Subject to details? - Posted by Dave J

Posted by Al - So Cal on June 28, 2002 at 17:47:06:

You`re right! Sometimes I blabber on and forget the
original question - just ask my wife.

Subject to details? - Posted by Dave J

Posted by Dave J on June 27, 2002 at 15:42:01:

I have a seller who is going through an ugly divorce. He just wants out and could care less if I just took over payments. She would like to see some cash but I think I can convince her otherwise being as it the equity would all be eaten up in realtor fees or by the bank if it goes to forclosure. I haven’t done a subject to and don’t own a course (ie docs) I have a fairly good idea of how it works and am willing to figure it out as I go. The property details are as follows. 5/3 nice 30 year old neighborhood in a upper mid class part of town. Comps show a value of around 130K and the seller mentioned a recent appraisal that came in near that. They are very desparate and want this handled ASAP. I told them that I would do my homework and see if I could come up with a solution but that I couldn’t promise them anything. Now I need help, I’m getting good at acting like I know what I’m talking about. However, if you read my so far unresponsive post a little ways bellow this one you will see that I am just starting out. I am getting my feet wet in a big way and trying to figure it out as I go. Is this deal to skinny? If I was to lease option it as an exit would it become profitable? I am starting to see this through some rose colored glasses and don’t want to make an uneducated or stupid mistake. But, I’m tired of sitting on my butt studying all this stuff and not taking action. Do you guys see a deal here? If s, what do I need to do to tye it up and then figure the rest out later? Oh yeah, one more thing. The seller wants to know whether the home loan would show against thier credit when they apply for another home loan after moving past this if I take over subject to? Thanks

More details. - Posted by Dave J

Posted by Dave J on June 28, 2002 at 09:55:08:

They owe 112K
payments PITI is 1080
I’m not intimately familiar with the area so I have to stab in the dark about market rents for the area. Ofcourse I would like to think they are around 1200+ but, I think I will call a local property management co and see if they will give me a ballpark figure.

Re: Subject to details? - Posted by Scott Shubert

Posted by Scott Shubert on June 27, 2002 at 23:02:58:


This will help some of the subject to pros (more pro than I hopefully) answer your question. You indicate that the property may be worth 130K. How much is owed? What are the monthly payments? What is fair market rent for a similar house?

Best of Success!

Re: Subject to details? - Posted by Al - So Cal

Posted by Al - So Cal on June 27, 2002 at 18:01:57:

My view is find a DEAL!!!
I stopped trading in the stock market in March, 2000.
It was a major top and technical indicators said get
Real Estate is very extended now and you need deals
to jump in in my opinion.
The goal should be to at least double money or better
in anything you do.

Response to Re: More details. - Posted by Peter_MD

Posted by Peter_MD on July 02, 2002 at 10:28:06:

Dave J:

I took several days to determine if I would respond to your questions. You are definitely a “newbie” as everyone starts there, I did, JohnBoy did, Jim FL did, and many other pros.

Now don’t beat me up on this, it is offered as a suggestion/recommendation to your questions. You’ve heard it many times before, get a course and read it. What you don’t know, you really don’t know. Suggest you get a course like the ABC’s of Subject2. The courses are on this site for a reason, they are good and they work.

Subject 2s are nothing to take lightly. You are legally, morally, and ethically responsible for someone else’s obligation. Just as if you have a child (or other family member) and you give them the car, credit card, or co-sign a loan. You are responsible, period.

Now, having said that, I know (having read your message several times) that you said you are tired of reading and it’s time to get out and do deals. Wrong, you need help and you need it bad! Go to your club meeting and ask around for a mentor. A mentor will guide you by the hand and make sure you are safe and protected. Yes, they will get a cut of the take for the risk they assumed, however, they will tell you point blank if you are wasting your time and spinning your wheels. Keep asking around the club until you get someone who will guide you through the deal.

I mentor two people right now. It’s a way to give back some of the things I learned from my mentor. I PAID my mentor when I first started but I needed to hit the road fast and wanted to get out of the learning curve quickly. It worked for me, was very (extremely) expensive, but I consider it well worth the money many times over.

Now, with your mentor, go over everything (just like a birddog would do who takes a “deal” to an investor). Discuss the issues, form a strategy, and then, and only then, approach the seller.

You say that you act like an true investor, believe me, I see them every week and the seller knows (it’s easy to spot).

The seller is in pain and they need assurances (something you never gave them). You need to put them at ease and provide them with the feeling that their problem (whatever it is) is over because THEY CALLED YOU…and YOU CAN DO IT!

Good luck. Take this information for what it’s worth and ask your mentor so many questions that you start to know the answer before they even tell you.

Just the way I see things…

Re: Subject to details? - Posted by Scott Shubert

Posted by Scott Shubert on June 27, 2002 at 23:00:14:

This response doesn’t make much sense with regard to the subject to strategy of investing and this person’s question. My understanding is that you find a low equity deal with 5-10%, take over payments and lease option with a 200-400 month cash flow and sell with the strike price of full market value or a little higher since the lease option is worth a premium. You also get a 5000-10000 option consideration. That isn’t about doubling your money but then again there is no money invested in this type of deal so it is an infinite return.

The person was asking whether this particular deal would work.