Why "subject-to’s", why now?

Posted By: Lindsey Jensen ICOR Blog & News,

Subject-to deal structures are just one of the tools you are going to need in your tool box for the market we are currently in and also the market we are headed into.

Six years ago, I started learning creative deal structuring. I went to every class I could on the topic and then would structure a deal based on seller circumstances. Doing this helped me to close more deals because I was able to help more sellers. I was able to come to the table with more than just one solution for the seller. This helped because they felt that I was actually solving their problems instead of sitting down and telling them how things were going to have to go. I was also able to help people that other investors and real estate agents just could not help. This helped me build a $10M portfolio in only 6 years.

There are many tools you will need to learn to become a great creative deal structurer but learning and mastering one at a time is a great way to go! Subject-to financing just happens to be one of the creative financing tools that you will need in today’s market conditions. (Cont. below)

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(Cont.) Over the last several years we have seen a real estate market like nothing we have ever seen before. Values appreciated at rates we have never seen before and we had the lowest rates we have ever seen as well. Now, we are back to a more normalized market. What does that mean to you? Well, there are going to be a lot of people that purchased their home in 2022 and later that may have purchased for more than asking, and were looking for the appreciation we had seen in years past and since the market could not go on like that forever, these people have not seen the kind of appreciation they were hoping for. This means, if they try to sell in the next few years, they may have almost no equity to do so. This eliminates a lot of possibilities for these homeowners and they may end up stuck and desparate, with no one able to offer them a solution.

This is where a subject-to strategy will come in handy! See, subject-to means you are buying a house while leaving the current mortgage in place. You don’t assume the loan, you pay the sellers current mortgage for them. This will allow you to pay more for a home than other people. You will be able to take over mortgages that have 2-3% interest rates that allow you to rent out a home for an affordable amount. This would not be possible if you paid what the seller owes and got a loan at the current interest rates. The payment will most likely be to high for the renter.

There are other reasons subject-to will help you become an investor not only in today’s market but in any market. It will allow you to buy houses without cash or credit! That means you can start buying today. You don’t have to wait until you have a certain amount to put down on a house or until you get a good credit score.

You will be able to help people that need to sell quickly. You don’t have to wait on financing to close on these houses. That means as long as the title company can accommodate your purchase, many times you can close inside of a week if that is what the seller needs. Or you can close on the date they choose. Being flexible on closing dates becomes a very important piece of the puzzle to desparate sellers.

This new market that we are entering into is showing signs of “hard times” for many people. Banks are failing, people are losing jobs, small businesses are going out of business, and inflation is squeezing us all. People purchased homes in 2021, and 2022, because they got amazing interest rates and payments they could afford. Many had to go to the highest end of the payment they qualified for just so they could bid enough to win the house they wanted. What they didn’t see coming was just how much everything else in their life was going to go up. So for people that moved into these houses thinking that they were going to appreciate, and they were easily going to afford their mortgage, many are now, one hot water heater failure away from not being able to pay their bills. An article from NPR states that we have gone from a Nation of “record savings” to “record debt” in only 2 years. Another article states that more consumers are using their credit cards to afford items like food and rent, and that households are nearing a breaking point.

So as these new homeowners reach their breaking point, they are going to need people that can help them out of the trouble they have gotten themselves into. These are not situations that are all going to look the same and they are not going to be solved by walking in and offering the seller 70-80% of the ARV on their home. Investors are going to have to come to the table with problem solving skills. People will be looking for someone they trust to help them and if you can give a seller several options to pick from, so they can CHOOSE what is best for them, you are going to be able to build a portfolio quicker than the investor that only offers one option.

I really believe that Subject-to helps a segment of sellers that most solutions can't or won’t. This is a tool you can use to make your dreams come true. You can build a portfolio you can retire from and this tool allows you to start now.


  1. https://www.npr.org/2023/03/08/1161407261/how-we-went-from-near-record-savings-to-record-debt-in-just-two-years
  2. https://www.cnbc.com/2023/03/09/as-credit-card-debt-hits-new-high-households-near-a-breaking-point.html#:~:text=More%20consumers%20are%20leaning%20on,latest%20quarterly%20report%20by%20TransUnion.