Buying a Property Subject-to Without Cash

Can you purchase a home without money, credit, or without having to take out a new loan or sign for debt? The answer may surprise you. Yes. Yes, indeed.

The way to do it is to purchase “subject-to,” a term meaning taking ownership to houses without signing for debt or taking out a new loan.

Subject-to is a buying strategy where you are taking ownership of the home, while keeping the seller’s existing financing in place until a new buyer obtains new financing and title is transferred. This is not a “get rich quick” scheme. It’s a sound and proven technique for earning wealth through the acquisition of property. There’s a lot of work involved and you have to invest enough time to make the process work.

If you want to be successful using this technique, you have to make a commitment. In fact you have to make several commitments. These are: 

1. Become a student.

No matter how much you know about real estate, there is always more to learn. 

2. Practice, practice, practice.

Practicing your skills improves those skills, enhances your chances for success, and the effort costs you absolutely nothing. 

3. Set goals for yourself.

Consider where you are and where you want to be. How do you get there? What are the benchmarks you will use to measure your progress? Invest time to determine these goals and put them in writing. 

4. Start making offers now.

Set yourself a minimum goal of making at least two offers on property every week. 

5. Schedule your day.

What gets scheduled gets done. What is not scheduled, no matter how important, drops by the wayside and rarely gets done. Consider this quote from Paul J. Meyer. “If you are not making the progress you would like to make and know you are capable of making, it’s because your goals are not clearly defined.” Fear is natural and anyone starting out in business can expect to encounter it.

Take action because action cures fear. Define your goals. Know where you are going and how you are going to get there.

Five Steps to Buying Houses Subject-To: 

Step 1: Attracting motivated sellers
Step 2: Pre-screening sellers 
Step 3: The face-to-face meeting 
Step 4: Due Diligence 
Step 5: Closing Sellers


What’s the difference between the average seller and a motivated seller? The average seller wants to sell his or her property. A motivated seller needs to sell that property. That’s a significant difference and it is a difference you should look for. You’re in a much stronger bargaining position when dealing with people who need to sell. Generally, that group of people will provide you with the opportunity to buy the most equity with the least amount of cash. 

A motivated seller has a reason for selling. 

• Behind in payments 

• Struggling to make monthly payments 

• Paying for a vacant house 

• House is in major disrepair These are the types of people you need to focus your marketing efforts on. Attract motivated sellers and you will often attract better, easier, and more profitable properties. The best sources for finding motivated sellers are: • Sellers in pre-foreclosure • Sellers who own vacant houses 

• Sellers who have an expired listing

To be successful in buying and selling subject to houses you must have a PLAN that answers these “million dollar” questions: 

Question 1: How do we find them? 

Question 2: How do we market to these people? 

Question 3: How do they find you? 

The Best and Quickest Ways to Attract Motivated Sellers 

1. Classified advertising. Run ads every week in your local market. Use attention getting headlines:
WE BUY HOUSES FAST – CASH 555-555-5555

These and other similarly worded signs should include a phone number that leads to a 24 hour recorded message about how you can help these people sell their houses.

Notice, headlines don’t promote you or your business, they address a problem being experienced by the seller and they promise a solution. 

2. Classified advertising. Run ads every week in your local market. Use attention getting headlines
3. Letters and post cards mailed directly to potential customers can be very effective.

You can target an entire community, a zip code, a neighborhood, or individual owners depending upon your needs and budget. Pre-foreclosure and expired listings lists are a great source of prospects. 

4. Internet Marketing

If you have a computer and you’re online, you can post your own advertising on the Internet. this is about as inexpensive a form of advertising you can get. Ads can be posted, at no cost, under the headings “Real Estate Services” or “Real Estate for Sale.”

5. Drive neighborhoods

Google Maps, Redfin, Trulia and so on which can be pulled up from the Internet, is a great resource for maps on the neighborhoods you’re interested in. Look for vacant houses and houses that are in need of maintenance and repair. Look also for places to put up your advertising signs. When you find a vacant home or likely property for acquisition, look up the owner at your County Records office or on the County Tax Records website. 

6. Business cards are a convenient and economical means of advertising. Make sure that your cards include: 

• Your name 

• Title, such as “Real Estate Investor’ 

• Phone and fax number 

• E-mail address 

• Buy and sell websites 

7. Vehicle signs.

Magnetic signs should include your phone number, address, seller’s website address, and a brief message such as:

WE BUY HOMES 222-333-4444 
1. Plan and Set Goals 
2. Schedule Time for High Payoff Activities (HPA) 
3. Communicate your plan and goals to the members of your team 
4. Track and measure your progress toward your goals. If your goal is to make two offers per week – measure it! If your goal is to buy one, if you do not test your marketing it is impossible to know what works and what does not!


Pre-screening sellers is a method of separating Sellers that want to sell from the Sellers that need to sell. To get the best results focus on Sellers that need to sell! 

1. Drive all your prospects through a Free 24-hour recorded system that automatically does the pre-screening for you.

To do this, you will need a voicemail system. You have access to this service through a call service company or pre-recorded tech system.When a seller calls and leaves a message their voicemail message is automatically forwarded to your e-mail address. You can respond to these messages immediately by clicking on the link and listening to their message. Often, the caller will still be available to take your call or are still at the property they are calling about. It is recommended that all initial calls go directly to your voicemail system so that the callers are pre-screened when you respond. The system should also be used to gather information about the caller. After you’ve acquired this information and evaluated the caller, you can respond with a return phone call. 

2. Use a Seller’s Website

Websites provide valuable information to sellers and buyers. The information positions you as an expert and as someone interested in helping people solve their real estate problems. 

3. Direct Phone Line to your personal phone or cell
4. Gather Seller Information

5. Schedule a Face-to-Face Meeting. This is the goal of your return phone call. If the prospect looks good, you should schedule an appointment immediately. If the numbers add up in your favor, say something along the lines of; “Based on the numbers, I feel we can get something done. When would you like me to come out and see your home?” Make sure that the property has potential before you schedule the meeting so that you don’t waste time and energy on a property you cannot use.

6. Run the Comps

You need to determine the fair market value of the properties you’re interested in. Run the comparable numbers. Get the sales prices of similar properties in the neighborhood for at least the previous six months. Drive through the neighborhood for a personal analysis and to get a “gut feel” for the value of the property.


The purpose of a face-to-face meeting is to establish trust and credibility with the Seller. Prepare a presentation binder to build trust credibility at your meeting. It should consist of two sections and five tabs under each section.

Section One: Overview of you and your organization. 

1. This is about who you are and what you do. 

2. Include references and encourage your prospect to contact those references. 

3. Flyers of properties purchased. Showcase a number of “subject-to” properties that you have sold so that the prospect can feel confident in your abilities. This is where you tell a story about how you buy properties. 

4. Include samples of how you build a Buyers List. Note that you are in business to find homes for buyers. That’s a significant difference from finding buyers for homes and that difference gives you a real edge over the competition. It shows that you’re in business to help people solve problems. Your goal is to build a buyer’s list of individuals and families who want to buy real estate. 

5. Equity Presentation. How to obtain the most equity with the least amount of cash.

Section 2: How you make offers to sellers. 

1.Offer to Purchase, which is three or four offers to the seller. 

2. Authorization to Release Information form. This gives you the right to acquire all the information from the LENDER about the sellers mortgage and escrow account. Make sure the seller reads, understands, and signs this document. 

3. Purchase and Sale Agreement. Use this document to close the seller and put the property under contract. 

4. Seller’s Disclosure of Property Condition. If you are serious about acquiring the property, make sure the seller fills out and signs this agreement. 


There are certain things you must do to purchase a property. The process is called due diligence and the first step is to contact the Sellers Lender using an Authorization to Release Information Form 

1. Immediately upon returning to your office, email your Authorization to Release Information form to your lender. That should put you into your lender’s system within 24 to 48 hours. 

2. Call your lender’s 800 number to verify the loan information. While on the phone, complete your lender information sheet or with the loan officer. 

3. Confirm your comps to make sure that you are dealing on real world facts and figures. Drive the neighborhood and pick up any House for Sale flyers you find. Also, call real estate agents who have properties in the area. Note that you are an investor and that you’d like to know the price of properties that are comparable to the one you’re acquiring. Get at least three comps for similar houses that have sold within the previous six months. 

4. You’ll need an estimate for interior repairs such as cleaning, painting, installing new carpet, etc. Exterior repairs could include such areas as landscaping, painting, roof repairs, mowing the lawn, etc. 

5. It’s time to devise your Exit Strategy. There are four exit strategies, or profit points, when buying and selling subject-to properties: 

• Wholesale – This is the fastest way to fill your cash flow gaps. 

• Lease Option – The second quickest way to generate cash flow. 

• Owner Financing – This can generate immediate cash, but is normally used in a long-term investment strategy. 

• Retailing – A method that uses third party lender financing. It’s a process that’s known in the business as “cashed out.” Calculating Selling Price. Once you’ve selected your exit strategy, you’ll need to establish selling price, buyer monthly payments, and estimate your profit. Fortunately, you have many tools at your disposal to help determine these figures. Mortgage loan calculators, can help you calculate your (PITI) principle, interest, taxes, and insurance payments. Loan calculators can be found on many websites.


Closing involves a number of steps. The first is to complete the purchase and sale agreement form and have it signed by the Seller. Next, you will need to set a firm date for closing on the property. Most sellers can be closed in five to seven business days. Once you have a signed purchase and sale agreement, you should contact your closing attorney or title company. Request the use of their conference room and notary services in exchange for giving the opportunity to write the title insurance. They’ll be glad to comply for the opportunity to write the title insurance on your property.

You will need the following documents:
Closing documents: 

• General Warranty of Deed 

• Limited Power of Attorney 

• Letter of Appointment 

• Notice to Lender 

• Utilities Letter 

• HOA Letter 

• Insurance Letter 

• Move out Addendum Trust documents: 

• Affidavit of Land Trust (if you are using)

• Land Trust 

• Appointment of Trustee 

• Assignment of Beneficial Interests 

• Deed of Trust

• Promissory Note

Here is a list High Payoff Activities (HPA) you need to focus your time on to BUY houses quickly. 

1. Direct your Marketing to Attract Motivated Sellers. 

2. Road Side Signs – WE BUY HOUSES. 

3. Place Internet Ads, Classified ads. 

4. Letters to expired Listings. 

5. Letters to sellers in Pre Foreclosure. 

6. Making 2 offers per week. 

7. Meeting with Private Investors.

And remember the harder you work the luckier you will find yourself!
The smarter you work the more hair you keep on your head!

Schedule your free consultation and let Bellvue Rush help you grab the keys to your financial freedom.