What if you could buy real estate without using your own money or relying on traditional bank financing? In this episode, Chris Prefontaine breaks down Subject-To investing and his powerful “Three Paydays” strategy, showing how investors can generate multiple income streams from a single deal.

Meet Chris Prefontaine

Chris Prefontaine is the founder and chairman of Smart Real Estate Coach, helping investors across North America buy and sell properties without banks or large amounts of personal capital. With decades of experience, he has built a system focused on creative financing and consistent deal flow.

What Is Subject-To Investing?

Subject-To investing simply means buying a property “subject to” the existing mortgage.

Here’s how it works in simple terms:

• The buyer takes ownership (title) of the property
• The seller’s existing mortgage remains in place
• The investor makes payments on behalf of the seller

Unlike loan assumption, the investor does not apply for or personally take over the loan. Instead, the deal is structured through proper documentation, often using trusts or entities, with legal guidance.

Why Investors Use Subject-To Strategies

Subject-To investing is powerful because it allows investors to:

• Acquire properties without new loans
• Avoid strict bank qualifications
• Help sellers who need quick financial relief or flexibility
• Leverage low existing interest rates from past years
  
  

This makes it especially attractive in today’s market, where financing can be a major barrier.

Addressing the Due-On-Sale Clause Concern

One of the biggest fears around Subject-To investing is the due-on-sale clause, which allows a lender to demand full loan repayment if ownership changes.

According to Chris Prefontaine:

• This issue is extremely rare in practice
• Proper structuring and documentation significantly reduce risk
• Working with experienced real estate attorneys is critical

In fact, even in rare legal challenges, properly structured deals have been successfully defended.

The Importance of Proper Documentation

A recurring theme in Subject-To investing is paperwork.

To protect all parties involved:

• Use a custom purchase and sale agreement with clear disclosures
• Ensure documents are reviewed and executed by qualified attorneys
• Close transactions professionally, not casually

Strong documentation helps prevent misunderstandings and protects investors if disputes arise.

The ‘Three Paydays’ Strategy Explained

One of the most powerful concepts shared by Chris Prefontaine is the “Three Paydays” system, which creates multiple profit opportunities from a single deal.

1. Payday #1: Upfront Deposit

Investors collect a non-refundable deposit from a tenant-buyer.

• Immediate cash inflow
• Helps secure committed buyers

2. Payday #2: Monthly Cash Flow

Investors earn a spread between:

• The mortgage payment they make
• The higher payment collected from the buyer

This creates consistent monthly income.

3. Payday #3: Backend Profit

The biggest payoff comes at the end of the deal:

• Profit from the property markup
• Additional gains from mortgage principal paydown
• Increased equity over time

Combined, these can result in six-figure profits, even on mid-range properties.

Who Are the Ideal Buyers?

Many Subject-To deals involve buyers who:

• Have strong income but can’t qualify for traditional financing yet
• Are transitioning from corporate jobs to entrepreneurship
• Experienced temporary credit setbacks

These buyers often enter through rent-to-own agreements, proving reliability before transitioning to ownership.

Emerging Opportunities: Distressed Seller Lists

A growing opportunity in today’s market is targeting distressed sellers, not just those in foreclosure.

These may include homeowners who:

• Are current on their mortgage
• But falling behind on credit cards, auto loans, or taxes

This “early distress” stage presents a prime opportunity for Subject-To deals before foreclosure occurs.

Building a Scalable Real Estate Business

Beyond individual deals, Chris Prefontaine emphasizes building systems and communities.

Key focus areas include:

• Expanding into multiple markets
• Tracking deal performance metrics
• Increasing successful deal completion rates among students

This approach turns investing into a repeatable and scalable business model.

Final Word of Wisdom: Confidence

When asked to share one key principle for success, Chris’s answer was simple:

Confidence

Confidence in:

• Your communication
• Your deal structure
• Your decision-making

In real estate, and in business, confidence builds trust and drives results.

Turning Creative Financing into Consistent Real Estate Profits

Subject-To investing, combined with the “Three Paydays” strategy, offers a practical and powerful path for building wealth without relying on traditional financing. By understanding how to structure deals, protect yourself with proper documentation, and create multiple income streams from a single property, investors can unlock opportunities that many overlook. Whether you’re aiming for upfront cash, steady monthly income, or long-term equity gains, this approach provides a flexible framework for scaling your real estate success.

If you’re ready to take the next step, Dwanderful, a real estate investing platform and podcast hosted by Dwan, provides the tools and guidance to help you move forward with confidence. On the site, you can access Dwan’s free book Real Estate Lingo to quickly understand key investing terms, or dive deeper with her paid book Five Pillars of Real Estate Investing, designed to help you build a solid foundation for long-term success.

You can also take advantage of the quick quiz game, which helps you discover how you could generate six figures in the next six months, whether you’re buying your first property or your next. Best of all, it takes less than a minute to complete, making it an easy first step toward your real estate goals. Contact us now!