Welcome To Sub2Deals.com!
This site was created to provide a place for like-minded creative Real Estate Investors to interact and get their questions answered while helping others by sharing their knowledge.
Whether you are just starting out on the path of Real Estate investing or you are a seasoned investor, there will be something for you here.
The primary focus of sub2deals.com will be real estate transactions that require little cash or credit and are known as buying “subject to” existing financing. Around here we just call it "Sub2."
What is a “Subject 2” Deal?
The typical sub2 deal involves having a seller deed the property to you while leaving the existing mortgage in place. There is no “formal” assumption of the loan, you just start making the payments. There are many variations to this type of deal and as many ways to “take one down” as there are investors doing it. We will cover it all right here.
Subject 2, The Good, The Bad, and The Ugly
The “sub2” method is my personal favorite way of buying property. It is fast, simple, and for me, relatively easy to negotiate with my seller. Is it without risk? NO! There are hundreds of teachers, gurus and mentors out there selling courses that try to sell this method as “Risk Free!” “No Cash or Credit needed!” This is simply not the case. It is a fantastic method of acquiring real estate but it must be done responsibly and with the proper education.
Get Them to Give You the Deed
This is my area of expertise and as I see it, a great way to build a portfolio for long term cash flow. Think about it, who gets better rates on a mortgage than a homeowner? As I write this, a homeowner with good credit can get a fixed-rate mortgage for about 5 ½% interest! Imagine having your rental portfolio full of those babies! We can show you how.
Maybe you are not into the rental scene (me either) but still want long-term cash flow without the management headaches. My exit strategy on most of my deals is to sell them with owner financing. Imagine taking over a property with an actual value of 85k for the balance of 70k. Your house has an interest rate of 6% and a monthly payment of $420. You sell for the actual market value of 85k with 8k down and finance the balance of 77k @ 10%. The buyer’s payment to you will be $675 per month. You get 8k in cash up front and $250 per month for the next 30 years.
How many of those do you need to give up the day job?
Who is William Tingle?
In June 1999, I was a District Manager for a national restaurant chain. I knew absolutely nothing about real estate, could not tell a deed from a mortgage. What I DID know was that I was tired of working 80+ hours a week and never seeing my family. One night while out of town for work, staying in a motel room, I was up at 2 am. There on the television was Carleton Sheets. I had probably watched that infomercial 1000 times over the past 10 years but something made me order the program that night.
In the week that followed, while waiting for the course, I was all over the internet, learning all I could about “Creative Real Estate”. I found several websites and met many other investors who seemed to think differently from most of the other people I knew. These guys spoke of things like “cash flow” and “return on investment”. This stuff was all Greek to me.
My course arrived a week later and armed with the knowledge in that book, I was off and running! I bought 2 houses that first month, both with bank loans. Even though I had little cash, I was fortunate to have great credit.
During this time, I was hearing more and more about this other method of buying property. You just take over payments, the seller deeds you the property while they stay on the loan. Who in the heck would do that, I thought? Not long after, I would find out.
I had a young fellow call me who had just bought a new home 8 months before. He and his wife were divorcing and neither could afford the home on their own. I drove out, we walked through the house (it was beautiful) and I said, “If I could take over your payments until I could sell it, would that work for you?” He said, “What do I sign?” I almost fell off my chair! I took over payments on that house and sold it with owner financing. I got 13k down and collected cash flow for over 2 years. They re’fied this past summer and I got another 9k. All totaled, I made over 26k on that house.
Since then, I have taken over 100 houses much the same way. I have since added rehabbing, flipping and Lease/Options to my toolbox but sub2 is far and away my favorite.
Five months after I bought that first sub2 house, I left my full time job for good. Being a full-time investor lets me enjoy life like never before and I thank God every day for making sure I was awake that morning at 2am to see Carleton Sheets.
Where Will You Be in 5 Years?
My goals are set for the next several years. Are yours? Where do you see yourself in five years? Can you picture being there? Are you willing to work hard enough to achieve those goals? These are the questions you should ask before jumping into any venture. If you want it bad enough you'll take the necessary steps and have the commitment to stay the course no matter what. Welcome to our website. If you want to learn more about real estate investing, you have come to the right place. Read the articles, ask questions and share your knowledge on our newsgroup.
There are a lot of sites out there and a lot of “mentors” teaching methods of acquiring property. Remember, if you have a question, make sure you ask an investor who knows!