Anyone getting into real estate investing is going to be interested in how much money they have the potential of making off their investments. Whether they’re flipping, wholesaling, holding for long-term, or using the Subject To method, they want to know, “Can I make a lot of money?”
I can speak for myself and many of my students in saying yes, you certainly can make a lot of money with Subject To deals. In fact, I wouldn’t be teaching this particular method of purchasing homes across America if the potential for big money wasn’t there.
Let’s look at an example to give you a glimpse of how Subject To deals work.
You get a call from a motivated seller who is willing to sell you their home ‘Subject To’ the existing mortgage. The home has a market value of $150,000 and the seller owes $130,000. The monthly payment to the bank is $1,000.
Now, let’s say you advertise the home for sale as a lease-option. You target those buyers who want to buy a home but have poor credit or unverifiable income. You tell them they can buy the house if they have $5,000 to put down on it and pay you $1,300 per month for rent. It’s a lease-option, so you give them the option to purchase the home say, within one year for $165,000.
They agree to the deal, and you help them get the financing to buy that home within a year.
In this deal, you get $5,000 down, $300 profit per month as rent, and when they get a new loan to purchase the home, you get an additional $30,000 ($165,000 – $130,000 owed to the bank – $5,000 down payment).
If we add up the numbers yearly, you’d get $5,000 as a down payment, $3,600 for rent, and $30,000 when they opt to purchase the home, totaling $38,600.
The Potential For Big Money
That’s a good chunk of change for one deal. Now, think about how much money you could make if you closed one or two deals a month. Think about what that would look like in one year!
The reality is that you can make a good living in real estate investing with ‘Subject To’ deals. There are always going to be motivated sellers that are willing to sell their homes fast because they need to. Whether they’re facing foreclosure, have to relocate in a hurry, or some other pressing life issue arises, they’re out there. And, there will always be buyers with poor credit or laps in income that will be more than happy to buy a home via a lease-option deal.
So get on out there and keep marketing to your particular niche, and keep growing your wealth one deal at a time.