How a subject-to purchase works, why a low existing rate is so valuable and which risks you need to cover.
In a subject-to deal you buy the property while the seller's existing mortgage stays in place. You take over the payments; the loan stays in their name.
A loan written in a low-rate period is worth real money. A property with a 3 percent mortgage produces hundreds of dollars more monthly cashflow than the same property financed at 7.5 percent today.
Almost every US mortgage has a due-on-sale clause: the lender may call the loan when ownership transfers. In practice this rarely happens while payments are made, but you need a plan B (refinance or sell).
Always close through a title company or real estate attorney, run payments through a servicing company, keep insurance in place with you as an interested party, and document who pays which costs.
Enter the existing loan and rate in the assumptions and switch to interest-only if that matches the loan. You immediately see the effect on cashflow and DSCR.
In short
Subject-to is bought for the rate, not the price. Have your exit ready before you step in.
Data from public sources and licensed feeds. Not investment advice.