Editing 1course Real Estate (section)

==== Real-Life Example: Thorough Due Diligence ====
Consider Jack, an investor who found a promising Subject-To deal. Here’s how he conducted due diligence:

* '''Legal Consultation:''' Jack consulted a real estate attorney to understand the state-specific regulations and draft a compliant purchase agreement and Subject-To addendum.
* '''Title Search:''' He conducted a title search and discovered a secondary lien on the property. Jack negotiated with the seller to clear the lien before closing the deal.
* '''Property Inspection:''' The inspection revealed minor roof damage and outdated plumbing. Jack factored the repair costs into his investment analysis.
* '''Mortgage Analysis:''' Jack reviewed the existing mortgage terms, including a low interest rate and no prepayment penalties. He also noted the due-on-sale clause and discussed mitigation strategies with his attorney.
* '''Risk Evaluation:''' Jack assessed the seller’s financial situation and confirmed their motivation to sell quickly to avoid foreclosure. He also re-evaluated the local market conditions and confirmed the property’s rental potential.
* '''Exit Strategy:''' Jack developed a plan to rent the property for steady cash flow, with a long-term goal of refinancing to remove the original mortgage and gain full ownership.