How To Find Subject To Properties

How to Find Subject To Properties: A Comprehensive Guide

Finding subject to properties can be a lucrative real estate investment strategy, allowing you to acquire properties without taking on the traditional mortgage. But knowing where to look and what to do is crucial. This guide will walk you through the process, equipping you with the knowledge to successfully find and secure subject to properties.

Understanding Subject To Properties

Before diving into the search, let's solidify the understanding of what a "subject to" property is. Essentially, you're taking over the existing mortgage payments while the seller retains legal ownership. This is different from a short sale or foreclosure. You aren't buying the property outright; you're assuming the responsibility for the mortgage payments and any other associated costs.

Key Advantages of Subject To Deals:

• Faster Closing: Compared to traditional purchases, subject to deals often close much quicker.
• Lower Initial Investment: You don't need a large down payment or a hefty closing cost.
• Potential for High Returns: With proper management, you can potentially profit from rent or appreciation.

Key Risks of Subject To Deals:

• Liability: You are liable for the mortgage payments, even if the property generates no income.
• Hidden Issues: Problems with the property might not be immediately apparent.
• Legal Complexity: This strategy often requires careful legal and financial advice.

Where to Find Subject To Properties

Finding motivated sellers willing to enter into a subject to agreement is key. Here are some proven strategies:

1. Networking and Building Relationships

• Real Estate Agents: Connect with agents specializing in distressed properties.
• Wholesalers: Wholesalers often have access to motivated sellers.
• Attorneys: Bankruptcy and foreclosure attorneys are excellent sources.
• Property Managers: They often interact with struggling property owners.
• Direct Mail Marketing: Target owners of properties with high equity or who are behind on payments.

2. Online Resources

• Multiple Listing Service (MLS): While not always explicitly stated, you can identify potential candidates. Look for properties with low prices or long days on market.
• Foreclosure Websites: These sites list properties facing foreclosure, although they might not explicitly be subject to opportunities.
• Online Marketplaces: Some online platforms cater to investors and might include subject to opportunities.

3. Offline Strategies

• Driving for Dollars: Physically drive around neighborhoods and identify potential properties. Look for signs of neglect or distress.
• Public Records: Research county records to find properties with tax liens or delinquent payments.
• Auction Sites: While typically not subject-to deals, you can find properties that might be suitable candidates after purchasing.

Due Diligence: Protecting Your Investment

Before committing to any subject to deal, thorough due diligence is paramount.

• Property Inspection: Identify any potential repairs or hidden issues.
• Title Search: Verify ownership and any liens or encumbrances on the property.
• Mortgage Review: Understand the terms of the existing mortgage, including payment amounts, interest rates, and prepayment penalties.
• Financial Analysis: Analyze potential cash flow and return on investment.
• Legal Counsel: Consult with a real estate attorney experienced in subject to transactions.

Structuring the Subject To Agreement

This is where professional advice is invaluable. The agreement should clearly outline:

• Payment Terms: Clearly define the payment schedule and amount.
• Responsibilities: Specify who is responsible for repairs, taxes, and insurance.
• Default Provisions: Outline the consequences of missed payments.
• Transfer of Ownership: Define the terms under which ownership will eventually transfer.

Conclusion: Mastering the Art of Subject To Properties

Successfully finding and securing subject to properties involves a strategic blend of networking, online research, and thorough due diligence. By carefully navigating these steps and seeking expert advice, you can unlock the potential of this powerful real estate investment strategy and build a substantial portfolio. Remember, thorough research, meticulous planning, and professional guidance are vital for mitigating risks and maximizing returns.