Every real estate investor, no matter what your current situation, will, at one time or another, be interested to know what I'm about to tell you...
You see, this is the secret of owning property WITHOUT MONEY or CREDIT!
Although the details are important (you want to make sure you do things correctly, and legal!), you want to know the how to and what to do things first, right now!
The method of real estate investing you will learn here is called Subject To, where you actually take possession (and title) of the property without using any of your own money or credit.
Subject To investing is simply to understand - you just take over payments on a property where the current owner needs to get moving and is willing to sign over the house in exchange for keeping their credit intact.
Now, that sounds like a simple plan for gaining wealth and equity - and it IS!
When using Subject To investing principles, you do simply take the house and the owner walks away!
Does it happen on every deal - of course not, however, IT DOES HAPPEN and when it does, the payoff is great!
Your task is to work with the seller to identify the situation they are in and gain understanding all around that the best solution is in keeping their credit intact (by you taking over the payments) and them moving on quickly (so you can get someone in there to make those payments for you!).
You take title to the property and can then sell it, rent it, lease purchase it - whatever, just as if you had used your credit and put 20% down to purchase it in the first place! YOU OWN THE PROPERTY without needing to do any of that!
Benefits to the Seller;
- Save their credit rating
- Move quickly (kitchen table close!)
- No fees out of their pocket
- Walk away 'clean' (no more payments - depending on your deal)
- No people traipsing through their house
Benefits to You;
- Fast close
- Instant possession
- Minimal up-front costs (title fees, etc.)
- Instant equity position
- Full title/rights to sell, rent, etc.
Yes, Subject To is a win-win situation for everyone!
Tell-tale signs that you have found a property prime for taking over Subject To;
1. The current owner has a situation that has come upon them suddenly.
This could be from loss of job, divorce, death in the family, job transfer or even a sudden repair needed on the house or a medical condition themselves.
2. There is equity in the property at/near 20% of the total value.
While this is not a set 'rule', it is a number you can look at to guide you. There are some situations where you will want to take the property using Subject To when there is less than 20% equity and occasionally you will find them with more equity where the seller will sign it over to you.
HOT TIP: When you find a property with more than 30% equity, you should have a lawyer sign all the paperwork as an independent third (and legal) party. You may want to bring that number down even further to protect yourself legally.
3. The property needs few/minor repairs.
In most cases, the property you purchase Subject To is not the issue, it is the situation of the seller needing to move quickly. In those situations where there are repairs to be made, be sure to estimate them BEFORE you look at the total equity position (in #2 above).
4. The property is in an area where you can move it quickly and make a profit.
Not every 'deal' is a "deal"! Just because you could take the property Subject To does not mean you SHOULD take it! If the property is not in an area that you know much about, or sits far away from the 'desirable' areas, be sure to include that in calculations (or, just stay away) as you may get into something you have to make payments on for awhile!
With everything in place, your Subject To transaction will be smooth and one of the simplest you will ever do.
Finding property to take over is simple, when you understand that you are there to help people that are in situations where they need to move quickly and you enter into it with a win-win or no deal attitude - you will be surprised at how quickly you will own property without money or credit!
Steve Majors - The Lazy Investor is well known for creative real estate investing. Teaching thousands of students how to bring more income through less effort proves this well-earned title. Find real estate investing articles, real estate news and valuable real estate investing products at http://TheLazyInvestor.com
