Episode #13
13. Sub-To Is a Ticking Risk (Banks Want Their Loans Back)
This episode breaks down subject-to (sub-to) real estate, the good and the bad, and why building a whole portfolio on it is a bigger gamble than most people admit. Sub-to gets pitched as a way to get into deals with little money down, no bank approval, and a rate you can't get anymore. Most of that is true. But the people teaching it tend to skip the risks: the due-on-sale clause, the seller's credit tied up in the loan, escrow jumps, exit problems, and the chance that laws tighten once enough bad actors give it a bad name. The core argument is that with old loans at 2-3% and new loans at 6-8%, banks now have a real financial reason to call those loans due, and AI makes sub-to transfers easier to find. There's no documented wave of this yet, so it's a forward-looking risk rather than an observed trend. Sub-to isn't a scam, and it can make sense on the right deal, but it's not something to bet everything on. 00:00 Intro & this episode's topic 03:39 Correcting last episode: banks can't take your equity 04:24 What sub-to actually is 07:41 Is it legal? The due-on-sale clause explained 08:24 The pros: rate arbitrage, amortization head start, and low cash in 12:09 The cons: why the due-on-sale clause matters more now 14:43 How AI makes sub-to deals easier for banks to find 16:38 Insurance, seller credit, and the risks to the seller 19:03 Escrow shock, exit risk, and investors who walk away 20:54 Regulatory drift: could sub-to get shut down like Airbnb? 22:51 The old world vs. the new world of interest rates 25:34 Why the loudest sub-to teachers haven't seen an enforcement wave 28:37 The pushback: "it hasn't happened yet" and the trust loophole 31:00 Final thoughts: sub-to isn't a scam, it's a gamble If you enjoyed this episode, be sure to subscribe, leave a review, and share it with someone building a business, a family, or both. Subscribe for more Beyond the Build episodes: https://www.youtube.com/@beyondthebuildpod Listen to Spotify: https://open.spotify.com/show/4e8B5ZI75I6wzo6FFw55yo?si=LSz9c7XITAKjXEYimFXypA Listen to Apple Podcasts: https://podcasts.apple.com/us/podcast/beyond-the-build-with-wendell-butler/id1784328740 Follow Beyond The Build on Facebook: https://www.facebook.com/beyondthebuildpod Follow Beyond The Build on Instagram: https://www.instagram.com/beyondthebuildpod/ Follow Beyond The Build on LInkedIn: https://www.linkedin.com/showcase/beyondthebuildpod/ Check out more from Wendell Butler: Personal Website: https://wendellbutler.com Facebook: https://www.facebook.com/wendellpbutleriv Instagram: https://www.instagram.com/wendellpbutleriv/ LinkedIn: https://www.linkedin.com/in/wendellpbutleriv/ Subscribe to Newsletter: https://wendellbutler.beehiiv.com/ Hammerhead Capital: https://www.hhcapitalrealty.com/ Flip Fuel Lending: https://flipfuellending.com/ Tide & Timber Ventures: https://www.tidetimberventures.com/ The Hive: https://jointhehive.co/
