Does creative financing still exist or are there ways to purchase homes in Phoenix without traditional financing these days?  If you’re like me, you’re probably saying, “No way”.  If so, read on. 

Recently, I had the privilege of speaking with a real estate investor, by the name of Nick Johnson, that specializes in Short Sales and “Subject To” purchases.  Nick David Krushinsky @daKrusherand I got introduced through a mutual friend, Matt Rosen @entrepreneurHI, from Twitter.  I learned a lot about Nick after talking with him for only an hour on the phone.  I learned all about his high regard for his family, his unparalleled ethics and his business philosophy.  Additionally, I also learned he is also the author of the eBook, “Subject2”.    

While most of us in the Phoenix area and beyond are all too accustomed with the term Short Sale, “Subject To” was not a practice in which I was all too familiar.  Being the type of individual that prides myself on keeping current with what is available in today’s marketplace, I immediately had to do some investigative research.   I figured that I would share a little overview of what I discovered. 

“Subject To”, also referred to as “Subject 2” or “Sub2”, is a form of creative financing in which the seller deeds the property to the buyer while keeping the existing mortgage note fully intact.  The buyer, typically a real estate investor, simply makes the mortgage payments on the existing mortgage.  These transactions can provide an array of benefits for both the buyers and sellers.

 The buyers do not need to go through the headache (I know all about this) of getting qualified for a new mortgage note.  There is no credit, income or asset verification required.  The investors own the property, but do not assume the loan.  This leaves personally liability on the sellers.  Typically, the main advantage for buyers in these transactions is acquiring a property at a much lower interest rate than if they were to purchase the property outright.

Subject2_bookcoverIt may seem unbelievable to most of us that a homeowner would deed over their property to another individual, but there are many reasons that sellers find this a great option.  The primary reason that many sellers opt for Sub2 financing is to obtain debt relief.  Some are facing foreclosure and unable to sell their property due to lack of equity.  Owning a property that is “underwater” is a concept that many Arizona homeowners can relate all too well.  Others simply want a fast sale.  They may be moving, transferring jobs, getting married, divorced or a whole list of various scenarios.  

Subject2 contracts should be implemented by a knowledgeable real estate professional.  We’ve all witnessed the dangers of working with someone who claims to be an expert but has no more expertise than you or me.  A sub2 contract is essentially the same as a standard state approved contract.  The only difference is the ‘sub2’ addendum states the terms of the existing loan. 

In today’s credit climate, we all know someone who may be struggling to qualify for a loan or continue making their monthly mortgage payments.  I would encourage you, no matter what your preconceived ideas of traditional financing are, to have them contact me before it’s too late.  There are many times that I may not be able to help them but I can guide them in the right direction.  Don’t let them become just another statistic.

Questions? Contact David Krushinsky Today!
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