How Would YOU Handle This....? - Posted by Richard

Posted by Richard on July 25, 2001 at 20:04:21:

If I buy this home “subject to”, will a standard contract with a clause stating something like “…buyer is purchasing property subject to its existing financing…” be sufficient, or does it involve a lot more than that?

How Would YOU Handle This…? - Posted by Richard

Posted by Richard on July 25, 2001 at 16:33:50:

I follow public records daily and mail letters to people within the area who have Lis Pendons filed on record by their lender(s).
Found a lady whose husband past away last year and she is unable to make payments and fell behind, so Lis Pendons was filed.
I mailed her my letter and she called me up.

She has been trying to sell this property for the last 6 months listing through a realtor to no avail.

Original list price was $124,500.
Then lowered it to $108,000.
Comps in the area are in the $100,000 to $104,000 range.

She says she had some offers that she turned down (one was in the $90,000’s and another involved a lease option) and now she regrets doing so because her contract with the realtor expired recently and because she is faced with the arrears.

Original loan amount was $84,000 back in 2/2000.
She says she now owes approximately $87,000.
She says her monthly payments are somewhere
around $675.
She stated that somewhere around $5500 to $6k
will catch her up on the loan.
She is unsure whether or not the loan is

Since comps are somewhere in the low $100’s, do you think this is worth investigating further?

I only know what she has told me (concerning the amount due & principal remaining).
I set an appointment to go visit her & during the visit, I plan to view her mortgage documents, letters, etc.

She states that she wants out of the deal and is willing to accept what she owes as the sale price.
She has not renewed her contract with the realtor yet.

My situation:
-have not closed my first deal on investment property.
-have no extra money.
-have high debt-to-income ratio.
-have almost no equity in my current home.

  1. If this is worth pursuing (which I think it might be), which techniques do you recommend using to purchase the property?

  2. Will you please include the #s you would use to buy and resale the property?

  3. Her husband was handicapped, so the home has been modified to accomadate handicapped people. Will this be a big concern in preparing the property for its new ownwers?

Anxiously awaiting your responses,


Ask more questions - Posted by Bud Branstetter

Posted by Bud Branstetter on July 26, 2001 at 11:28:21:

When you say the original loan was 84K but now 87K has she done a chapter 13 before or a forbearance? With payments of 675/mo it appears no taxes or insurance is escrowed. But that doesn’t jive with the LTV.

What state is the property in? Do you want to do a PacTrust on this one?

Re: How Would YOU Handle This…? - Posted by Brandon Treat

Posted by Brandon Treat on July 25, 2001 at 21:06:13:

Richard I’ve posted already under Becky’s post, but in this one I’m wondering when you say you follow public records daily, how are you physically doing this? You mean just keeping an eye on the legals section in the paper or actually going to the courthouse everyday and doing something in particular?

As far as this given situation goes, I’ve been looking for something locally myself to try to get in a ‘subject-to’ or lease option deal and am attempting to learn how to best approach sellers with the idea. I would consider myself lucky to come across the property you have, since even though the numbers are a tad ‘skinny’, once you tie it up and advertise it ‘rent to own’ your phone will be ringing off the hook and if you play your cards right, this seemingly only semi-attractive property could do quite well for you.

Great luck be with you.

Brandon Treat

Re: How Would YOU Handle This…? - Posted by Becky IL

Posted by Becky IL on July 25, 2001 at 18:50:47:

I would buy her house subject to for the mtg balance and cure the arrearage out of pocket, then I would L/O it to a tenant buyer.

Richard, you are really in a good position to help this poor woman. There are actually many ways you can buy her house without any risk to you. You can also get an option on her house for a price equal to paying off the mortgage and advertise for a retail buyer.

But if you can’t get the deal yourself, why don’t you partner up with another experienced investor. Time is of the essence when folks are in foreclosure.

Re: Ask more questions - Posted by Richard

Posted by Richard on July 26, 2001 at 14:32:53:


The $675 is the P.I. payment.
I did not bother stating the P.I.T.I. payment because here in Florida, there is a “Homestead Exemption” for an owner’s primary residence.
Since I will take possession of the property and not occupy it, i will not qualify for the exemption, thus my taxes will be slightly higher than what is on the home right now.
As far as i know, she has not filed Ch.13, but as I stated eariler, I still need to view documentation to verify everything.
I will remember to specifically check the amount escrowed.

I am not familiar with the PACTrust…can you please direct me in the right direction?


Re: How Would YOU Handle This…? - Posted by Richard

Posted by Richard on July 25, 2001 at 21:22:31:

I found a website for the county clerk where you can look up specific documents online.
I choose “Lis Pendons” as the document to lookup each day and use the legal description of the property to match up with a subdivision, etc. here in the county.

I also travel to the courthouse 3 times a week to view a clipboard they have posted that lists the foreclosure sales that are going to occur within the next few months.

It was really hard to get everything sorted out when I first started doing this, but once I got all the info sorted out, keeping up with it has become easy…the difficult part for me is to find the one’s that are actually worth pursuing because there are many properties out there that have little or no equity at all!!!

Re: How Would YOU Handle This…? - Posted by Becky IL

Posted by Becky IL on July 26, 2001 at 24:43:03:

Now that the search engine on this board is back up and running, you should do a search on “subject to” and read the back posts because there is a lot of info there.

But the short answers to your questions are:
I use my own sales & purchase agreement and it states subject to the existing mortgage. Yes, there is a closing, but maybe not like you’re thinking. I usually do it at the sellers’ home, but I’ve also done it at title offices and attorney offices. I always take the property in a land trust and I always get a letter signed by the seller indicating that they fully understand the due on sale clause.

Subject to versus L/O gives you more control of the property in that I can also offer a new buyer owner financing if I acquired the property subject to.

Finally, I also do get an landlord’s insurance policy on the property because the deed, in fact, has changed hands.

More info in regards to subject-to please… - Posted by Brandon Treat

Posted by Brandon Treat on July 25, 2001 at 21:01:37:

I’ve been attempting to learn as much as I can about purchasing ‘subject-to’… Obviously Richard has done the footwork and found a potential deal but with his situation, which is similar to mine, would getting ahold of the property ‘subject-to’ be better than in the form of a lease option?

And as far as aquiring the property ‘subject-to’, and please forgive my ignorance, as I stated I’m trying to learn, is there a closing when doing a ‘subject-to’? How great, if any, is the risk of having the loan called due?

Any info would be highly appreciated, thanx.

Brandon Treat

Re: How Would YOU Handle This…? - Posted by Richard

Posted by Richard on July 25, 2001 at 20:20:12:

Also would like to know how to handle insurance issues when buying the property “subject to”:

  1. Should the insurance remain in the current owner’s name?

  2. If not, won’t this notify the lender that a sale has occurred?