How to Buy Properties Subject to the Existing Note

Jay Conner

Feb 10 2022

Jay Conner explains how to buy properties that are subject to the existing note.

“Who, in their right mind, would sell their house, leave the mortgage in their name, and trust you will make their payment?”

When I first heard about closing deals subject to the existing note, this was the first question that popped into my mind. This method of buying properties sounded impossible!

When I say “subject to,” I mean buying a home, or any property, subject to the existing mortgage. In short, I buy a house from a seller, the deed is transferred into my entity's name, and I agree to make the seller's mortgage payments. However, the mortgage stays in the seller's name until I sell the property to a new buyer.

There are plenty of reasons why I buy properties subject to the existing note, but who would be willing to sell me their house while still being responsible for the mortgage?

For a seller, it sounds like a big risk. Where's the guarantee that I will pay their mortgage that remains in their name?

When I first started talking to potential sellers about buying their properties “subject to,” I quickly learned that it was my motivated sellers who were willing to take me up on the offer.

Who is my Motivated Seller? After many years of buying properties “subject to,” I've learned how to review a seller's property information sheet and quickly determine if it is a possible “subject to” deal.

From my experience, the strongest candidates for “subject to” are sellers who are currently behind on their payments. Recently, I bought a house “subject to” from a seller who was four months behind on their payments. If the seller has a mortgage, I talk to them about selling subject to the existing note.

In order to buy a property “subject to,” there has to be a current mortgage in place. Obviously, sellers who own their house free and clear of any mortgages aren't going to sell “subject to.” On a free and clear house, I negotiate to buy with seller financing.

Youtube link:

How to Buy Properties Subject to the Existing Note https://youtu.be/SMsiVCELmhg

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