Once you have a Subto Deal under contract, you might be wondering how the process of taking over the payments actually works.
Because I tend to get this question a lot, Cody and I discussed this in one of our recent Sunday Service live sessions.
Check it out here:
If you’re unsure what the difference is between seller finance and subject to, subject to (Subto) basically means that when you buy the property, you pay for the remaining loan or mortgage payments.
This is something that should be considered as part of your entry fee when you purchase anything with creative finance.
But how do you actually start making subto payments?
How to Take Over Payments on a Subject To Deal
There are a number of ways that you can start making payments on a subto deal:
Hire a 3rd party company called a servicing company to handle those monthly payments.
Use the seller portal online to make payments directly
The first way is hiring a third party company that handles monthly payments for the seller.
In our example, we used Home Key Servicing, which is currently handling all of our loans for a property in Atlanta.
We basically pay Home Key Servicing a fee to keep a handle on paying the subto payments.
Going the 3rd party route isn’t bad – depending on what you’re using them for, your payment to them could be as low as $20 a month.
Using a servicing company has a lot of benefits:
It keeps the seller up to date on their payments.
It keeps your records organized.
It makes it easy to either sell the property, refinance, or move to seller finance because you have all of the documents thanks to the servicing company.
The second way, which is probably the easiest and the most direct, is to just use the seller’s own online payment portal.
The seller gives you the login to their payment portal and then you just pay whatever amount is owed.
It’s simple and quick and if you set it up, it can be automatically taken out of your bank account; you just change the name and banking info into your name.
Subject to is a great win-win situation for both the seller, as it helps them get out of a situation, and you as the buyer as you can buy a property without using your own money or your credentials.