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Types of "Subject-to" Real Estate Investments

by MLB Real Estate Group 02/21/2021

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

MLB Real Estate Group

Mary Lou Buckley

A full-time Realtor © for 25 years, MaryLou has transacted business from raw land sales to luxury homes in both New Hampshire and Massachusetts. She prides herself in having a diversified background, and great local knowledge of the southern New Hampshire and northeast Massachusetts markets. A prior product manager in the electronics industry, MaryLou takes pride in her marketing knowledge and skills.  

Her hard work and dedication to each client has resulted in quality relationships with buyers and sellers as well as consistent leadership awards. Her commitment to the industry in general has been demonstrated by her service on the Granite State South Board of Realtors Board of directors, the Granite State South Board of Realtors Ethics Committee, as well as membership in the New Hampshire Association of Realtors, Massachusetts Association of Realtors, Northern New England Real Estate Network (NH Multiple Listing) and Massachusetts Property Information Network (MA Multiple Listing).

She is a consistent multi-million dollar producer who credits her success with the repeat referral business from her past and present clients. They have helped her become a highly respected and recognized Realtor © within the community.

A resident of southern New Hampshire for 27 years, MaryLou lives in Atkinson with her husband, Michael.

Amy Wholley

New to the industry and eager to help you with your needs, Amy Wholley is a licensed Realtor © in New Hampshire and Massachusetts. With a passion for service in the southern NH area, Amy is ready to help with your home buying and selling needs. As a proud member of the Coco, Early & Associates family and an active member of the Realtor © association, Amy carries the values of hard work, integrity, and outstanding client service into everything she does.

When Amy is not making home ownership dreams come true for her clients, she enjoys spending time with her young family and going to the beach to soak up the sunshine. Originally from southern Maine, Amy now lives in Pelham, NH with husband, Mark and two sons, Liam and Finn.