hey what's going on guys this is Daniel one half of the Kwak Brothers and in
this video we're gonna talk about what is a subject to strategy alright guys
welcome back now guys imagine imagine if I were to tell you that there are ways
to acquire a property no money down but it's not owner financing that's right
right and it's weird cuz I preach owner financing a lot right because I'm kind
of known as the owner financing guy alright I want to talk about something
today called subject to acquisition now before we go ahead and talk about what
that even is or how it's used or what the benefits are guys please like and
subscribe to this video it would really help us out a lot and let's just play a
little game let's say for every like or subscriber how many times you share this
video is how many times you're gonna do is subject to transaction in your career
and trust me after what hearing what I have to say about subject 2 you're gonna
want to hear it so again guys right go ahead and go like and subscribe to our
video it's gonna help us out a lot alright so what exactly is subject to
financing well subject 2 is exactly what it sounds like you're buying a property
subject to their existing financing so what this pretty much means is you're
pretty much exchanging the ownership of a building property or asset and you're
pretty much taking their place and you're paying the mortgage without you
having to get a new mortgage now I have to stress this because this is really
important when you're taking the place of somebody else's mortgage the bank
will still underwrite you meaning that they're still going to analyze you
they're still going to look at your financials to make sure that you are a
good risk in comparison to the person you're taking over for so let's create a
little scenario to help you guys better understand what it is so let's say
you've got mr. Smith mr. Smith has owned this property for the last five years
right let's say it's he lives in it right he lives in the house and let's
say mr. Smith all the sudden has you know he's lost his job and he's tried
selling this property for a very long time and at the end of the day you know
he went back to renting and you know he's living in an apartment with his
wife and you know let's say he's got a kid for the sake of the example and he's
just trying to sell this house because while he's renting he's paying rent but
at the same time you know he's having to pay a mortgage and it hasn't been going
to sell and a lot of issues that's what's happening
now I always structure and explain every single real estate strategy based on
what problems it solves because at the end of the day as real estate
entrepreneurs we are professional problem solvers within the real estate
industry that's what we are hopefully doing right and hopefully why you're
watching this video because you want to know more tools so you can help solve
people's problems so how do we solve mr. smith's problem
how do we do that all right well it's simple let's say that we tried the owner
financing route right let's say we try it but number one he doesn't even want
anything to do with the property he doesn't even want a note attached to the
property and not only that let's say we try it and the monthly payment that I
would give to him is lower than the mortgage that he's going to have to pay
to the bank every single month now if you're watching this video and you don't
know what owner financing is guys I encourage you to check out some of our
other videos that we have on owner financing you know I talked I have a
30-minute video that literally talks about hot in the go shape for owner
financing we have a three to three hour class on owner financing click on the
links in the description below and you'll have access to it all for free
that's right you don't have to pay anything you could
just get it right now all right so let's say it doesn't work out the owner of
financing payment is not enough to cover his bank and he really just wants to get
rid of it pretty much well what I can do is I can do a subject to the existing
mortgage and I could take his place in the mortgage meaning that the mortgage
that he has with the bank I could then in turn just take his place
now I may pay a premium alright I may just give him some money just to walk
away but in most subject-to scenarios that I have personally seen myself
that's not the case you literally just take the place of the individual paying
the mortgage and well there's a lot of things that that's going to have to
happen now obviously you are going to be have to taken through the underwriting
process meaning the bank is going to have to analyze you why because well if
somebody else is taking place of that individual in the mortgage they want to
know their financials as well because end of the day the banks are in the
business of risk of loaning money and assessing the risk you know they want to
see if they're a better or you're a worse risk than the guy taking over that
more and depending on if it's better or worse
they may make some changes now let's talk about in what context will this
work right can you use it on a fix and flip can you use it on a buy and hold
now guys I'm here to tell you you could do it for both so first up let's talk
about a fix and flip scenario right so same scenario let's say mr. Smith he's
on the property for four months and let's say that it's an area where you
see it as a pretty good fix and flip market well you couldn't just use
subject 2 to acquire the property because I didn't add a subject 2 is just
an acquisition 'el strategy all it is and you could pretty much pay the
mortgage right which means you don't have to pay cash as you traditionally
would for the acquisition of the property so instead of paying 50 grand
to buy the house whatever maybe because let's say it's a scenario where you
offer mr. Smith 50 grand but it's not enough right it's not enough to pay down
the debt that he's got on the property right and unless you fix it up and
there's equity and you increase the value by rehabbing it it's not going to
suffice the debt service that's already remaining on the property so you offer
50 grand and he says no I can't do that I'm sorry because I have a $75,000 loan
on the property so it just wouldn't work but let's say that you do the numbers
and you actually would end up the the after repair value would actually end up
being a hundred and fifty grand so there's a lot of money to be made here
so in this case you would offer a subject to acquisition where you pretty
much pay his mortgage every single month you take the place you take mr. Smith's
place in the mortgage and let's say you rehab it for five six months you pay the
mortgage off for five six months you sell the property and you path to note
that work that's a win-win for everyone because while mr. Smith gets rid of the
house right you make your profits you don't have to come up with 50 grand up
front the banks get all their money back because the loan is paid off and you
make some money on the side as a fixing flipper so that's subject to acquisition
solves everybody's problem well it's the same thing in a bind hold in a bind hold
let's say the seller is extremely motivated mr. Smith just wants to get
rid of it you know he doesn't care well that's
case that's perfect because well you have means of producing income with that
property whereas mr. Smith doesn't because for mr. Smith it's not an
investment property it's a primary residents where you have a
different plan and a different idea with that property you could perhaps run it
up by the bedroom you could perhaps put it on a platform like air B&B you could
pay the mortgage and you could utilize the ownership to make more money through
a strategy whereas mr. Smith probably wouldn't have thought of that strategy
or even had the resources or the team or the knowledge to execute like you would
so again guys hopefully this video was helpful in understanding what is subject
to acquisition in terms of what it is and how you can use it in a couple of
different scenarios if you guys have any questions leave it down in the comment
section below or email me at info at two o'clock weathers calm again guys don't
forget to Like subscribe and share this video all the links are in the
description below I'll see you guys in the next one