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Do You Know How To Buy A Home Without Borrowing A Dime?


Successful real estate investing requires being nimble on your feet and taking advantage of opportunities as they present themselves. One such opportunity is the "subject to" arrangement. There are few "perfect" real estate deals out there to take advantage of, but a properly executed "subject to" is about as close as most investors will come. The biggest appeal of this transaction is it rarely requires the buyer to put a dime of their own money at risk or have to go through the process of borrowing money to complete the deal. For beginning real estate investors this type of deal is a great way to get your feet wet before moving on to the more complex and complicated deals. In this article I'll describe what a "subject to" deal is, when it is best used, and some of the types of "subject to" transactions.

What does "subject to" mean?

What this means is that an investor is buying the property subject to the existing mortgage and certain conditions that must be met. Typically the financing stays in the current homeowner's name while you the investor take over the mortgage payments until the property is sold. There is some amount of risk involved, such as a soft real estate market, or there isn't enough equity in the property to make it feasible.

When is the best time to use this type of transaction?

A lot of things have to fall into place for this to work. First the current homeowner must be willing to deed the home over to you and agree to move as well. You as the investor have to make sure you have done your research and fell fairly confident you can move the house in a reasonable amount of time for a decent profit. So it's really all about timing and being able to find a homeowner willing to walk away from the equity that's built up in the home.

What are some methods employed to conduct a "subject to"?

This will depend largely on the condition of the current loan. If a homeowner is current on their home loan but knows their income is about to diminish to a point where they can no longer make the monthly mortgage payments then offering to take over payments is the preferred method. If they have fallen behind in their mortgage payments a real estate investor can offer to bring them current, or reinstate their loan id needed.

You might run into the situation where the homeowner is willing to enter into the agreement at first but later starts to get "cold feet", usually when they figure out how much equity they are giving away. The smart real estate investor should immediately make some kind of cash inducement if the deal has enough profit in it. Offer to pay for some or their entire move; offer them a cash amount up front equal to a percentage of the profit you expect to turn. Be creative in your thinking if this crops up and you potentially stand to walk away with a tidy sum of money.


"Subject to" opportunities are perfect for both the veteran and rookie real estate investors. It does require the right timing and conditions to pull off, but regardless of whether it's taking over payments, reinstating the loan, or some other arrangement this is by far the easiest and one of the most productive methods available.