Take over the seller's existing mortgage and keep their rate — see the equity, cash flow, and risk before you make an offer.
How Subject-To Works: You buy the property "subject to" the existing financing. The mortgage stays in the seller's name, but the deed transfers to you. You make the seller's payments — keeping their rate and terms — without qualifying for a new loan. Works best with motivated sellers who need out fast.
⚠️ Due-on-Sale Clause: Nearly all conventional mortgages contain a due-on-sale clause that allows the lender to call the loan due when the property is transferred. In practice, lenders rarely exercise this right if payments are being made — but the risk exists. Always consult a real estate attorney before closing a subject-to deal.
🏦 Existing Loan Details
How much is still owed on the mortgage
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The principal and interest payment you'll be taking over
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The rate on the seller's current loan — this is what makes sub-to attractive when rates are low
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Any cash you pay the seller for their equity or to make them whole. Enter 0 if none.
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Title, attorney, recording fees, etc.
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🏠 Property & Rental Info
What the property is worth today — get a BPO or pull comps
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What you'll charge the tenant
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Annual taxes ÷ 12
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You'll need your own landlord policy even though the mortgage is in seller's name
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Management, maintenance reserve, vacancy reserve
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Instant Equity Pickup at Purchase
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Monthly Cash Flow
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After all expenses
Annual Cash Flow
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Per year
Cash Invested
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Total out of pocket
Cash-on-Cash Return
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Annual return on cash in
Loan-to-Value (LTV)
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Loan balance ÷ value
Rate Advantage vs Today
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vs current 7.5% market rate
Verdict
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Amount
Key Due-Diligence Step: Before closing any subject-to deal, verify there are no tax liens, HOA liens, or second mortgages behind the first. Run a full title search — even though you're not getting a new loan, you're taking on real risk. Also make sure the seller's homeowner's insurance is updated to name you as an additional insured. Learn more about protecting yourself with the Note Investor's Due Diligence tools.