The Left Column is how most “Buy & Hold” & “Fix & Flippers” buy properties. The Right Column is How I Buy Properties. These are generally Not Fixers. More detail http://PassiveIncomeGrowth.com/Subject-To/
How most “Buy & Hold” & “Fix & Flippers” How I Buy Properties
buy properties Traditionally Using Subject To
NOTICE: In this case the Seller would have to come into closing with money if a Traditional sale was used.
When you use Traditional lending you have to qualify, put 20% down and you are limited to 4 properties. However, when you use Subject To, there is no “qualifying”, you can use little money down and you can buy an unlimited number of properties. When I Hold a property as a Rental, I need a lot of cash just to get into the property to hopefully make $100 to $200 a month “cash flow”. I have to worry about renters, clogged toilets, new roofs, broken AC Units and on and on.
With Selling to Tenant Buyers, However, I get $10,000 down right away for me to spend on the next house (or however I want to spend it) and the Tenant Buyer does the Rehab, the maintenance, takes care of the Roof and AC Unit if they need to be replaced or fixed.Buyer’s down payment gives me Money to Buy the Next one and the Next one and the Next.
These are “off market” sellers who need or want to sell their house quickly. I can buy a house “off market”, no agent fees of 6% ($12,000) so there doesn’t need to be a lot of equity. I am not rehabbing the house. The Tenant Buyer will do that. I give the seller some $ equity, they move. Closing takes place in escrow. I take over their loan & their payment. I then mark up the price, sell the property to a Tenant Buyer who puts $10,000 or more, down. I get to keep the $10,000. They don’t have to qualify at a bank so they are willing to pay more. I charge a little above what the property would rent for and I keep the difference every month as my “cash flow” Usually $300 to $500 per month. None of the hassles of having renters.
Pretty cool, eh? If you want even more detail http://PassiveIncomeGrowth.com/Subject-To/