Software Features


Software Features

Property Data

Research properties and their owners, compile lists, and more.

MLS Comps

A multiple-listing service comparable tool.


List your properties with Propelio Realty for incredible savings.

Short Sales

If you have an underwater property, our experts can help.

For Education


Interesting and valuable articles from Propelio and the industry.


Real Estate education platform led by a team of professionals.

Propelio TV

A channel that gives daily updated archive of our live video.

Discover Propelio

About Us

Get to know Propelio better – explore our story and mission.

Map Coverage and Brokers

Shows MLS coverage and broker transactions in your state.

Referral Program

Share Propelio with friends and family to earn exciting rewards

Template is not defined.
Play Video

Mastering the Art of Subject To Investments

Are you intrigued by real estate investment strategies that require minimal cash and deliver maximum benefits? One such effective method is “Subject To” investments. This strategy enables you to take over properties without assuming the existing mortgage, paving the way for smart investment opportunities. Let’s delve deeper into the ins and outs of this fantastic investment model.

Understanding “Subject To”

What is Subject To?

In the realm of real estate, “Subject To” refers to acquiring a property subject to the existing financing. This means you take over the property while the original mortgage remains in the seller’s name. You make the mortgage payments on behalf of the seller, but the loan stays in their name until it’s fully paid off.

It’s Not an Assumption

It’s crucial to understand that “Subject To” is different from loan assumption. In a loan assumption, the buyer formally takes over the loan, and the original owner’s name is removed. With “Subject To,” the loan remains under the seller’s name, and you make payments on their behalf.

Benefits of Subject To Deals

Faster Closing Process

One of the biggest advantages of “Subject To” deals is the speed. Since you don’t have to secure new financing, you can close deals faster. No need to go through the lengthy approval process with a bank.

Buy Properties with No Equity

“Subject To” allows you to acquire properties even when there’s little or no equity left. This makes it easier to find deals that might not attract traditional buyers or investors.

Minimal Cash Outlay

Another benefit is minimizing your cash outlay. You typically don’t need a large down payment, making it ideal for investors looking to enter the market without significant upfront capital.

Risks Involved

Existing Loan Balance

While you take control of the property, you need to remember the existing loan balance remains under the seller’s name. It’s your responsibility to ensure these payments are made on time to avoid foreclosure.

If you default on payments, the legal obligations fall back on the seller. This can impact their credit score negatively, so it’s crucial to manage these payments diligently.

Identifying Potential Sellers

Sellers with Little to No Equity

Sellers with minimal equity are often more willing to enter into “Subject To” agreements. This could be due to market conditions or a recent decline in property value.

Facing Foreclosure

Properties in foreclosure are great targets for “Subject To” deals. These homeowners are often looking for quick solutions to avoid foreclosure and are more open to creative financing.

Overdue Payments

Sellers who are behind on their mortgage payments are likely to consider “Subject To” deals. You can step in, cover the overdue payments, and continue making monthly payments.

How Subject To Works

Acquiring the Property

When you buy a property “Subject To,” you receive the deed to the property while the loan remains in the seller’s name. This means you gain ownership but continue the existing mortgage payments.

Keeping the Existing Loan

The key here is that the existing loan stays in place. You don’t take out a new mortgage; instead, you honor the current terms and conditions of the seller’s loan.

You obtain a new deed transferring ownership to you. However, the mortgage remains in the seller’s name, and you are responsible for making the payments.

Important Rules and Considerations

Residential Use

“Subject To” deals are primarily used for residential properties. These transactions fall under commercial law, meaning you are buying the property as part of your business, not as a residence.

Seller Cooperation

Seller cooperation is essential. They need to understand and agree to the terms, including the fact that their name remains on the loan, and they are legally responsible if payments aren’t made.

Title Insurance

While it’s not a must, getting title insurance is recommended. It offers protection if there are any title issues that arise after the purchase.

Having an Exit Strategy

Always have a solid exit strategy. Whether you plan to rent out the property, sell it, or use owner financing, you need a plan to make the most out of your investment.

Suitable Properties for Subject To Deals

Foreclosure Properties

Properties that are already facing foreclosure proceedings are prime candidates. Sellers in these situations are often looking for quick solutions to avoid losing their homes.

Properties Behind on Payments

Homes that are significantly behind on payments but still have intrinsic value are another good target. You can negotiate with the seller to take over the property and handle the overdue payments.

Low Equity Homes

Properties with little to no equity also fit well into this investment strategy. Sellers are more willing to consider creative financing when traditional sales methods are not an option.

Evaluating the Deal

Estimating Repairs

Before committing, estimate the repair costs. You need to ensure that any necessary repairs won’t outweigh the benefits of taking over the property.

Calculating Equity

Calculate the existing equity in the property. The difference between what is owed and the property’s market value will help determine if the deal is worth pursuing.

Assessing ARV (After Repair Value)

Assess the ARV to understand the potential value of the property post-repair. This helps in calculating the potential profit from the deal.

Final Thoughts

In conclusion, mastering “Subject To” investments can be a game-changer for savvy real estate investors. This strategy offers the opportunity to acquire properties with minimal upfront cash, bypass traditional financing hurdles, and close deals quickly. However, it’s crucial to approach these deals with due diligence, understanding both the benefits and the risks involved. By identifying suitable properties and maintaining clear communication with sellers, you can effectively leverage “Subject To” investments to expand your real estate portfolio and achieve significant returns.

show less

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Episodes

Play Video
78 minutes

Good morning, everyone! I’m Ron, and today, along with Daniel from Propelio, we’re...

Play Video
10 minutes

Exploring owner financing in real estate opens up a unique pathway to property...

Play Video
16 minutes

Max Maxwell has become a name to reckon with in the real estate...

Play Video
32 minutes

Getting into real estate can be daunting, especially when trying to secure private...

Play Video
47 minutes

Hey real estate enthusiasts! Today, I’m excited to share some invaluable insights from...

Play Video
33 minutes

Hey everyone, Grant Kemp here from Creative Cash Flow. Today, I want to...

Play Video
44 minutes

Good morning, investors! Today, we’re diving into one of the most crucial skills...

Play Video
43 minutes

Good morning, everyone! Welcome back to episode 5 of “Grant Teaches You Something.”...

Play Video
9 minutes

Hey there! Today, I’m excited to give you a quick rundown of how...

Play Video
10 minutes

Today, we’re diving into the basics of owner financing, one of my favorite...

Propelio TV

Do you love learning from your favorite hosts? Subscribe and we will notify you when we release new shows.