Making Money With Subject-to Deals

by : Real Estate Ninja


The subject-to is one the most sought after real estate techniques being used today. With this system, it's all about control!

When you take a property subject-to, it means that you agree to buy the property, subject-to the existing mortgage. In other words, the mortgage remains in the seller's name. But, the deed belongs to you. I know you're probably scratching your head right now, but that's no typo. You own the house legally but the seller is still legally responsible for paying the mortgage.

In traditional transactions, when you buy a home from someone, the deed and the mortgage are transferred to you in your name. But this method is used primarily with investment property, more specifically on deals where the homeowner is facing foreclosure or simply wants out of the property. This is when you would want to just step in and take over the property. By doing a deal this way, you eliminate the need for getting a new mortgage and also by mitigating or minimizing your liability.

I have done several subject-to deals over the years and it's a great way to accumulate a portfolio of rental properties for income. The scenario goes like this; a seller contacts me with a property that is either vacant or occupied by bad tenants. He is fed up making payments or can't make the payments anymore; in some cases he is already behind a couple payments and is going to be facing foreclosure soon.

Once I analyze the property's rental potential and accessed the necessary repairs. Then I've decided that it makes financial sense, I proceed with writing up the documents. After I have signed documents in my hands, I evict tenants if I have to, make repairs and immediately start looking for a lease option candidate or rental tenant depending on the type of property it is. After I have my tenant or buyer, let them make all of my monthly payments on the property until I either sell it or refinance it.

The best part about doing subject-to deals is that you'll be able to just step into the shoes of the owner without any money down and with very little liability. You can do what ever you want to do with the property, because for all intensive purposes, it's yours!


There are several required documents that need to be signed by the seller. Without these documents you could open yourself up to laws suits or lose control of the property.