A wrap is a home with a buyer already living in it, already paying you every month. They own all the headaches. You own the note.
Three things happen at once when you close. Take them in order and the rest of this page is easy.
The person living in the home, buying it from you. Called that because their loan wraps around the mortgage underneath it.
They're a buyer, not a tenant, so they pay the property taxes, carry the insurance, and fix everything that breaks. Taxes go up, that's their problem. Furnace dies, that's their bill.
You hold the deed the entire time. They have possession and every responsibility of ownership, but title stays in your name until they pay the balance in full. If they walk away, the house is already yours — there's nothing to take back.
You collect the difference between the two payments, every month, starting the first month.
Same house. Completely different position. You're holding a note instead of a lease, and almost everything that makes rentals annoying comes from the lease.
A rental is simple and any buyer understands it. A wrap takes an afternoon to learn. That learning curve is most of the reason the numbers look the way they do.
A deal we closed and sold. Every figure below is the actual number from the closing file.
Cash to get in: $15,390. Against $563.08 a month, that's roughly a 44% cash-on-cash return, arriving in month one. No lease-up, no vacancy — the buyer was already living there.
The wrap buyer here is a self-employed contractor. Good income, real down payment, no bank willing to write the loan.
The note is written on a 30-year schedule, but most wrap buyers are gone well before that — they sell the house, or come into money and pay it off, or refinance into a conventional loan once their credit supports it. Any of the three ends the contract early.
Whenever that happens, the buyer owes you the remaining balance in full. You pay off the mortgage underneath, and the difference is yours in cash — here, about 1.4 times the entry fee, on top of every month of cash flow collected along the way.
That gap also widens over time. Both loans amortize at once, but yours is further along its curve, so it drops faster than the buyer's does — the spread grows every year you hold, and accelerates.
The two loans don't end together. Yours has 329 payments left. The buyer's has 360.
There's no way to know when a wrap buyer will sell, pay off, or refinance. The good news is you don't need to — the longer they stay, the better the deal gets. Here's the same $15,390 at three exit points.
Figures assume the wrap buyer performs and the payment spread holds. The 30-year card is the ceiling, not the expectation — year ten is the outcome we'd underwrite to.
Millions of homes carry mortgages written at 3–5% that no bank will ever write again. Some of those owners need out — a job move, a divorce, an inheritance, a payment they can't keep up with. Selling the normal way means paying an agent, waiting on an appraisal, and handing that irreplaceable loan back to be extinguished. Selling subject-to gets them released faster and keeps the loan alive.
There's a large group of people who can comfortably afford a house payment and cannot get a mortgage issued. Self-employed with income banks won't count. A thin credit file, or none at all. Immigration status. Recent arrivals with steady work and no U.S. borrowing history yet.
Not all of them are creditworthy on paper — some have no credit history whatsoever. What they have is income, stability, and enough cash for a real down payment.
We put the two together. The seller gets released, the buyer gets a home, the low-rate loan survives instead of being paid off — and you end up owning the position in the middle.
Make one mortgage payment. That's the entire operational job — truly passive cash flow, not the version that comes with a phone that rings.
No tenant screening, no maintenance calls, no turnovers, no shopping insurance, no escrowing taxes. When the water heater fails, the wrap buyer replaces it — and that improvement stays with the house whether or not they ever finish paying for it.
A loan servicer is the company that sits between you and the wrap buyer and handles the plumbing. They collect the buyer's payment, send the mortgage payment out on your behalf, issue monthly statements and a year-end tax form, chase down late payments, and charge the late fee. It's what a property manager is to a rental, except it costs $25 a month instead of 10% of the rent.
We use a servicer called Ziggy. Wrap buyers often agree to pay the $25 themselves once they see the portal — it's how they track their own balance coming down. On some deals we've negotiated that in advance; on others it's yours to cover.
The servicing fee is never folded into the cash flow number we publish, in either direction. When we say $563 a month, that's the payment spread. The $25 is disclosed separately on every deal, so you always know who's covering it.
Tap any question to open it.
Most investors treat this as the best outcome available, not the worst.
The buyer walks away from their down payment, every payment they've made, and every improvement they put into the house. You keep all of it. The mortgage has been paid down in the meantime, so your equity position is larger than the day you bought. And the house is usually in better shape than when you got it, because owners renovate and renters don't.
In Kansas and Missouri, where nearly all our deals sit, recovering possession is a straightforward eviction. From there you can place a new wrap buyer and collect a fresh down payment, sell the house, or convert it to a rental.
And we'll help you re-wrap it. Finding and placing wrap buyers is what we do every week — we've done it more than thirty times. That help doesn't expire when the deal closes.
Most mortgages contain a due-on-sale clause letting the lender demand payoff if the property transfers. In practice it almost never happens, and the incentives explain why: banks are in the business of collecting payments, not repossessing houses. Foreclosure is slow, expensive, and frequently loses them money. A performing loan is worth more to them than a legal process, and they have limited practical means of noticing a transfer on a loan where payments are being made on time.
We still build the structure so that it wouldn't matter if one ever did:
Trust ownership. We recommend taking title in a trust. Lenders expressly permit transfers into a trust for estate planning, and trust documents are private and unrecorded — there's no public record showing who the beneficiary is. In most cases the transfer isn't visible in the first place.
Power of attorney. The original seller signs a POA at closing letting you act on their behalf regarding the property. If a question ever came up, that lets you reconvey title to the seller and take it back through a trust or contract for deed — resolving the trigger while you keep owning and operating the asset.
Contractual cooperation. The seller is obligated by contract to sign whatever's needed to resolve a due-on-sale issue. It's a duty, not a favor.
They're the wrap buyer's responsibility under the contract for deed, so increases flow to the buyer, not to you. Your mortgage payment is fixed. This is one of the largest practical differences between a wrap and a rental — rising carrying costs are the main thing that quietly erodes rental returns over a hold period, and here they don't touch you.
Because we show you what you'll actually pay, not what the seller was paying.
The seller's insurance policy is cancelled at closing and replaced with a new one, which is almost always cheaper. On Raytown, the seller's premium was $448 a month and the replacement was $123 — the payment dropped from $1,862 to $1,536.92 on that alone.
Some loans also carry a temporary escrow shortage that inflates the current payment until it clears. Where one exists, we disclose the reduced monthly amount, how many months it runs, and the total dollar cost. We also tell you whether the insurance figure is a bound quote or an estimate. Ask for the bridge on any deal and we'll send it.
Good news. The equity spread converts to cash sooner than modeled, which raises your annualized return rather than lowering it. Monthly income stops and a lump sum replaces it.
Usually not long, and that's by design. We find and underwrite the wrap buyer while the property is still under contract, before you ever see the listing — that's what makes the entry price what it is. If we sat on these for two years of payment history first, they'd be priced like seasoned notes.
What stands behind the deal instead is a buyer who has committed a five-figure down payment on a house they picked to live in, and our underwriting of their income and stability. We'll show you the file on any deal you're looking at.
The position: title to the property, the note the wrap buyer pays you, the low-rate mortgage underneath, and the spread between them — including the equity spread that's sitting there whether or not you ever collect another month of cash flow.
It's not a down payment against the purchase price and it isn't held in reserve. Together with the wrap buyer's down payment, it funds the deal — cash to the seller, any arrears brought current, closing costs, commissions, holding costs. What's left after those is our fee. We'd rather say that plainly than have you wonder.
Yes — the position can be sold to another investor, note and cash flow together. But there's no exchange for these and no guaranteed timeline, so plan on a multi-year hold. If you need the capital liquid in twelve months, this isn't the right instrument.
Yes. Self-directed IRA funds are eligible. Your custodian will have a process for it and we've worked through it before.
However you prefer — your name, an LLC, or a trust. We recommend a trust for the privacy reasons covered above.
You take title by warranty deed, the same instrument used in a conventional purchase, and the deed records in your name. Every deal closes through a title company, so title is searched and insured exactly as it would be on any other purchase. The wrap buyer holds no deed — they receive one only when they've paid their balance in full.
Selling these to outside investors is the newest part of what we do. The volume behind it isn't. Sourcing the deal, structuring it with the seller, and placing the right buyer in the home are three separate skills, and the numbers above are what it took to get good at all three — which is also why we can stand behind a deal years later if it ever needs re-wrapping.
Colors match the listings: purple is the wrap buyer's side, gray is the mortgage side, orange is what you keep.
Fifteen minutes on a live deal, with the mortgage statement and the contract for deed open in front of us, teaches more than any page can.
Book a callEducational material describing a transaction structure in general terms. Not legal, tax, or investment advice, and not an offer to sell securities. Figures for 10905 E 59th St are actual numbers from a closed transaction; every deal differs. Retain your own attorney and tax professional and review the loan documents, contract for deed, and title commitment before closing.