How Much Money Do I REALLY need to do Sub 2?

Comments(6)

• 
  rajwarrior9th June, 2003

  Money to buy the property. It will take some cash to convince the sellers to leave. As John Locke puts it, 'U-haul' money at least, usually in the area of $1000 or so depending on the equity and how good you are at convincing them they don't have any equity.
  
  There are also closing costs to get the deal done. It's hard to pin down a figure without a specific deal to work with, but for subject to investing, $2500 is not really off the mark to close the deal.
  
  If you don't have the money, either start saving or borrow from a friend/relative. While your gathering your money, keep studying because REI is true investing with no guarentees. It can make you rich, but it can also make you broke.
  
  Good luck
  
  Roger

• 
  tbelknap9th June, 2003

  What closing costs are you referring to in a Sub To transaction? The only costs I can see is the notary and filing costs. No transfer taxes in my state if I use a land trust.
  
  Tom

• 
  JohnLocke9th June, 2003

  chasoni,
  
  Glad to meet you.
  
  I would say you would need at least $200 dollars if you knew how to put a Subject To deal together.
  
  First you would purchase 1000 business cards for about $20 then you would pass these out to everyone you know or meet, sooner or later you would find someone who just wants out of a property.
  
  Then you would give the seller who just wants out $10 when you signed the Offer and Acceptance Agreement with them to make the transaction legal.
  
  Now you would run an ad in the newpaper to sell the property which would probably run about $150.
  
  When the home sells using a Contract for Deed you probably would make on the average Subject To deal upfront $8,000 which you could then finish up paying for any costs that are connected with recording costs, transfer tax, etc.
  
  You probably wonder why I said it would take $200 yet I only showed $180 in costs, the other $20 is used for celebrating when the house is sold.
  
  Actually there is probably no set amount that one should have when doing a Subject To deal it all boils down to how creative you are in finding a seller and buyer. The two words that come to mind are Ambition and Desire no matter what method of creative investing you do.
  
  Welcome on board this board, if you are very short on funds then I would recommend you start off Bird Dogging get some money together, get your feet wet and continue on in this great industry.
  
  John $Cash$ Locke

• 
  roztom10th June, 2003

  John:
  On subject to's do the sellers want some kind of protection that their mortgage will be paid and how is that shown to the seller since their credit is on the hook ?
  Assuming a buyer might or might not show up on time ?
  
  Thanks,
  _________________
  Tom B.
  
  "Nothing To It, But To Do It"[ Edited by roztom on Date 06/10/2003 ]

• 
  chasoni10th June, 2003

  Thanks John, everyone.
  John, i have a ?: assuming i wanted to find a motivated seller sooner rather than later, passing out business cards isn't enough to begin with is it? what else works, as cheaply as possible. i have some funds but i am still gathering. i am going to order your course. if u use land trusts, do u use the kind that i have read about from Bill Gatten?
  thanks,
  Sonia

• 
  HoGiHung10th June, 2003

  Mr. Loche will hopefully come back and give the last two posters a great answer.
  
  You can help re-assure the seller by using a Loan Servicing company. Using John's example of getting a $8,000 down payment, I would put some of that in escrow with the LSC in case the new buyer defaulted. Kick him out and resell.
  
  As for Land Trusts. I don't believe John uses them, but I'm sure he will be back to chat.
  
  It is my preference to use Land Trusts. Yes it is an added cost. But I'm kewl with that.
  
  Ho...