My mentor told me this week that sub-to is really just a bet on the servicer staying asleep
I keep turning that over. He has done eleven of these since 2021, all in the $180k to $240k range in the Carolinas, and he said the spread on every single one looked clean on paper. Then he described the two that went sideways and both times the problem was not the seller, not the title, not the payment structure. It was the servicer waking up and running a routine audit somewhere around month fourteen. He said he got out both times because he had enough cash to refi fast at whatever rate was available, and he was clear that if he had not had that sitting liquid he would have been in real trouble. That part has not left me. I have been building my note math around the acquisition side, the spread, the carry, the seller situation, and I had not been modeling a forced refi at current market rates as a baseline scenario I actually have to be able to survive. He said the rate on the underlying loan is almost irrelevant if you cannot cover the exit. I am going back through everything I thought I understood about this structure.
