Window Opening Wider For Sub2 Investing

According to, 37% of homeowners in the United States have zero equity in their homes. They’re not necessarily upside down, they’re just not above water …yet.

Couple that with the fact that rental rates are at historical highs, and mortgage rates were at historical lows, this represents a high-leverage, buy/hold, cash-flow and appreciation opportunity not seen in years. Moreover, these same 37% of homeowners are still having to come out of pocket to sell conventionally.

At the same time, a predictable percentage of these homeowners HAVE to sell, regardless.

These conditions naturally make ‘sub2’ offers attractive, since the sellers can walk without damaging their credit, or create a financial catastrophe for themselves, and even buy new homes.

This is the beginning of a new opportunity for Sub2 investors.

Since the sellers have no equity, they don’t expect to realize any on a sale. That’s one reason why ‘sub2’ investors can get in with little money.

Never mind, with no agent or bank fees, or title company fees (for those who know how to check a title), the closing costs can be negligible.

That means you can get into a house for practically nothing. However, the profit comes, by taking the existing mortgage financing, and offering EZ financing to a new buyer. And like Rent-A-Center, we charge a premium price in return for that EZ financing, but ultimately put more than 25% of the home’s newly-minted equity into our pockets.

Now we’re financiers, and buy-and-hold investors, instead of landlords.

I just started reading about sub2s and lease options and I’m still confused as to the difference. With both you are a landlord correct? Just one(sub2) you have title in hand and (sandwich lease) you do not? I’m sure I will figure it out by the books end. :smile


In a sub2 transaction the buyer will have the deed subject too underlying in place financing!

In a lease option the leasing party will not have the deed until the option is triggered and the purchase is finalized.