Things NO ONE Tells You About Subject-To | Real Estate Investing
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Things NO ONE Tells You About Subject-To | Real Estate Investing


This video will cover three things that you need to know about subject-to that no one’s telling you. Hey, welcome to my channel if you’re new.
Welcome back if you’re true I’m Dara, real estate investor,
entrepreneur, and consultant out of Atlanta, Georgia and I’m going to jump
right into this video because it’s very important that I get the word out about
this topic here. So, before we get started make sure you subscribe to my channel,
and also be aware that I am not a tax attorney, tax professional, accountant, CPA, or anything or anyone that claims to be. I am just Dara, a real estate investor,
entrepreneur, and consultant out of Atlanta, Georgia. Alright but yeah, so this
is me talking from experience And I just want to share, because subject-to is
one of those subjects– I’m just playing It’s one of those topics that a lot of
investors, when they’re new, hear about it and they’re like, “Oh my gosh, great let’s
do it!” Because it’s no money down It’s sexy, it’s cool. And then a lot of
homeowners hear about it and think, “Scam!” So, I’m here to tell you three things you
need to know about subject-to Whether you’re a homeowner or an investor
interested in pursuing this strategy. First thing is that it’s not a scam. It’s
not a scam; it’s a real, actual way to sell a property or to acquire property
or get rid of a property. So yes, you can sell a property subject to the existing
financing. I’m in Georgia, that’s the only state I’m gonna speak of, but I think a
little birdie told me that a lot of the 50 states in the United States of America,
you can do this strategy too. But speaking only from what I know, what
I’ve done in Georgia, subject-to is an actual, legitimate way to acquire
property. Now, are there people who are scammers out there? Of course. Are there
people who take advantage of others or homeowners who are in vulnerable
situations such as pre foreclosure? Does America start with an A? Right. But just so everybody knows, subject-to is not a scam in its own right; it is a very
legal way to acquire property. Again, I’m not an attorney, don’t claim to be one,
and you should seek the advice of a legal counsel. Now that that’s out the
way, it’s not a scam that was rule number– tip number one, secret number one: it’s
not a scam and can actually be done, let’s get into the real nitty gritty of
this video. So first things first something that nobody ever talks about
when it comes to subject-to is insurance! Now I got a question on one of my videos
about subject-to and the specific deal that I acquired this way, and I was like
“Wait that’s a great question, and you don’t have the answer because nobody
talks about it.” So here I am talking about it. Insurance: who, what, when, where, why, and how? So as you may know, a mortgage is your principal, interest, taxes, and insurance.
So P-I-T-I. P-I-T-I So this last “I” is your insurance. So if you’re taking over
somebody’s mortgage, you’re taking over their mortgage payments, you’re paying
their PITI, you’re also paying insurance. So, the question I got was, “When you take
over subject-to, do you have to get your own insurance policy?” And that’s a great
question my friend, cuz I thought the same thing. I actually went out to some
insurance agents that I know and I’m like, “Hey can you insure this property
for me?” No need, because you’re already paying it, so instead of getting your own
insurance policy, what you should do is have the mortgage holder–the previous
homeowner–add you on to their insurance policy as an additional insured. When it
comes to subject-to, a lot of times you get a lot of backlash, a lot of
negativity, and it’s probably from hearsay or maybe horror stories of
experiences that have gone wrong and the first objection that I think most people
hear, besides being a scam, when it comes to subject-to is, “Oh no, you’re gonna
get caught with the due on sale clause.” Right, now I’m no expert in subject-to
so won’t claim to be, but I do know investors whose sole business model is
on subject-to. So they’ve acquired over 50 properties this way and out of their 50,
zero have been called due on sale. A lot of people lose sleep at night
about this three-word phrase, and the truth of the matter is it’s very unlikely to
be called. Now, I’m not gonna say what causes it or what triggers it; you can
definitely do your own research on that but as far as the payments being made to
the bank, they really just want their payments on time. That’s all. So make sure
you get those payments into them on time it doesn’t matter if it’s coming from
John Doe, the mortgage holder or My Pretty LLC, you know? So just make sure
you pay on time and you really don’t have to worry about the due on sale issue
at all. So this leads me to my next tip being: it doesn’t matter what account is
making those payments as long as those payments are being made. So the bank
isn’t gonna say, “Hmm. John Doe used to pay me every single month, now My Pretty LLC
is paying me. Well who’s My Pretty LLC? Let me go investigate and make sure they
don’t keep paying me on time.” I mean what? I don’t– I don’t really know, but it
doesn’t matter who the money is coming from as long as it’s paid in full–you pay
more, that’s better–and on time. Period. The last and final tip that I want to
share with you guys that nobody else talks about when it comes to subject-to
is good old tax season. Now again, I made that disclaimer in the beginning and I
personally don’t even know much about taxes myself, but this one thing,
you’re gonna need to know. So like I mentioned when you’re paying a mortgage,
you’re paying PITI. That last “I” was insurance, that first “I” is interest. And
if you don’t know, when you pay interest on a mortgage, you can deduct that on
your taxes. So when tax season rolls around, you want to make sure that you
have an agreement along with telling your mortgage holder–the previous seller–
like, “Hey, could you add me to your insurance policy as an additional
insured?” You want to have an agreement with them that “Hey, since I’m making
these payments, which includes the interest, will you allow me to write that
off on my taxes? Will you allow me to add that on my taxes, because you ain’t
getting the benefits of what I’m doing.” You know what I’m saying? I hope that makes sense, just trying to break it down mano-a-mano so everybody can
understand. But yeah so with [interest] you want to have it arranged with the
previous homeowner–the current mortgage holder– that you will be the one to write
off and deduct that interest that’s being paid. So, there it is guys. Now this
is gonna be the one rare video where I do not encourage you to ask me questions
in the comments, because like I said, I’m no way, shape, or form a professional– a
tax professional or an expert. So if you have any further questions or need
clarification, that’s when you call your tax expert, call your real estate
attorney, call your tax attorney, call your CPA or accountant, but don’t call
Dara. But I hope these three tips I shared with you helped. If so, give me
a thumbs up, share this video and subscribe to my channel. Wait! Before you go, read down below in the description box. If you have any other questions
pertaining to real estate wholesaling getting started or getting to that first
deal, go ahead and schedule a one-on-one consultation with me. If you like this
shirt that I’m wearing, let me know and I might mass produce them for all the
pretty little flippers out there. So again, thanks for watching, I will see you
in the next one.

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