"The Basics" of Subject-To Investing and Buying Real Estate Subject-To - powered by Happy Scribe

Hey, guys, if you're a little lost when it comes to subject to real estate investing, like, you're kind of just nodding along when you hear other real estate investors talking about it, but you really don't understand it. I did that for a while when I got started, so don't be ashamed of it. But if that's you, you're going to want to stay tuned to this video because I'm going to break down exactly what subject to real estate investing really is and what it is not. In three, two, one. Okay, before we get started, I need three things from you. Number one, I need you to subscribe to this channel. Number two, click the bell to be notified any time a new video is posted. And number three, tell all your friends and colleagues that there's a new channel on YouTube dedicated to creative real estate investing. Thank you for doing that. I really appreciate you. Now, let's jump into this. As you know from watching all of my previous videos, my name is Jeff Kaufman, and at the time of this recording, I am approaching nearly $8 million in acquisitions. But I've done it all using creative financing, mainly subject to.

I often make the mistake of assuming that people understand what I'm talking about when I start rambling about subject to financing. So today I thought I'd step back and get back to basics. For those of you who don't fully understand what it means to buy a property subject to just yet. Now I'm going to walk you through what a typical subject to deal looks like. We'll talk about the parties that are involved in a subject to deal and exactly what your role is in the deal. So let's just answer the question, what in the heck is subjectto financing?

Let's head over to the computer and I'll show you. All right, here we are inside of a mind map that I created. And I like to use mind maps because I'm a visual learner. I'm also a visual teacher. So this might look like a big plate of spaghetti to some people, but to me, this is totally logical. But let's jump into this thing and let's talk about the parties involved in the subjectto deal. In a subjectto deal, we're always going to have a borrower. We're going to have a lender, and then, of course, we're always going to have you. Let's just talk about the borrower lender relationship for now. When a borrower goes out and gets a loan on a property, what they're doing is they are giving a promissory note or they're promised to pay to a lender. The lender is going to place a lien against the property, and that lien can be in the form of a mortgage or a deed of trust. And that is all dependent upon the state in which the property is located. So let's say that this loan has been closed and the borrower is doing fine.

They're making payments. Everything is good. And then maybe the borrower experiences some kind of, some kind of life changing event where they're no longer able to make those payments. This is where you're going to come in. Since you're a diligent marketer, you're going to be marketing to people like this. And so it's going to be your job to get in front of this borrower who is now a seller because they can't make payments. So let's say that you get in front of this seller and you strike a deal with that seller to purchase their property subject to, well, what the heck does that mean? What that means is this promissory note and this lien for that matter, when you purchase this property, the seller is going to deed the property to you. But the promissory note and the lien that's on the property, both of those are staying in place. So you're going to come to terms with your seller here.

Maybe you're going to give them some.

Money up front, maybe they're going to give you some money up front, who knows? I've had it both ways. But in exchange for you making their payments, they're going to give you the deed to the property.

What you're going to do in turn.

Is you're going to start making payments to that lender. But now you legally own the property, which means as an investor, you can now generate income off of that property. The key points to this are that this note that the borrower has given to the lender and this lien that the lender has placed on the property, those are both staying in place. When you purchase this property from the seller, nothing's getting paid off. The loan is not getting paid off. You are going to abide by the terms laid out in this promissory note. So let's recap here. In a subject to deal, you are going to get in front of a seller and you're going to negotiate with that seller to take over their payments. You're not going to assume the loan. You're not going to use your credit. You're not going to qualify for the loan. Your only qualification is the trust and report that you've built with the seller. That's it. But you've come in, you've struck a deal with the seller, you're going to take over their payments. The seller is going to deed the property to you. You're going to start making payments directly to the lender.

And now since you legally own that property, you can use that property to generate income for yourself, whether that be passive or maybe you're going to do a quick flip or something like that. The key points, the note and the lien both stay in place. You're just paying the lender according to the terms on the note. If you stop paying, the lender can absolutely foreclose on that property just as they would the original borrower. So that's it. That's all there is to this subjectto seems very complicated, but if you look at it in this context, it's really quite simple. And buying a house subject to is 100% legal in all 50 states. No question, you can do this. So if you're an honest person, you have some integrity, and you're a vigilant person about making payments on things, subjectto would be a perfect fit for you.

All right. Hey, guys. If you want to know more about subjectto real estate investing, head on over to my website subtoonpire.com. The link is in the description along with a link to a really indispensable calculator that I use to evaluate every single subject to deal that I do. And I'll also throw the link to the mind map that I shared in this video as well. If you liked this video, go ahead and click the like button and then go out and check out our other videos on the let's talk subject to channel. We're not holding anything back on this channel. We want to deliver top notch value. I appreciate your support. Have a great one. We'll see you next time.