Analyze any subject-to deal. See how much equity you capture on day one, your monthly cash flow, and how it compares to buying with a new conventional loan at today's rates.
EXISTING LOAN
PROPERTY INCOME & EXPENSES
SUBJECT-TO RESULTS
Equity Captured Day 1
$25,000
Purchase: $180,000 - Loan: $145,000 - Down: $10,000
Monthly Cash Flow$170/mo
Annual Cash Flow$2,040/yr
Cash on Cash Return20.4%
DSCR1.18
Total Cash Invested$10,000
Existing Payment$920/mo
VS CONVENTIONAL LOAN AT 7%
New Loan Payment$898/mo
New Loan Cash Flow$192/mo
Down Payment Required (25%)$45,000
Monthly Savings (Sub-To)$-22/mo
Annual Savings$-262/yr
The existing loan rate is not significantly better than current rates. Consider whether the reduced down payment alone justifies the subject-to structure.
What is a Subject-To Deal?
A subject-to deal means buying a property "subject to" the existing mortgage staying in place. The seller transfers the deed to you, but their loan remains in their name. You make the monthly mortgage payments going forward. This is one of the most powerful creative financing strategies because you can acquire properties with very little cash down while inheriting the seller's interest rate — which in today's market often means getting a 3-4% rate instead of 7%+.
When Does Subject-To Make Sense?
Subject-to deals are most powerful when the seller has a significantly below-market interest rate. Properties purchased in 2020-2021 with 2.5-4% rates are ideal candidates. The spread between the existing rate and today's rates is your profit advantage. Subject-to also works well when the seller is motivated (facing foreclosure, job relocation, divorce) and willing to transfer the deed while their name stays on the loan.
Risks to Consider
The primary risk is the due-on-sale clause — the lender can technically call the loan due when ownership transfers. In practice this rarely happens if payments are current, but it is a real risk. Other considerations include the seller's credit exposure (the loan is still in their name), insurance complications, and the need for a proper legal agreement drafted by a real estate attorney.
Frequently Asked Questions
What is a subject-to deal in real estate?
A subject-to deal is when you buy a property and take over the existing mortgage payments without refinancing. The seller's loan stays in their name, but you get the deed and make the payments.
Is subject-to financing legal?
Yes, subject-to deals are legal in most states. However, the original mortgage has a due-on-sale clause that technically allows the lender to call the loan due. In practice, lenders rarely enforce this.
How much money do you need for a subject-to deal?
Typically just a few thousand dollars paid to the seller for their equity, plus closing costs. Much less than the 20-25% down required for conventional investment loans.
What is the advantage over conventional financing?
You inherit the seller's low interest rate. A 3.5% assumed rate vs a 7% new loan can mean hundreds of dollars per month in cash flow difference on the same property.
Track This Across Your Entire Portfolio
Track your subject-to deals alongside conventional properties. becvio calculates health scores, DSCR, and cash flow for every financing type.
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