negotiable before you sign the purchase and sell agreement. However, the majority of buyers (especially first time homebuyers) will want YOU to pay for the closing costs. Better to stick to the asking price and pay those than to reduce your price and have them to pay.