March 2025
MESSAGE FROM THE BOARD
Mastering Subject-To & Creative Financing in Chicago’s Real Estate Market
Real estate investors in Chicago know that traditional financing isn’t always the best option—especially in a market where high interest rates and strict lending rules can limit opportunities. That’s why savvy investors turn to creative financing strategies, such as subject-to deals, to acquire properties without relying on banks.
What is a Subject-To Deal?
A subject-to transaction means buying a property subject to the existing mortgage staying in place. The seller’s loan remains active, but the buyer takes over the payments without formally assuming the mortgage.
This strategy is especially valuable in today’s market because it allows investors to secure lower interest rates on existing loans rather than financing at today’s higher rates.
Many sellers considering a subject-to transaction typically have low to moderate equity, usually ranging between 0% to 20%. These are homeowners who may not have enough equity to sell traditionally without bringing cash to closing.
Example: A homeowner has a 3% mortgage rate but needs to sell quickly. Instead of securing a new loan at 7% or higher, an investor takes over their existing payments, keeping costs low and creating instant cash flow.
Why Subject-To Works in Chicago Right Now
Chicago has plenty of motivated sellers facing:
✔ Foreclosure risks due to financial hardship.
✔ High property taxes forcing owners to sell.
✔ Absentee landlords who no longer want to manage rentals.
✔ Homeowners with little equity, making traditional sales difficult.
Subject-to deals provide win-win solutions, allowing sellers to exit their properties without damaging their credit while investors acquire properties without the headaches of bank financing.
How to Structure a Subject-To Deal the Right Way
✔ Title Transfers, But the Loan Stays in Place
• The deed transfers to the buyer, but the mortgage remains in the seller’s name. This must be fully disclosed to avoid misunderstandings.
✔ Insurance Must Be Updated
• The original homeowner’s insurance must be replaced, as the seller is no longer the owner.
• The buyer can add the seller as an additional insured for extra protection.
✔ Understanding the Due-on-Sale Clause
• Most mortgages include a due-on-sale clause, meaning the lender has the right (but not the obligation) to demand full loan repayment if the property transfers ownership.
• However, as long as payments remain current, lenders rarely enforce this clause.
✔ Use a Loan Servicing Company
• A third-party loan servicing company can collect payments and ensure the mortgage is paid on time.
• This adds credibility and security for both the seller and buyer.
Combining Subject-To with Other Creative Financing Tools
Subject-to investing becomes even more powerful when paired with:
• Wraparound Mortgages – Creating a second loan for a new buyer while keeping the original mortgage active.
• Seller Financing – If a seller owns the home outright, they can finance the deal directly.
• Hard Money Loans – Used for renovations while keeping the subject-to loan intact.
• Lease Options – Renting the property to a tenant-buyer who has an option to purchase later.
The Bottom Line
Subject-to deals are one of the best ways to acquire properties with little upfront capital while keeping low-interest financing intact.
✔ Lower your acquisition costs by avoiding high bank rates.
✔ Help motivated sellers get out of tough situations.
✔ Build a scalable real estate portfolio with minimal personal financing.
Want to learn how to put these strategies into action? Join the next Chicago Area REIA meeting and connect with investors closing subject-to deals today!
Iva Norris
Chicago Area Real Estate Investors Association - Vendor Director
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| Upcoming Events |
CAREIA
Board of Directors
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Rehabbing Workshop and Property Tour
Saturday, March 15, 2025 @ 9am-1pm.
https://www.careia.org/event-6066789
$49 for members; $79 for non-members
Short Term Rental Sub Group Meeting
Monday, March 17, 2025 @ 7 p.m.
Portillo's Hot Dogs, 531 N. Randall Rd., Batavia, IL 60510
https://www.careia.org/event-5971603
Anyone who has an interest in investing in short or mid-term rentals are invited to attend our monthly STR sub group meeting. Each month we will have an open forum to discuss all things short term rentals.
Real Estate Networking Night
Monday, March 24, 2025 @ 6:30 p.m.
Portillo's Hot Dogs, 235 E. North Avenue, Glendale Heights, IL 60139
A FREE Member & Non-member Event
https://www.careia.org/event-5948703
Cash Flow Game Night (Members Only Event )
Wednesday, April 2, 2025 @ 7:00 p.m.
McDonald's off Highland Avenue
1 Yorktown Shopping Center, Lombard
https://www.careia.org/event-6028906
CAREIA Monthly General Meeting
Monday, April 14, 2025 @ 7:00 p.m.
Networking starts at 6:45 p.m.
Hyatt of Lisle • 1400 Corporetum Drive, Lisle
Topic: Raising Private Money from Self-Directed IRAs
Key Note Speaker: Mary Ann Skweres https://www.careia.org/event-5971527
Short Term Rental Sub Group Meeting
Monday, April 21, 2025 @ 7 p.m.
Portillo's Hot Dogs, 531 N. Randall Rd., Batavia, IL 60510 https://www.careia.org/event-6028911
Anyone who has an interest in investing in short or mid-term rentals are invited to attend our monthly STR sub group meeting. Each month we will have an open forum to discuss all things short term rentals.
Real Estate Networking Night
Monday, April 28, 2025 @ 6:30 p.m.
Portillo's Hot Dogs, 235 E. North Avenue, Glendale Heights, IL 60139
A FREE Member & Non-member Event https://www.careia.org/event-6028912
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President: Pete Gordon
Vice President: Steven Bell
Secretary: Rob Hayes
Treasurer: Vanessa Krynen
Librarian: Dwayne Denzinger
Programing: PK Kleinert
Vendor: Iva Norris
Newsletter: Belinda Moore
Publicity: Mary Ann Skweres
Membership: Danny Galvez
Tech Support: Keith Jablonowski
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Our mission
To support and
promote local real estate investors
though networking, education, support, leadership on
legislative issues,
and promoting professionalism
and standards of excellence in the
real estate
investing industry.
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WORDS OF WISDOM
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“The most important quality for an investor is temperament, not intellect… You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” – Warren Buffet
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Library Book of the Month
The Book on Managing Rental Properties: A Proven System for Finding, Screening, and Managing Tenants with Fewer Headaches and Maximum Profits
Brandon Turner and Heather Turner
This book is a how-to manual with all the nuts-and-bolts stuff, like procedures and checklist and resources, but it also has a lot of soft skills information that can turn your business from burden with lots of tenant hassles to one with good tenants paying high rents on time.
Inside, you’ll learn how to:
- Boost your shot at success by 100x with a subtle mindset shift
- Attract the best tenants with low-cost strategies
- Spot the seven red flags in potential tenants
- Protect yourself with nineteen key rental lease provisions
- Find and retain tenants who pay on time
- Take the sting out of taxes, bookkeeping, and other paperwork
- And much more!
Did you Know?
We have: Books, CD's, and even Movies!
Have you ever wanted to read a book or listen to a course but didn't want
to spend the money knowing if it was what you really wanted?
Well, that's what our Library is here for. It's for you to read, listen or even watch some great things on real estate without having to dish out the bucks!
Sometimes you will find you may want to purchase the book or program after you borrow it. Great, but aren't you glad you didn't pay for all the ones that just weren't right for you?
To check out materials:
- Only members can borrow materials
- Review inventory here: https://www.careia.org/LibaryList
- Fill out CAREIA Library request form
- Receive materials at the next General Meeting
- Materials are due back in one month
- Note. If materials are not returned, member is responsible for paying cost of materials for replacement.
