Michael Emilio

I’m going to talk to you about a special way to acquire property.

And that way is called “Subject To”.

What is Subject To?

It’s one of the fastest and easiest ways to get property into your real estate portfolio. It allows you to add to your investments by using a simple and easy technique while giving you an ability to help people that are in need of a quick real estate position. And that’s always a good thing.

There’s risk, but that’s obvious whenever you’re going into real estate investing. As an investor, you know that risk equals reward. You have to deal with some risk in order to get that reward of a big fat payday. The way you mitigate the risk is with knowledge. Knowing what to do and when to do it gives you an advantage that many other would-be investors don’t have. By constant learning and getting new investment techniques and really integrating them, you’ll have new ways of getting investments under your belt.

Using “subject-to” you can actually buy properties without cash. Yes, that’s right, without a dollar in your hand. Hear me out though, I definitely do not suggest you do this if you don’t actually have the ability to front this money if you had to. You really want to have the money available or at least access to the money. If you really want to lower your risk, you should do a “subject to” as if you signed the mortgage. We’ll get into what I mean in a second.

When you’re buying real estate via “subject-to” you are getting this property “subject to” the financing that currently exists. What this means is that the loan that’s currently there stays there without any formal declaration on your side. This means that the seller will deed the property over to you and you take over the payments just like the old owner used to.

Who’s liable on the debt

You might ask yourself, “Sounds good on my side, but why would the seller offer to give me this property and still stay liable on the debt?”

The reasons are simple. Maybe the owner needs a fast sale. Maybe the seller just wants to get rid of the home. They want a quick solution to their problem. That’s where you as a real estate investor come in. You come in, sweep away their old problem, and they’re happy because they finally got that property off their hands and you’re happy because you added a nice piece to your real estate investment portfolio. Win-win.

In case you were wondering, buying properties “subject-to” is completely and totally legal. But I want you to keep something in mind. This is a powerful technique, so don’t use it lightly. The people you’re going to be buying properties from are expecting you to be responsible for the loan. So be responsible! As an investor you give solutions to people’s problems. So be the solution-giver! As such, you have to keep the promise to keep those mortgage payments current.

Keep yourself on the safe side

To be safe, I suggest that you have a minimum of three months of reserves to cover your payments. This gives you time to secure a tenant or buyer, depending on your intentions. Flexibility is key! You need to have the ability to feel comfortable about looking for buyers and renters in a relaxed way, not thinking that your financial livelihood rests in the balance! Real estate investment is not something you jump into without the proper ability to cover yourself in case events don’t line up perfectly. You have to always think ahead and expect the unexpected. This keeps you ahead of the game and puts more money in your pocket in the long run.