What Steps to Take After Closing a Subject-to Deal

After closing a subject-to deal, there are some important steps to make when you secure this incredible real estate investing deal. 

This type of real estate investment is called subject-to because the purchase of the home is subject-to the current loan remaining in place. As the investor, you take over the payments on the seller’s loan. There are many reasons why a seller would enter a subject-to deal. You get the deed and ownership of the house, and they can get a boost in credit and the ability to move-on from a home they could no longer afford. 

So, once you close a subject-to deal, what comes next?

Step-by-Step Actions after Closing a Subject-to Deal 

1. Record the Deed 

This step is simple, and if you are handling the closing yourself, you will record the deed. To do this, you just take the deed paperwork to the local county recorder’s office. 

The deed is a document that transfers the title and ownership to you from the seller. 

2. Transfer Utilities

Regardless of your exit strategy, which we will discuss below, you or your company should now be the name on all the utilities for the property. 

3. Start the Second Insurance Policy 

This is a simple step. All you need to do is fax the closing paperwork to your insurance agent and they can get a new policy started. If you don’t have an agent, research to find someone that has a good reputation working with real estate investors or agents.

4. Change the Address with the Loan Company

Because you will now be responsible for the loan payments, you need to change your address with the loan company as soon as you close. Some lenders have an online portal where you can switch the address, but you can also mail a letter. 

5. Change Address with the Homeowners Association 

If the property is within an HOA you will also need to change the contact information with them. You want to ensure all the relevant information is coming to you, and not the seller.

6. Setup Auto Draft for Monthly Payments

Making the monthly loan payments is now your responsibility, and setting up an auto draft is the easiest way to make sure you pay on time every month. This is especially important once you have multiple properties on the books.

7. Enter the Purchase in the Books

Keeping track of your investments is an essential step in being a successful real estate investor. At first, you will probably do some of the bookkeeping yourself, but it is wise to hire a trusted bookkeeper when you can. 

8. Execute Your Exit Strategy

Here are the different exit strategies. This is something you decide before you close the deal, so now it is time to execute. These are a few profitable exit strategies I use in my own investing. I cover each one in-depth in my free Unlimited Funding Kit. 

1. Cash out and pay off the loan 
2. Sell and keep the loan in place 
3. Rent it out 
4. Sell it on a lease option 

As you invest more and more these steps will become second nature.