#33 The Dreaded Subject-To

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Summary

Many real estate investors avoid Subject To deals because they seem too complicated or advanced, but with Dwan’s help, you can master them in no time. This episode of The Most Dwanderful Real Estate Podcast Ever describes an overview of the Subject To process and Dwan gives listeners some crucial things to keep in mind before taking on a Subject To deal.

As with all of our real estate investments, our goal is to help the homeowner who is in distress and about to lose their home. With a Subject To, you find a homeowner who has a house in really good condition, a fixed mortgage, and a low interest rate and you have them deed the house to you, while their name remains on the mortgage. You can either live in the house or make it a rental, but you make the monthly mortgage payments for about 5 years before refinancing. This will help build up the original homeowner’s credit and make it easier for them to get a new home loan down the road.

Time Stamped Show Notes

  • 2:21 – Dwan describes what’s been going on with her recently and the dog stomach bug saga that she has been dealing with.
  • 10:11 – She has been working out and walking the dogs a lot in Iowa.
  • 12:06 – In June, we will be wrapping up the season of short sales and creative financing, which will each get their own season in 2020 for more detailed information.
  • 13:48 – We have already talked about flipping contracts and short sales.
  • 15:29 – With a Subject To, you find a distressed homeowner whose house is in good enough condition that you would consider living in it yourself or keeping it as a rental. For this to work, they can’t be too far behind on payments, and they will deed the house over to you, while their name remains on the mortgage.
  • 17:40 – Why do people do Subject To’s?
  • 19:54 – Next week, we will talk about owner financing, but for a Subject To, you file the deed and make the monthly payments to the bank towards the mortgage with the original homeowner’s name on it. This helps them rebuild their credit, and by the time you have to refinance after 5-7 years to put the mortgage in your name, their credit has made a recovery and they are better set up to be able to get a loan for another house.
  • 23:15 – Most of the time, it takes 5 years for the homeowners to get over their bitterness towards the bank and decide to buy another home, so this timing is great. The 3 crucial things the house needs to have before you agree to do a Subject To are: (1) Fixed mortgage, (2) Low interest rate, and (3) Home in good condition.
  • 26:49 – The bank gets picky with investors and will stop giving them mortgages on new properties if they have “too many”, so Subject To deals are the way to get around that.
  • 29:34 – Beta testing on the Dwanderful.com Membership Site is completed and now you can start a FREE trial membership to get access to the LIVE Coaching Calls, Document Library, Chat Box, and many other resources.
  • 32:24 – Your assignment is to re-listen to this episode to make sure you understand Subject To.

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