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  • Bailey Kramer

Subject to- Infinite Return!

If you've read about any of my other deals, you'll know that none of them are your standard, every day deal: and this one is no exception!



This property is a 3 bedroom 2 bathroom house located in a town called Ingleside, which is in Northern Illinois.

We closed on the property on March 30th 2021. We found it by cold calling a list of “low equity” homeowners from a site called Propstream.


After chatting with the owner over the phone, we gathered a few important details:

  1. He is a motivated seller, since he told us that he is being stationed to Texas for the Military in a few months

  2. He barely has any cash to his name because he dumped it all in buying toys, like a brand new truck

  3. He didn’t get a great deal when he bought the property as far as purchase price goes.

  4. & last but not least, he bought this property just 2 years ago and doesn’t have much equity at all built up.

After gathering those details, we realized that this could be a great property to do what’s called a “subject to” or also known as “subject to the mortgage”. In the simplest terms, this is where we buy the property from him and take over his existing mortgage payments. There’s a lot of little complexities with subject to, so if you want me to make a video talking about subject to let me know in the comments below!


So I mentioned he took out a mortgage just 2 years ago to buy the property and here are the terms he received on the loan:

  • He put down 0% since it was a VA loan

  • The interest rate is 2.875%.

  • Its a 30 year term

  • And his monthly payment is $1,140/month and that includes taxes & insurance


So when we bought the property, this is how the deal essentially looked:

  • We agreed that he would keep his mortgage in place & we would buy it subject to like I explained

  • Additionally, we put $0 down, all we had to do was pay closing costs which were about $2,000 bucks

  • And lastly we set a sales price at $179,500. Essentially what this means is we owe him $179,500 in 28 years when the mortgage is paid off: We’ll get that money from either selling the property in 28 years or we’ll refinance the property to pay him back.


One thing I glossed over but it'

s absolutely crazy is that me, 20 years old at the time, basically got a loan at a 2.875% interest rate which is absolutely unheard of on a great property! That’s the power of subject to!


Ok so now that you’ve seen the property and understand how I purchased it, now its time to let you know how I’m actually going to make money from it!


We rent this property for a whopping $1,950 dollars! We have a great tenant in place on a year lease.

If you remember what I said earlier, our monthly Principal, INterest, Taxes & Insurance payment is only $1,140, leaving us with a spread of $810/month! Now of course we do have other expenses and places where that money goes, like reserves for maintenance & vacancies, so let’s say that is $200/month, which is on the high side especially for a property in great condition like this one! We’d be left with monthly cashflow of $600/month. And since I have a partner, my take is $300/month on a $1,000 investment that I made upfront for closing costs!


It took me about 3 months to make my $1,000 bucks back and now its basically an infinite return! And the property has already appreciated to $220,000 which is just wild!


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