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Subject to Real Estate Investing – No Money Down Investing Overview

I. How to invest in real estate with little or no money down (subject to overview)

Have you heard the buzz words thrown around “no money down investing?” Maybe it was followed up by a guy in slick suit, fake smile that is talking so fast that he must be on a stimulant. Well it certainly sounds cool. In the good old days of early 2000s, real estate was climbing and the bankers were giving out no money down loans like candy. Nowadays, banks want 20 percent down. Good lord that’s a lot of money!

Well you can still do no money down investing even though the banks are tighter even after government bailouts (which many banks used to increase their cash reserves rather than lend). It is called subject to investing. Subject to investing refers to purchasing a home subject to the existing mortgage staying in place. You typically make an agreement to make the mortgage payments in exchange for the house.

Confused? Don’t worry, I was a bit perplexed when I first heard this concept as well. And I may have oversimplified a bit. Think of this way – the deed is what denotes ownership of the house. The person whose name on the mortgage is not what denotes ownership. (even though they are typically the same person). So if you get the deed of a house from a seller in exchange to make their payment, boom! No qualifying. No closing costs. Nothing down investing.

So you own this home, how do you sell it? Usually, you will want to sell rent to own or with owner financing. If the owner could sell it immediately in its current condition for cash he probably would have. So you rent the home to pay the mortgage expenses to someone who wants to buy it in a year. These people pay extra up front, you get paid for cash monthly flow, and you get paid when you close. There are tons of people that want to do this out there. Even in a slow market. You will be shocked.

A cautionary note, this is in no way legal advice. If you get an agreement, do not rush into it. Do not get everything signed at the kitchen table (you shark you). Instead have a lawyer draft up the paperwork. There are lots of disclaimers and paperwork to minimize your liability and clarify the arrangement. That way, if you go to sell the home for a profit, the original seller cannot get greedy and default on the agreement and waste your precious time. If they say I did not know I was selling, You say: why were you at a closing attorney’s office?

This article was written by Eric Wilder, M.B.A, an ex-automation engineer for a fortune 200 company who traded in the corporate life to work in exchange for a full time investing career. For more free information on how our company continues to make money in this economy, go to our web site for Free Real Estate Investing Information.

This article was written by Eric Wilder, M.B.A, an ex-automation engineer for a fortune 200 company who traded in the corporate life to work in exchange for a full time investing career. For free tips on how our company continues to make money in this economy, go to http://www.RealEstateInvestorMBA.com.




11 Responses to “Subject to Real Estate Investing – No Money Down Investing Overview”

  1. I’d have to comply with you here. Which is not something I usually do! I love reading a post that will make people think. Also, thanks for allowing me to speak my mind!

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