HOW TO INVEST ‘SUBJECT TO’ AND OVERCOME THE ‘DUE ON SALE’ CLAUSE MATT THERIAULT
receive many questions revolving around how
to invest ‘subject to’, and specifically how to
overcome he “due on sale” clause. Investing
‘subject to’ is when a motivated seller signs over
the deed to you while you continue to make
payments on their existing financing. You have
taken ownership of the property subject to the
make sure that the seller
knows everything that you know
about how to invest ‘subject to’.
Full disclosure with the seller
will keep you out
of a lot of potential trouble.
existing financing. You, the buyer, own the
property while the seller still owns the liability of
the loan.
real deal is the seller’s motivation to sell. First,
you do need a motivated seller for this strategy
How to invest ‘subject to’ is actually a very simple
to be applicable. When you do find the right
strategy, but like every strategy it’s not going to be
situation, and take over a motivated seller’s
a good fit for every situation. Whether its seller
payments, the seller benefits by getting peace of
financing, lease options, private money, hard
mind and preservation of their credit score.
money, whatever it may be… ‘subject to’ is just
Should the seller raise a concern around
another tool in the toolbox of which enables you to
whether you’ll follow through and actually make
use someone else’s money to transact your real
the payments, you can explain that the risk of
estate. Typically, your ideal situation for ‘subject to’
losing your money in the deal and the equity in
investing is just about any situation where a quick
the property is enough to keep you from missing
takeover of the property is in order to solve the
payments.
challenge at hand.
The answer to the question how to invest
Ok, so why would a seller agree to such an
‘subject to’ is not a complicated one. As long as
arrangement? Remember, at the center of every
you are clear with regard to what ‘subject to’ is,