Real Estate Investor Articles

In my previous two articles in this series on what "subject to" is and what a typical "subject to" deal looks like, you learned quite a bit about the big picture of how agreeing to make payments on an existing loan when buying a house actually works.

In this article, I will share with you what I believe some of the benefits are for buying properties "subject to" the existing financing.

First, and this is a big one for investors in our current credit markets, you do not need to go out and get a new loan. There are large numbers of investors that have great credit and can afford payments on a property, but due to our current credit market are being denied new loans. It sure doesn't help that many lenders have limited investors to having a total of 4 loans in their name before cutting them off from getting new loans. So, being able to start making payments on an existing loan make buying the properties much easier and allows you to buy more than 4 properties that many lenders limit investors to under the new lending guidelines.

Second, there are no loan fees. While there are certainly

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marketing costs and closing costs and costs for key Dream Team member services like your attorney, title company, accountant or CPA, et cetera, there are none of the fees associated with a new loan. There are no points, no origination fees, no doc prep fees or other costs of that nature since you are just agreeing to make payments on the existing financing on the property.

Third, as Gary Keller pointed out in the "Millionaire Real Estate Investor" book with the example of the investor accomplish this with a quitclaim deed, you are the owner of the property and, as such, you get the benefits of ownership. Unlike a Lease Option, which has some similarities to buying a property "subject to", when you purchase a property "subject to" you do get the tax benefits--and responsibilities--of ownership.

Until my next post,

James