Would you believe you can get sellers to give you the deed to their house for absolutely nothing, while they keep ownership of the outstanding mortgage? Welcome to the world of “Subject To” real estate investing!

If you have not already read the section on lease options, take a look there first and drop back here when you’re done. Lease options and “Subject To” (or sub 2) deals are very closely related, so it’s a good idea to have a background in lease options before reading any further.

As you learned in the lease options section, a great way to make money in real estate is through control of a property, not necessarily ownership of a property. You achieve this in lease options by getting the option, but not the obligation, to buy the property some time in the future. At the end of the day, however, you still don’t own the property so problems can sometimes (although rarely) occur, such as the owner suddenly deciding they don’t want to sell. This isn’t a worry if you’ve got all the right documents signed, but still, it can be a bit of a headache.

“Subject To” investing gets rid of this worry by giving you, the buyer, ownership of the house, but without having to lay down one red cent! How is this done? Well, the situation is very similar to a lease option in that you have a motivated seller who is willing to take their equity at a later date. However, with a sub 2, the owner signs the deed over to you “subject to” the existing mortgage. What this means is that the owner’s name is still on the mortgage, while you own the house! The beauty of this situation is that you are the owner of the house, but are not responsible for the actual loan on the house, giving you much more flexibility.

Who would ever deed their house over to you? People who need to sell their house quickly, or need debt relief fast. What if you’ve got a seller that is transferring out of town and needs to move quickly? The average time it takes to sell a house on the market is 89 days - you can get the seller on their way in a fraction of the time. Or what if the seller recently lost their job and needs debt relief quickly? You can offer them a quick way out.

So, now that you have the deed to the house, what do you do? This is where your lease option background comes into play. You immediately start marketing the house as a rent to own, as per the examples in the lease option page. You get the standard option consideration (non refundable, of course), monthly rent spread, and back end profit. You win, the seller wins, and the new owner wins!