"Bad Credit? No credit? No Problem! Buy with no money down!" We have all heard these statements over and over again from the 'Get Rich Quick' crowd endlessly selling those overpriced DVD packages and training classes to unsuspecting individuals that are still wet behind the ears in real estate investments. They promise you that all you have to do is purchase their program and aside from that out-of-pocket expense you will be making millions in real estate with "no money down". Well it isn't that easy. Yes you can -and should- acquire properties with very little upfront costs associated, but you can do it without wasting thousands of dollars on useless DVDs. You can do it on your own through a technique called 'Subject-To'. One of the greatest things about purchasing properties under a subject to is it is perfect for beginners and at the same time for the experienced guys with the guts it can be used on more challenging property deals.

The term 'Subject-To' refers to the fact that you are acquiring a property subject to any current mortgages, liens, and judgments - or in other words you are acquiring the property but still must either pay off in full or continue to make the monthly payments for any and all mortgages, liens, and judgments against the property. There is a multitude of ways to implement this process, but in many of cases my preference was to catch any payments in arrears, and continue making the monthly payments on behalf of the mortgagee. The beauty of this method is you do not have to come up with all the cash to pay off the mortgage in the beginning, rather you can 'slide in the backdoor' and focus your time and energy on rehabbing and flipping the property.

Now I must make a quick side note: I believe in giving you the good, the bad, and the ugly. I am not going to paint a rosy picture for you. All investments contain an element of risk, in this case: The act of filing a 'Quit-Claim Deed' or the similar document that constitutes a conveyance of the property may allow the bank to accelerate the note and force payment on the spot. This can be very bad news should it happen to you as the bank *could* demand the entire mortgage payoff immediately on the spot. This all depends on your local laws and the terms of the original mortgage. Now in honesty I have NEVER seen this happen, but it is always a possibility.

I will assume you have already selected a property that you wish to acquire, have completed the necessary research, have made contact with the owners, and convinced them to do the deal with you - if not - shouldn't you be working on that now? Moving on, I will gloss over some aspects as they are covered in previous articles 'What is a Quit-Claim Deed' and 'How to Door Knock'. Just make sure when you are getting documents signed by the owners of the property that they sign Loan Authorization agreement allowing you to talk to the bank on their behalf.

Once you have inked the agreement, had everything notarized, and filed your Quit-Claim Deed you have a few options available to you depending on where you are in the foreclosure proceedings. If you are only a few days to the auction, of course you need to move quickly, contact the bank to request a 'Reinstatement amount' - amount the bank requires to stop foreclosure and continue with monthly payments. Hypothetically if you have two months or more until the date of the auction, you could take the risk and not reinstate the bank, rather spend your time and money on fixing the house and selling it. But be forwarded this is risky as the clock is ticking and if you do not sell before auction YOU WILL LOOSE EVERY PENNY YOU PUT INTO THE HOUSE. This is not recommended unless you are confident that you will be able to sell the property prior to sale.

While there are some ways to limit your loss (which I will cover in future articles), for the beginners I highly recommend reinstating any mortgages and keep up with all the payments, this gives you the most flexibility.