How to Buy Homes Without Cash or Credit Using the 'Subject-To' Real Estate Investing Strategy

Real estate has many moving parts that can be confusing. Here, Scott Ulmer and Dan Mazy sit down to discuss what they call "The Unicorn" of real estate investing, known as "Subject-To." 

Throughout this conversation, “Subject-to” is broken down into simple, easy to understand concepts. Scott goes through his over 24+ years of real estate knowledge, breaking down exactly what “Subject-to” means, when to use it, and how to use it. 

So, what is “subject-to”? It's when a buyer/investor is taking legal title from a seller while the seller leaves their existing mortgage on the property. The seller remains responsible for the mortgage with the bank, but the buyer has legal title and has agreed to make the mortgage payments for the seller. 

“In a ‘subject-to,' I’m buying the home ‘subject-to’ your mortgage remaining in place, thus the term.”- Scott Ulmer 

Scott then breaks down the best targets for “subject to” sellers, the benefits of doing a “subject-to” deal, and who makes a good candidate for this type of deal. 

As Dan explains, once you’ve made up your mind on what you want to do with the property, there is a strategy to using “the Unicorn”. Creating an exit strategy decides if you want to keep the property in your portfolio for a long time, or rent for a while, and then sell. In this video you will hear the personal examples of properties both Dan and Scott have worked with. 

“Having an exit strategy, If I’m doing a ‘sub to’, really why I’m doing it, is to keep it and not to try and sell it. I don’t necessarily want my buyer to cash me out. “- Scott Ulmer 

While discussing the importance of marketing, and painting the picture for the seller, they talk about the negatives and highlights for the seller. Then, they focus on the mistakes buyers make, and how to avoid the infamous “due-on-sale clause”.  

“The FDIC instituted the ‘due one sale clause’. Which simply says if you sell, the collateral we have has to get satisfied and paid off.” Scott Ulmer 

 Scott clarifies, however, that he has never seen a subject-to deal go bad because the bank issued a due-on-sale notice. As long as the bank is getting the mortgage payments, they usually leave you alone. 

After taking the time to go over money breakdown scenarios, Dan and Scott also layout their best advice for anyone looking to get started with “subject-to” deals in real estate. Gaining additional knowledge of the benefits and how this type of deal can work for you is vital to add to any real estate investing arsenal.

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