The Art of “Subject To” Real Estate Investing

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Subject To Real Estate Investing

Are you interested in learning how you can build a portfolio of real estate without ever qualifying for a bank loan and for very little money out of pocket?


If you are currently a real estate investor or looking to become one, you must understand the method of purchasing properties “Subject To” the existing financing.


What is “Subject To”

When you purchase a property “Subject To” you are purchasing it subject to the existing mortgage that is already in place.


You are not assuming the loan you are taking over the responsibility of making the payments.


The terms on the current mortgage or note do not change during this process.


When you buy “subject to” the owner deeds the property over to you but they remain on the loan.


Why Would Any Seller Agree To This?

If you are not familiar with subject to real estate investing I am sure you are asking yourself right now, “Why would any seller in their right mind agree to deed me their home and stay on the loan?”


There are actually many different scenarios that may influence a homeowner to be open to subject to.


All of these reasons usually stem from an unfavorable situation that the homeowner is faced with. Usually they do not have the time or money to sell the property in a traditional manner.


Situations that may lead to a seller looking for alternative methods of selling their property:

Loss of job

Death of a spouse



No Equity


Tired landlord


Top Benefits of Subject To Investing

Can acquire with very little money out of pocket

Do not have to qualify for bank loans

Your credit score does not matter

Can close quickly

Can takeover great low interest financing

Not legally bound by a loan in your name (You are responsible for making payment though)


Due On Sale Clause

 Most bank loans today have what is called a “Due on Sale” clause in them.


This clause is a right the bank has to call the entire amount owed to them due at once. This is not a law.


Many people have been taking over loans subject to over the last 30 years.


While the bank can call the loan due it is extremely rare that this happens.


Banks are in the business of making money. Why would they want to call a loan due if it has had a history of being paid on time and they are collecting interest on it each and every month?


Lenders would much rather get paid than pay legal fees to foreclose on someone who can’t pay in full if the loan was called due at once.


Lenders do not like to have non-performing loans on their books either.


Where to Find Subject To Deals

 The key to finding great opportunities for subject to deals is to find great lists to send direct mail to.


There are many great list providers out there that can supply you with lists of homeowners or investors that are going through divorce, evictions, probate, bankruptcy, foreclosure, delinquent on taxes, etc.


These list providers also have options for you to further filter the lists by aspects such as location, type of housing, amount of bedrooms, bathrooms, square footage, equity, date purchased, etc.

The best option for those looking to acquire subject to’s for very little money out of pocket is to locate properties that have very little equity.


Motivated seller’s that have little to no equity may not be able to sell using traditional methods.


These seller’s may not be able to afford paying real estate commissions, closing costs, repairs, etc. They are stuck in a tough situation where you may be their best option.


Typically, loans that originated, or were refinanced, in the last 1-5 years will have the highest likelihood of not having much equity. This really depends on the current market situations though.


Note that you can still find great subject to deals that have a great deal of equity and where the loan was originated over 5 years ago.


For these properties you may have to fine tune your negotiating skills and be a little more creative.


Seller’s will most likely want a good portion of their equity back. It is up to you to think of creative ways to repay that equity rather than a lump sum right away.



There you have it. You are now aware of a very powerful method of acquiring real estate. Add it to your real estate investing toolbox to really add a boost to your portfolio.


Here’s to your success!



I hope that this post was very helpful to you. If it was, please share with someone who you think may benefit from it. 

Here’s to your success!!!



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