Learn how to structure subject-to real estate deals over the phone and close more deals with these 3 powerful strategies.

Introduction

Real estate investing doesn’t always have to involve traditional bank loans, hefty down payments, or even large amounts of cash up front. One of the most powerful strategies in creative real estate financing is the subject-to deal. A subject-to deal allows you to take control of a property by taking over the existing mortgage—without qualifying for the loan or going through a bank.

If you’ve been wondering how to structure subject-to deals to close more deals, this guide is for you. I’ll break down 3 proven ways to structure these deals over the phone so you can win over every seller and grow your real estate portfolio quickly.

What is a Subject-To Deal?

In a subject-to deal, you purchase a property “subject to” the existing mortgage. This means that instead of securing a new loan, you take over the payments of the seller’s current mortgage. The mortgage stays in the seller’s name, but you gain control of the property.

This method is great for:

• Investors with limited cash who want to acquire properties without needing large down payments.
• Sellers who are motivated to get rid of their property, either due to financial hardship, relocation, or other reasons.

Now, let’s dive into the 3 ways you can structure subject-to deals and win every seller!

1. The Seller Pays YOU to Buy Their Property

Yes, it’s possible for the seller to pay you to take over their mortgage. This happens when a seller is so motivated to offload their property that they’re willing to pay for the privilege of having someone else take care of their mortgage. This could happen when the seller:

• Can’t afford to make payments and is on the verge of foreclosure.
• Has already moved out and can’t manage the financial burden of two properties.
• Is underwater on their mortgage and just wants out.

How Does It Work? In this structure, you take over the mortgage and may even receive a monthly payment from the seller. This means the seller is paying you to relieve them of the responsibility for the property, and you benefit from taking over a house without spending your own money.

Example: I once structured a deal where the seller paid me $500 a month to take over their mortgage. The seller was eager to get rid of the property, and I walked away with a monthly income and control of the house!

Why It Works:

• Motivated Sellers: This strategy works best when the seller is in a financial bind.
• No Cash Needed: You don’t have to put down any money or pay upfront fees.
• Profit from Day One: Not only do you take over the property, but you can also make money from the seller’s payments.

2. Buy the Property with No Money Out of Pocket

This is another fantastic way to structure subject-to deals. In this scenario, you take over the mortgage, but you don’t pay anything out of pocket for the property. This can happen when:

• The seller’s mortgage is current, meaning there are no late payments or back payments that need to be covered.
• The house is in good condition, so no immediate repairs or renovations are needed.
• The seller is willing to cover the closing costs, which means you don’t have to pay for any of the transaction fees.

Example: I’ve acquired properties where I didn’t have to pay anything upfront because the house was in good shape, and the seller was even willing to cover all the closing costs. I walked away with a property for free!

Why It Works:

• No Upfront Cash: You don’t need to dip into your own savings or secure a loan.
• Instant Property Control: You gain control of the property immediately without the typical headaches of buying a house.
• Motivated Sellers: This works best with sellers who are looking for a quick, hassle-free way to get out of their current situation.

3. Pay for Back Payments, Repairs, or Closing Costs

While some subject-to deals require no money down, there are situations where you might need to pay for some costs out of pocket. These costs could include:

• Back mortgage payments: If the seller is behind on their payments, you may need to bring the mortgage current by paying a few months’ worth of missed payments.
• Closing costs: In some cases, the seller may not be able to cover the closing costs, and you’ll need to pay them.
• Repairs: The property may need repairs or updates, which you would pay for after taking over the mortgage.

While this option does involve some upfront costs, it’s still far more affordable than buying a property with traditional financing. And with a subject-to deal, you’re taking over a mortgage without having to qualify for a new loan.

Example: I once bought a property where I had to make three months of back payments to bring the mortgage current. The seller was behind, but after covering the past-due payments, I was able to take over the property and still profit from the deal.

Why It Works:

• Flexible Costs: While you’re paying some money out of pocket, you’re still acquiring the property without a bank loan.
• Great for Distressed Properties: This strategy works well for properties that need some work or are in foreclosure.
• Long-Term Profit: Even if you invest money upfront, you’re setting yourself up for long-term gains.

Conclusion

Structuring subject-to deals is a powerful way to acquire real estate without traditional bank financing. Whether you’re getting the seller to pay you, taking over the property without paying out of pocket, or covering some back payments, these strategies allow you to close deals faster, minimize your own investment, and grow your portfolio.

By mastering these 3 ways to structure subject-to deals, you’ll be able to win over sellers on the phone and expand your real estate business—without needing large amounts of cash or qualifying for loans.

Ready to Learn More About Subject-To Investing?

If you’re interested in mastering subject-to deals and other creative financing strategies, visit MyRealEstateDojo.com to get access to free training and resources!