Subject To V. Lease Option

[byoon 0]

Can someone explain to me how subject to deals are different from L/O?

 

I have the Manual, and it is by far the simplest method, at the same time, I would like to be completely armed with knowledge so I can best help the Seller.

 

And I wouldn't want to miss a great deal!

[Jonathan RexfordFL 8]

The difference in the transcation is that purchasing a home subject too the existing financing is that you OWN the home and under a L/O you CONTROL: Here is a little check list that I provide my ground partners when we are dealing subject too.

 

1. Sign A Contract With The Seller Subject Too The Existing Mortgages.

2. Have The Seller Sign The Seller Property Disclosure Statement.

3. Have The Seller Sign The Seller’s Affidavit. (Same Name Affidavit) If They Use Initials For There Name.

4. Have Seller Sign A Power Of Attorney And Have Your Trustee “Trustee Authorization” Regarding Insurance And Taxes.

5. Seller Then Signs Seller Mortgage Disclosure Statement (Due On Sale Disclosure Notice).

6. Seller Signs Letter Appointing Management.

7. Seller Signs Management Contract. (Just Keep This In The File)

8. Seller Then Signs Letter To Lender “Notification Of Establishment Of Trust” Hold This Letter In The File.

9. Seller Then Signs Letter To Insurance Company “Notification Of Establishment Of Trust” And To Change The Insurance Policy To A Landlord Policy And Naming The Trust And Trustee As Insured. (Keep This On File Just In Case You Don’t Have Your Own Insurance In Place For These Deals)

10. Have Seller Sign The “Change Of Address” Form From The Seller’s Mortgage Company Statement.

11. Now The Seller Creates The Land Trust, Which Will Own The Property.

12. Seller Signs Appointment Of Trustee. (You Or Your Appointee)

13. Seller Signs Appointment Of Successor Trustee. (You Or Your Appointee)

14. Seller Signs “Declaration Of Trust And Land Trust Agreement Naming Seller As Beneficiary.

15. Have The Seller Sign The “Standard Warranty Deed” Before A Notary.

16. Seller Signs “Assignment Of Beneficial Interest And Quit Claim Of Land Trust” Assigning Their Beneficial Interest In The Trust To A Personal Property Trust You Create For This Purpose Or Any Other Entity That You Choose To.

17. Seller Sign The Authorization to Release and The “Estoppel Letter” This Is To Be Sent To The Mortgage Companies To Verify All Balances.

18. Before You Invest Any Money Paying A Seller Or Bringing A Loan Current, Always Get A Title Search From An Insured Title Researcher. Verify That The Sellers Are The Proper Parties And That No Undisclosed Liens Exist.

Record The “Standard Warranty Deed” Along With The “Affidavit Of Land Trust” As Soon As Possible.

 

 

*** There are a few more steps depending on the situation. As you can see they are a little different than a Lease option.

[Adam King (MI) 1]

Byoon,

I advocate three things when getting started in real estate:

 

1. Don't make a rehab your first deal

2. Don't take over the liability of payments if you can't afford to (Hence sub to)

3. Focus and specialize on what mirrors your abilities

 

The basic abilities are this:

 

1. Cash

2. Knowledge

3. Time

 

You'll be hard pressed to fail if you can keep these things in mind.

Regards,

Adam

[Sold ! 0]

To simplify and answer the question directly:

 

In a Sub 2 deal you get the deed signed over to you from the seller.....therefore, you own the home.

 

In a LO, the seller stays on the deed and retains all benefits, thereof. As has been stated, you get control of the home.

[byoon 0]

Wow, thanks for the support!

 

It seems sub2's are more involved than L/O, and it might take me a while but I'll be the next sub2 pro!

 

I'll keep the questions coming, and hopefully...*drum roll* share some stories and deals with you soon!

 

Again, thanks.

[Brian - L.V. 0]

It seems sub2's are more involved than L/O, and it might take me a while but I'll be the next sub2 pro!

 

Exactly. There's not just one way to make $$ in real estate, but lease purchasing is the best and the lowest risk, in my opinion. You don't need someone that is facing bankruptcy or is willing to deed their house over to you (along with the payments) to make a win-win situation. Stick around, we're a very helpful (and very funny at times) group.

[Carny 0]

Does the mortgage company have to approve you when you do a sub2?

[-Tony- 0]

No, don't ask don't tell

[MichaelC 160]

Does the mortgage company have to approve you when you do a sub2?

<{POST_SNAPBACK}>

No, don't ask don't tell

<{POST_SNAPBACK}>

Definitely not! As Tony said, this is done on the sly. Because once title changes hands, the lender has the right to call the loan in. Meaning you or someone had better be able to get new financing on the property!

[Jason (AL) 1]

It seems sub2's are more involved than L/O..

 

You don't need someone that is facing bankruptcy or is willing to deed their house over to you (along with the payments) to make a win-win situation.

 

Subject-to.......lease optioning...

One's just as easy as the other.

You're in the "middle" either way you go.

With sub2, you OWN the house.

L/Os, you're merely a T/B with the right to sublease.

For those here that "buy" with a L/O, are you not still in charge to see that the mortgage payments are being made? If they're not being made, then the house will go into foreclosure. Then goes your deal you had set up. I bet you'd have a VERY unhappy T/B then should this happen. (But since this is a lease option site......... )

So, as Adam said, don't do any deals such as sub2s and sandwich L/Os if you aren't prepared to make those monthly mortgage payments, should your tenant or buyers fail to do so.

 

Ya don't have to buy a person's house sub2 that is only in bankruptcy.

It's best to get 'em before they get to this stage.

 

Just whatever flavor you like best. Go with it.