Subject to the Mortgage (Step by Step)


Buying property subject to the mortgage most
commonly referred to as buying subject to can be an invaluable tool in your real estate
investing toolbox that can significantly increase the number of deals you do each year. And right now I’m going to show you how to
do it step-by-step, including sharing with you all of the documents that you’re going
to need to pull it off. And if you like creative real estate investing
strategies and you aren’t subscribed to the channel do that now and ring the notification
bell, so you never miss an episode. I release very cool stuff like this weekly. All righty, so let’s get started. Speaker 2: This is Theriault Media. Matt Theriault: Hi, I’m Matt Theriault, CEO
of Epic Real Estate. And if you’re wondering how to buy real estate
subject to the mortgage then you’re in the right place. I’m going to show you like I’ve shown thousands
of my clients to do just that and I’m going to walk you through it step-by-step. Then after, if you want some more help, I’ll
show you how to get that too. Okay, simply put, buying a property subject
to the mortgage means this, you are buying a property from a seller that has a mortgage
on the property, but for any number of reasons they need to sell and sell fast and for any
number of other reasons maybe they can’t sell the property any other way. So, you come in to buy the property, you’ll
go on title as the owner, yet the mortgage stays in place in the seller’s name. So, you own the property. The seller is still responsible for the debt. Matt Theriault: It’s pretty cool, right? Is it that simple? Yeah, it is that simple, and I’m going to
walk you through how to do it step-by-step. So, first what you’re going to need is to
find a seller in a situation where they need to sell fast, or they have exhausted all other
options, and this is all they’ve got. And you can click this right here to watch
a video that shows you how we’re finding sellers like this for as little as a dollar a day. Then once you’ve found a seller and they agree
to you buying subject to the mortgage, in its most simplest form it looks just like
this. Not terribly different than any other way
that you’d purchase a property with a regular purchase agreement. You go ahead and you just place your agreed
price right here on the contract just like this, and then in the terms, you’d go ahead
and write subject to existing mortgage, and boom you’re done. Matt Theriault: That’s enough for your closing
agent to know what to do from there. Can you do this? Of course, you can and because you can go
ahead and smash the like button for me. And if you have some questions about it, go
ahead and post them in the comments below while I continue. I mean could it really be that simple and
risk-free? Well, actually it is that simple. There is a slight risk though. It’s a very small one, but it exists. And what I’m referring to as a clause in the
seller’s mortgage, it’s an acceleration clause, commonly referred to as the due-on-sale clause. And what this clause states is if for any
reason title is transferred without paying off the mortgage the bank can call the loan
due, the whole note. Matt Theriault: Sounds scary, I know. It stops a lot of investors dead in their
tracks, but I literally have never known anyone to where this has happened. But the risk, it exists. And I used to say, “I only know of one person
to where this has happened,” just to cover my butt, but I didn’t really know that person. I just heard about a person that it happened
to. But now, I do actually know a person, and
it happened to be a student of mine. I mean, what are the chances? Really, really slim, almost nonexistent, but
lightning can strike. So, what happened? Well, my client Parker, who’s very successful
by the way, he runs one of the more successful wholesaling businesses in the whole country,
and one day he received a letter from a bank that owned the note on one of his properties
that he had taken over subject to the mortgage. Matt Theriault: In this letter, the bank was
calling the loan due. They wanted the whole amount paid off. He called the bank to explain, and the conversation
when kind of like this, “Hello bank, I received a letter notifying me that you’re calling
the note due on his property I own. Well, the previous owner couldn’t make the
payments so I’m making these payments for them because I can, and I’m going to continue
to do so.” And then the bank replied with, “Oh, okay. No problem. That letter, it gets triggered automatically. But now that we know what’s going on, no worries. Please keep making the payments. Thank you,” and that was it. That’s how it went down for the one person
in more than a decade of creatively investing in real estate that I know where they heard
from the bank in such an instance. So with that said if even the slightest risk
of something like this is just too much for you to handle, there’s another way that you’ll
totally be able to appreciate. Matt Theriault: Instead of you directly buying
the house that I just showed you how with the purchase agreement, the seller first would
then transfer the property into a trust making you the trustee, and the seller becomes the
beneficiary. Now the seller is no longer the owner because
the trust now owns the property. You manage the trust as the trustee. The seller’s the sole beneficiary to what
the trust owns, the house. And what this does for you is it qualifies
you for the one exception, the one exemption that does not trigger the due-on-sale clause,
and it states that “A transfer of property into a living trust where the borrower remains
the sole beneficiary and does not result in a change of rights of occupancy, the bank
can not call the loan due in that instance.” This type of transfer is conducted on a daily
basis as a standard estate planning practice, so when this type of transaction happens,
it doesn’t even throw up any red flags. Matt Theriault: The bank typically pays it
no attention at all, and even if the bank did, they couldn’t do anything about it. So, now how do you become the owner of the
property? Well, there’s a second document that you need. It’s an assignment of beneficial interest
to where once signed by the seller, you become the sole beneficiary of the trust. And this document this one is not recorded,
so nobody including the bank will ever even know that it exists. They won’t know that you’re the beneficiary. You just take this assignment document, file
it somewhere nice and safe, and then just enjoy your new property subject to the seller’s
mortgage until you’re ready to sell or refinance. Matt Theriault: So, if you’d really like to
get more help with creative real estate and investing and work together on your overall
business, there’s a link below on exactly how to do that or check out this video. I’ll put it up here to where I pulled this
out regarding what you can do with a wraparound mortgage to make subject to deals like this
one even more profitable. What’s a wraparound mortgage? Well, it’s all answered right here. Check it out and watch your passive income
portfolio grow fast, right? Matt Theriault: And don’t forget to like this
video, subscribe to the channel and post your comments and questions below. And let me ask, who do you know that might
find this video useful? Well, please share it with them. It’d be a favor to me as well, and even more
importantly, a favor to them. All righty, I’ll see you next time. Take care.

28 thoughts on “Subject to the Mortgage (Step by Step)

  • Whenever you're ready… there are a few ways we can help. It might make sense to take a look at how we work with our clients at http://REIAce.com

  • Very informative. You included some strategies that may also come in handy during long term care planning, which many people aren’t well informed about despite so many baby boomers retiring every year. Bravo.

  • I know nothing about this field but watching your video it does really break down the information step by step. you also added great b-roll and included so many steps of the program I can totally see why you have 16k subs! Congrats!

  • Very good advice! Clear and easy to follow! Thanks for sharing! New friend here, and keep on growing, you are doing great!

  • There's so much to learn! My Dad just passed and we've learned so much about all of this stuff. I haven't been a homeowner since 2009 but will definitely watch your channel to learn more before I dip in again. Thanks!

  • Tons of great stuff here my friend, thanks for sharing all these steps! Really big congrats on hitting 16K! Wow! Keep on crushing it! 😀

  • Curious in today's environment…with impeccable credit…can you get into a home with 5% down (or less)? At a decent rate, of course.

  • I have a huge interest in real estate! Might buy a home next year and Im always learning interesting stuff from your videos ! Thank you

  • Hello my name is Philip here at PDSENTERPRIZEZ LLC
    [email protected]
    In Louisiana
    I'M looking and needing investors to partner with I've created my own strategy in purchasing homes buy and hold at 50 to 80% equity in them above the amount the seller owes on the home with a monthly cash flow and profit at the cashing out stage.ALL Pretty Homes properties move in ready tenant buyer is responsible for all repairs until he or she refinance and cashes us out.The investor owns the Titles we split monthly cash flow and equity at cash out only If I stay in the deal.I'll only get a decided equity amount up front out the deal if I'm out the deal.I'll find the houses and find the buyers.
    You my reach me at email above or 8773468988 Thanks.

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