Stumble It!
Basics of Taking Over Payments in Real Estate
This article is courtesy of Jacob Okunoren of Amazing Atlanta Investments.
His company specializes in wholesaling properties, and offers some of
those properties by "subject to". Be sure to visit his site, and sign
up for his free newsletter to get more real estate investing
information. If you are interested in investing in the Atlanta area,
don't miss his great properties. Also, anyone that is relocating to
the Atlanta and surrounding Metro area, can get a great deal.
Thank You Jacob! - Real Estate Investor Girl
Today we're going to dive into a topic that's very dear to my
heart, the art of taking over payments. It's the absolute best way
to purchase homes, and it's what has allowed me to amass a very
large number of properties.
The official name for this method of acquiring homes is called
"subject-to". That's because you buy the property subject to the
existing financing the seller already qualified for. Many
investors struggle trying to get sellers to go along with this.
That's one reason I have so many clients purchase their properties
from Amazing Atlanta Investments. When you buy a home like this,
you are responsible for the payments on the loan. The seller will
deed the property over to you, so you'll officially own the home,
but the mortgage will stay in the seller's name.
It's important that you explain to the seller that the loan will
remain intact until you find a buyer. You should NEVER give a time
limit on how long the loan will stay with the seller. For example,
some investors who are so hungry to find a deal will tell the
seller that he promises to find a buyer to pay off the loan within
a few years. This is a very bad strategy because you really can't
predict what the selling climate will be down the line. If you
don't get the home sold, you'll now have a seller who's ticked off
at you because you couldn't live up to your word.
You'll want to make sure you use the correct paperwork to transfer
the title from the seller to you. When you do business with
amazingatlantainvestments.com, we provide this to you FREE of
charge. Not having the correct documents can land you in big trouble
down the line.
A couple of things I want to mention now. If you say you are going
to make the payments, then you must do exactly what you say you'll
do. The sellers are entrusting their credit to us. To ruin their
credit intentionally or unintentionally would be down right
unethical. Although it rarely happens, you should explain to
sellers that there is a chance the lenders may call the balance on
the loan due if they see the property has switched hands. This is
because of a "due on sale" clause that lenders have in their
agreement with the seller. The experience I've had is that lenders
really don't care where the payments are coming from as long as
they're collecting their interest every month. Also, because of
the high number of foreclosures, lenders are doing as much as they
can to keep as many performing notes as possible in their
portfolios. Nonetheless, the sellers should still be aware the possibility
exists for the loan to be called.
Those are basics of subject-to. I'll be delving further into specific
aspects of this wonderful strategy in upcoming newsletters.
To make sure you don't miss future posts of Real Estate Investor Girl, why not subscribe? You can choose the method of RSS feed, or email. As always, feel free to comment in the comment area below.
Comments