Many investors have unfounded fears about Subject-To deals; specifically, they usually have no idea what a Subject-To deal even involves! My goal today is to break down the confusion around this deal structure with old-fashioned knowledge. If you have the education, then you can use this strategy as a tool to acquiring more deals.
A “Subject-To” deal is defined as the acquisition of a property that already has a pre-existing mortgage. However, the person buying the property does not become personally liable for repaying that debt. This is the opposite of “assuming” a mortgage, where the buyer would take over the mortgage payments of the property they are purchasing and therefore becoming personally liable.
Remember: If you take a property Subject-To, YOU ARE NOT RESPONSIBLE FOR THE PREVIOUS FINANCING!
You need to make sure you have all the proper paperwork for the deal, including a Purchase Agreement and any documents if you’ll be putting the property in a Land Trust. You can learn about land trusts and how to structure your properties to best protect them at my Land Trust Bootcamp coming up in November.
For more information on my Land Trust Bootcamp from November 11-13 in Tampa, Florida, click here: http://www.larryharbolt.com/landtrustbootcamp.
For your own copy of my cheat sheet that walks you through Subject-To deals, visit larryharbolt.com/subject2.