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Real Estate Finance Made Easy With Subject To Options
Real Estate Finance Made Easy With Subject To Options
If you’ve been investing in real estate for any period of time, you probably know about, or hopefully have even used “subject to” and “option contracts” in your real estate investing activities.
On their own, both of these strategies have tremendous merit, but if you want to ninja supercharge your real estate investing, you need to read this article and learn how to blend those two strategies together and start using “sub-to options” to invest with.
Real estate deals can be financed in any number of ways, but one of our favorite real estate financing strategies is to negotiate a subject to option.
A subject to option has a huge advantage over other forms of option, primarily because with a subject to option, financing is not an issue, and neither are holding costs.
When you take a property subject to you are taking title to the property (or in this case getting the right to take title to the property) subject to the existing mortgage or financing on the property.
Sometimes, you may here this referred to as a wrap or AITD (All Inclusive Trust Deed) type strategy.
In these deals, you dont need financing to take title, because you are just promising to pay the mortgage(s) that is/are already on the property.
But, here’s the challenge with a straight sub-to deal. If you take a property “subject to” the existing mortgage and get the title, then you’re on the hook for mortgage payments, property taxes, upkeep and other costs and hassles.
On the other hand, if you take through a sub-to option, title does not pass. So, you aren’t on the hook for payments and all those other expenses.
Not only that, but if you negotiate your sub-to option well, you’ll probably be able to get into it for as little as $10 out of pocket.
Using this strategy, you can sub-to option dozens or hundreds of properties at a time, and your total out of pocket investment and carrying costs will be almost inconsequential!
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