Premiere Plus Realty Co.
Jennifer Johansen, Premiere Plus Realty Co.
Email: [email protected]

Types of "Subject-to" Real Estate

by Jennifer Johansen 09/06/2020

Image by Nattanan Kanchanaprat from Pixabay

If you're looking for "subject-to" real estate, you know it can be a good investment. This kind of real estate is purchased "subject-to" the existing mortgage. So the buyer owns the property, but the mortgage stays in the seller's name. Payments are made by the buyer, but it's not necessary for that buyer to obtain a loan, pay all the fees associated with that, and use their own credit to buy a house. It can be an excellent deal for an investor and for a seller who's facing foreclosure or other types of problems. Here's what you need to know about the different kinds of "subject-to"  real estate.

"Subject-To" an Existing Mortgage 

The most common type of "subject-to" real estate has that designation because it's "subject-to" the current seller's existing mortgage. If you want to buy this kind of property, you won't need to get a mortgage of your own. Instead, the seller will deed you the property and you'll continue to make their mortgage payments. This can help you get properties fast and keep you from worrying about things like whether your credit is good. Not all investors like these kinds of properties, but they can be good choices when they're handled correctly.

"Subject-To" Other Types of Liens 

Even though they aren't as common, it's also possible to buy "subject-to" properties that don't have a traditional mortgage on them. These properties might have some other reason that they aren't free and clear, such as tax or contractor liens. If payments are being made on these things and you don't want to pay them off to buy the property, you can offer to buy from the seller "subject-to" those liens. Just make sure you know what you're really committing to, all the liens on the property and how much they're for, in total.

Who Would Typically Choose the Kind of Investment?

Both single-family and multi-family properties can be purchased "subject-to" existing mortgages and other types of loans or liens. When it comes to these kinds of investments, most investors who choose them are familiar with investing already. That's because there's risk involved, and brand-new investors might not protect themselves against these risks as well as they should.

Still, investors who are careful and want to get started in the market can do well with these kinds of properties because they don't have to use a lot of their own money or qualify for mortgages. Then can simply purchase properties, and that can mean a much bigger portfolio much faster than they would have thought possible. If you're looking for a way to build a big real estate portfolio quickly, buying "subject-to" properties can be one of the ways to do that.

About the Author
Author

Jennifer Johansen

Jennifer is passionate about the Real Estate business, and has been involved in related family businesses in construction, architectural millwork, and finance for 20 years. She and her husband relocated to Naples, from New York, 10 years ago, although her family has owned property on Marco Island since the 1980's. She has a Bachelor's Degree in Psychology and a Dual Master's Degree in Counseling and Education. She has acquired many necessary skills that are useful in Real Estate from being in the field of Counseling for many years. She holds the belief that building rapport is vital to helping her clients have a positive experience, while achieving their goals. She is very thorough and detail oriented, and has formed many close relationships with professionals in related fields, such as law, title insurance, home inspectors and other contractors. She aims to offer concierge- level service to her clients at every price point. When time permits, she enjoys spending time with family and friends. Having grown up on the South Shore of Long Island, and enjoying her summers on Fire Island, she loves any activity related to salt water, boating and the beach. Additional hobbies include gardening, art, and studying nutrition, wellness and naturopathy. She is knowledgeable about Naples and Marco Island Real Estate, in estate areas, golf/gated communities, and waterfront properties. She is a member of The Naples Board of Realtors and Marco Island Area Association of Realtors.