Buying Subject To

When you buy the house subject to, does that mean the seller doesn't care about their credit? Some sellers just don't. The question to ask is how would this affect the ability for somebody to get a loan if they give you their house subject to?

This answer depends on first, whether they are going to go get a loan. Plain and simple, many do not. Secondly what their debt ratio is. This is important because this payment will show and count against their debt ratio until it's paid off. What can you do in this situation?

We suggest you buy their house but then put the deed in escrow. They can then take that land contract to the bank and show they are collecting a payment equal to their out going payment.

What's does this do? This will essentially wash out their debt ratio and help them qualify.
Should you put the deed in escrow or would you just sell it. We wouldn't buy it any other way. Remember, it isn't going to go into a land trust. In this case, you want to buy it on a land contract. Have it put in escrow with instruction to record it when you pay the loan off. This works so you don't have to chase them down!

The question to ask is have you recorded the deed? Maybe you haven't and you put the property into a land trust and received a signed beneficial interest. Technically you do not have insurance on this house right now. Think about it. That deed transferred the policy that belonged to the seller is no longer in effect. If the insurance finds out that they don't own the house, you could have larger issues than you care to imagine.

If the deed gets recorded it becomes public knowledge that it has transferred. You need to cancel their policy or they can, and you get a landlord policy on the property. Make sure you do this yourself. Then you no longer have this issue. By the way, the landlord policy is cheaper then their owner occupancy policy.

When it comes to real estate investing, I highly recommend information from Ron LeGrand . For vauable information regarding investing in homes visit RonLeGrand.com. You can also find useful investor resources in the free newsletter at MillionaireMakerNewsletter.com