Watch the video about this topic:
https://www.youtube.com/@simplydoit1

📚 What This Post Is About:

• Understanding what a “Subject-To” real estate deal is
• Real-life example from investor Dani Beit-Or
• Pros, cons, and risks of this advanced investing strategy
• Why it could be a great opportunity in today’s market

⏱ Estimated Reading Time: 6 minutes

🔑 Highlights – Main Takeaways:

• A Subject-To Deal lets you take over a seller’s mortgage without getting a new loan
• Huge benefits include lower interest rates, built-in equity, and better cash flow
• Risks exist, like the bank calling the loan due, but these are rare and manageable
• These deals often require less upfront cost and no appraisal
• Dani shares how he successfully executed this strategy with real results

🏠 What Is a “Subject-To” Deal?

In this recorded session, I break down a creative and often misunderstood investing method: the Subject-To deal.

“Subject-To” (short for “subject to the existing mortgage”) means that instead of getting a new loan, you take over the existing mortgage payments from the seller. The mortgage stays in the seller’s name, but ownership of the property transfers to you (or your entity).

In this session, I explains how I personally used this strategy to:

• Lock in a 3.25% interest rate (compared to today’s 6.75%)
• Buy the property below market value, instantly gaining $55K–$60K in equity
• Avoid typical loan fees, appraisals, or mortgage approval delays
• Keep the mortgage off my credit report, protecting his DTI (Debt-to-Income ratio)

💡 Why Consider It?

• Built-in equity: I paid significantly less than market value, giving equity from day one.
• Better cash flow: Thanks to the low-interest mortgage, monthly income is higher.
• No credit impact: The loan doesn’t appear on your personal credit.
• Lower closing costs: Since you’re not getting a new loan, many of the typical lender fees are avoided.
• Faster to close: You skip many traditional hurdles.

⚠️ What Are the Risks?

Full transparency, there are challenges:

• “Due on sale” clause: Most mortgages have this, which gives the bank the right to demand full repayment if the title changes hands. However, in over 20 years, I’ve only seen this happen twice—making it a low-probability but real risk.
• Seller cooperation: You need the seller to sign multiple documents and stay responsive during the process.
• Insurance complexities: You may run into hurdles when trying to change or update the insurance policy if it’s still in the seller’s name.
• Document-heavy: These deals require 10+ legal and notarized documents, especially for things like permission to speak with the lender, county, insurance, etc.

🧠 How to Approach It

• Go in with eyes open: Know the risks, but also understand how rare some of them are.
• Mitigate risk with equity: If you’re getting significant equity on day one, you have room to refinance or sell if needed.
• Lean on experience and support: This strategy isn’t for beginners, but it can be powerful when done with the right knowledge and team.

💬 Final Thoughts

This approach, though more advanced can unlock deals that would otherwise seem impossible. It’s not about cutting corners but finding smarter ways to invest in the current market.

Creative financing isn’t just theory. It’s working! And it could work for you too if done right.