Subject To (Sub2) Transfer Cash Flow Calculator
Calculate monthly cash flow and equity buildup on a Subject To (Sub2) acquisition. Models taking over the seller's existing mortgage at low rate while keeping rental cash flow.
| Property Value | — |
| Loan Balance Assumed | — |
| Day-1 Equity (Value - Balance) | — |
| Cash In (Seller + Arrears + Closing) | — |
| Monthly PITI | — |
| Monthly Cash Flow (Rent - PITI - Opex) | — |
| Annual Cash Flow | — |
| Cash-on-Cash on Cash In | — |
Subject To (Sub2) means buying property 'subject to' the existing mortgage — seller's name stays on the loan, you take title and make payments. Most powerful in 2024-26 when sellers have 3-4% legacy loans and market rates are 7-8%. Builds wealth on the rate arbitrage without qualifying for a new loan. Risk: due-on-sale clause + seller's credit attached. Source: Bill Bronchick Subject To Manual, NAR Creative Finance Guide.
How Subject To Works in 2027
Seller deeds property to you 'subject to' the existing mortgage. Loan stays in seller's name; you take title and make payments. Most powerful with motivated sellers (divorce, relocation, payment delinquency, life event). You bring 1-2% of value as cash to seller (typically $3-15k) plus reinstate any arrears. Total cash in is far less than 20-25% down payment + closing for traditional purchase.
Why 2024-26 Is Peak Sub2 Era
Sellers with 3-4% legacy mortgages cannot afford to move (the new house would have a 7-8% mortgage = much higher payment). They sell at small discount to avoid foreclosure. You inherit the low-rate loan and cash flow benefits. As market rates normalize 2027-29, the rate arbitrage decreases and Sub2 activity will slow.
Risk Management Best Practices
(1) Title held in land trust — beneficial transfer harder to detect by lender. (2) Authorization to Release Information signed by seller — lets you talk to lender directly. (3) PACER/loan servicer monitoring — auto-pay setup with rolling reserve. (4) Insurance update with seller named additional insured (do NOT remove seller). (5) Written disclosure to seller of all risks. (6) Exit strategy: refi out within 3-5 years or sell.
Last updated May 2026. Sources: Garn-St. Germain Act 12 USC §1701j-3, NAR Creative Financing Guide.