Pros & Cons of "Subject-to" Real Estate Investment

by Garden Home Realty LLC 05/31/2021

When you're considering buying real estate as an investment, it's a good idea to weigh the pros and cons. That's especially important with "subject-to" real estate, because there can be risks and rewards with this type of property that are different from traditional purchases. Here's what you should be considering, before you decide on this investment strategy.

The Pros of "Subject-To" Real Estate

On the "pro" side of buying "subject-to" real estate is the way you can acquire multiple properties for your portfolio. Additional benefits include:

There's no need to get a mortgage in your name, so you won't be overextending your credit or finances.

You avoid a lot of the transaction fees that come with getting a mortgage and buying a property.

You can close on the property quickly, and you'll pay fewer title company fees in the process.

You can buy as many properties as you want, as fast as you want, and all you have to do is make the mortgage payments.

You'll be helping sellers who are facing foreclosure or otherwise need to get out from under their house payments.

The Cons of "Subject-To" Real Estate

With any real estate transaction or investment of any kind, there are cons that come along with the pros. When you weigh them carefully, here's what you should be thinking about:

If the seller files bankruptcy, the original lender could foreclose on the property and you may lose your investment.

The lender could exercise their "due on sale clause," and require that the current mortgage balance be paid in full.

The deed could be tainted in some way, and without title insurance in your name you might not be protected.

You may end up spending money on an attorney if something goes wrong during the process.

Technically, the bank still owns the home because there's a mortgage on it.

Why Choose This Type of Real Estate Investment?

If you don't have the money or credit to buy investment properties, buying "subject-to" can be a good choice if you understand and mitigate the risks. You may also want to choose this option if you're trying to acquire a lot of properties quickly, and you want to save money over traditional purchasing options. For people who buy "subject-to", there can be big opportunities to buy quality properties they might not be able to afford under typical circumstances.

But it's very important that you're aware of the risks and legalities. Getting an attorney to help you with the first few properties, and to collect and make the mortgage payments on all the properties you buy, can be one of the ways you can make this type of transaction safer and better for you and the seller.

Home Loan

Investment

Mortgage

About the Author

Garden Home Realty LLC

Welcome to Garden State Realty LLC, a trusted boutique real estate brokerage located in Livingston, New Jersey, proudly serving clients from across the globe. With a passion for real estate and a track record of success, we’ve built a reputation for excellence, professionalism, and a personal touch that sets us apart.

At the heart of our service are the key traits of exceptional real estate professionals: unwavering integrity, in-depth market expertise, innovative marketing strategies, skilled negotiation, and a well-connected professional network. These qualities define how we do business and ensure that every client receives outstanding results.

We are committed to delivering top-tier service by putting your needs first, actively listening, communicating with clarity, and responding promptly to your concerns. Whether you're buying, selling, or investing, you can count on us to be your reliable partner every step of the way. Welcome to a real estate experience where your goals become our mission.

欢迎来到 Garden State Realty LLC，一家值得信赖的精品房地产经纪公司，位于新泽西州利文斯顿，致力于为来自世界各地的客户提供优质服务。凭借对房地产行业的热情和卓越的成功记录，我们赢得了卓越、专业以及独特个性化服务的良好声誉，使我们在行业中脱颖而出。

我们服务的核心在于优秀房地产专业人士的关键特质：坚定不移的诚信、深入的市场专业知识、创新的营销策略、娴熟的谈判技巧以及广泛的高质量专业网络。这些品质是我们业务的基础，确保每位客户都能获得卓越的成果。

我们致力于提供顶级服务，通过将您的需求置于首位，积极倾听、清晰沟通，并迅速响应您的每个需求。不论您是买房、卖房还是投资，您都可以信赖我们作为可靠的合作伙伴，全程陪伴您左右。欢迎加入我们的客户群体，在这里，您的目标就是我们的使命。