Get rich slow is real estate investing in the truest sense, meaning you acquire properties, hold on to them while they appreciate while having tenants pay down the mortgage.
By using a buy and hold strategy, you can make $10 million dollars with $20k a month of positive cash flow.
What’s the catch?
It takes time. This strategy may take you 8-12 years to obtain the same type of results that my wife, Shenoah Grove and I have obtained.
Of course, there is a right way and a wrong way to purchase real estate rentals. If you pick the wrong city, or in the right city you pick the wrong sub division, then you’ll not see the proper appreciation.
This mistake will cost you hundreds of thousands of dollars.
In this video, I give you two tips on how to purchase real estate properties for buy and hold the right way.
For more information on Phill Grove and his real estate coaching and mentoring tips, please visit http://REIMaverick.com/more-info.
To visit Jim’s main website and to learn more, follow the link: http://www.investingnownetwork.com
Hello, this is Marko Rubel with Unlimited Funding Program, the authority in real estate investing. Today I’ve prepared a short tutorial on how to communicate with a seller when negotiating a Subject To deal. Here are a few important concepts to keep in mind when you invest subject to.
”During a Subject To negotiation, should you tell the home seller that your company will pay the loan until you find a buyer? ”
” I am not sure that I understand this question, I mean this is a good question… but let me just make sure I understand it properly. What you’re asking is, is it ok to say that your company is going to be making payments. It is ok to say that your company will be making the payments until your buyer will refinance. Look, it’s not only okay but it’s the only way to do it. If you’re buying a property subject to and your getting the deed from the seller, the seller is trusting you. They are not going to trust the buyer. You are the property investor. So you’ve definitely got to say that your company will be making the payments. The trick is to mention it very subtly. Getting into detail is not recommended, it’s your business. The more you tell the home seller about your business, the more difficult things become. The seller can get overwhelmed and that’s the reason we don’t talk too much. The seller will start thinking of all the things that can go wrong, and they don’t need to know everything about your business. For example, who you are going to put in the house, how you are going to do it, etc. That’s your business, so don’t feel that it is necessary to tell them every detail. If they ask what you are going to do with the house, then it is ok to tell them that you are going to network with different companies. You can say they know people relocating to the area, they send us the buyers, we put them into our houses and refinance them later on. I mean that’s what we do, and that’s enough to say. That’s about everything you want to say, remember less is more. I’m telling you, when I sit down with a seller, I don’t talk much. Too much talking will create objections for your seller. Keep it simple. You know, if you start talking about potential problems the buyer could have, such as credit repair, it is possible the seller could get scared and look for other possible problems. At that point, you will have to address these seller objections and you may not have enough time to effectively do so. So keep it short and simple to avoid creating objections that could lead to a no. These tips should be applied to all of your future subject to investments.”
Hope this bit of info helps you with your goal to make money investing in real estate.
And if you want to know how I made millions of dollars flipping houses, go to my website right now for your ”Free Success Kit”
In Conclusion, simplicity is the key to negotiating with the seller when dealing with subject to property. Too much information can confuse and overwhelm the seller, so remember to keep it simple. You can apply these marketing principles to all of your real estate investments.
If you want to learn how to invest in subject to properties — and you want to REALLY make money on your next Subject To investment — you need to go to my website right now for your ”Free Success Kit”
I hope you found the information in this video valuable and informative. Please leave your comments and questions below! Good luck with your next real estate investment!
Thanks for watching, -Marko
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What is a Subject 2 Deal?
A “Sub 2” deal is a type of creative financing where the home-seller deed’s the property to you while leaving the existing under-lying-mortgage in place. There is no FORMAL assumption of the seller’s-loan, you start making the payments as if you are the old-owner.
There are many ways to structure a “Subject to” deal. I have bought subject 2 deals for “rental homes” and I have bought subject 2 deals for Fix-and-Flip. Therefore, The “Subject 2” method is my personal favorite way of buying houses in Dallas Texas.
WHY…? Because I am in total control of the deal.
I am not at the mercy of the banks, the title company, the inspector or the appraiser.
Plus It is fast, simple, and relatively easy to negotiate with the motivated-home-sellers.
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Before you jump in your car and race over there, there’s one important thing to do before you go. You need to collect some data.
In this video we talked about important information in order analyze your deal and how to make a decision depending on your strategy.
Learn more on taking over properties subject to the existing financing.
Real estate investment expert Joe Crump teaches zero down investing techniques. Learn foreclosures, short sales, “Subject To”, land contracts, “Multi-mortgage” and other creative real estate financing structures.
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I spend so much time explaining this to my students: the difference between a land contract and a Subject To deal and the hierarchy of zero down real estate deals. Let me go through it again and explain the differences between them and what works and why in different situations.
“Joe, can you give some basic definitions for some of the strategies you implement? How can I explain the difference between a land contract versus a “Subject-To” versus a lease option, etc.? Thanks, Javier.” — Javier Pelanco
Joe: I’m going to try to make this quick. We spend two and a half to three hours on this at the Buying Event because this is the core information of what I teach — this is the most important part that you need to understand — structuring zero down deals. That’s what this is really all about.
Joe: If you understand what the hierarchy of these structures is, it’ll make it easier for you to look at a particular deal and say, ‘Yes, that deal needs to be structured in this way in order to make it work.’ Ultimately, what we’re looking for is a way to solve the problem of the seller. Also, we’re financing deals. All of these kinds of investment deals are about solving the problem for the seller, and when you solve that problem for them, then they’ll want to do the deal.
Joe: But it has to be solved in a way that makes profit for you. So, rather than talking about how we’re going to make a profit on it, I’m going to talk about how we’re going to structure the deals, the different structures that are available and the hierarchy that they should be in, and I’m going to try to do this in the next two to three minutes.
Joe: First of all, “Subject-To”: this is the top of the hierarchy. The way you buy the property “Subject-To” is the seller that has an existing mortgage on the property deeds the property to you. The loan stays in the name of that seller. You’re not assuming the loan. You’re not qualifying for the loan. You’re not even ever talking to the lender. All you’re going to do is start making the payments on it.
Joe: The deed is in your name because they deeded it to you — you’re going to take a warranty deed, and this puts you in full control of that property. Now, it’s still subject to the existing loan, so those payments have to be made, and it’s possible that the lender is going to take the property back if you default on it.
Joe: Now, there’s some other issues in this which need to be addressed I’m not going to get into it because we don’t have much time, i.e. due on sale clauses and things like that, bu it’s not difficult. We do these types of deals all the time. This is the top of the hierarchy and this is the way that you want to buy properties.
Joe: The next type is “Multi-mortgage”. This is if a seller has equity. Let’s say they have a first mortgage of $100,000 but the property is worth $200,000. They’re willing to sell it for $180,000 but they don’t want to take an $80,000 loss, so what you do is take over the first mortgage subject to the existing loan ($100,000) and then you give them their equity as a second. So, they deed the property to you and then you borrow that other $80,000 from them in the form of a note and you owe them $80,000 to be paid over a period of time at a certain interest rate….
To read the rest of the transcript and more of Joe Crump’s articles, click here: http://joecrumpblog.com/the-difference-between-a-land-contract-and-a-subject-to-deal-2/?utm_source=Youtube&utm_medium=EndLink&utm_campaign=Youtube131022
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“What happens when this occurs? You acquire a property via a Subject To (taking over the existing loan). You put a tenant buyer into the property. The new tenant buyer signs a tenant application and a lease option with your agreeing to buy the property in one year. But the bank decides they don’t want you to be paying the payments, instead just the original owner. Do you have to kick out the tenant buyer, get back the lease option fee and could this lead to possible legal problems with both the tenant and the buyer and the seller?” – Julie Oden
Joe: Well first of all, I’ve never seen that happen. Let me qualify that. I have had the banks ask that the original borrower make the payments. That’s happened a few times. I once had a bank say that they wanted me as the lease option owner, the deed holder of that property who was renting it out to a new tenant – they wanted me to qualify for the loan.
Joe: Bank of America did this to me. They called me up and I said to them, ‘I took over this property a couple of years ago and I’ve been making the payments ever since. They’ve been coming from my bank account. I’m going to continue to make those payments as long as I have this property. If I gave it back to the original owner, I know that they can’t make the payments – that’s why I took it over from them. I can make the payments. That’s why I’m doing this way.’ And they said, ‘Well, I understand that but you still have to qualify for that property.’ And I said, ‘Well, that’s now how I work. I don’t do that. I don’t qualify for the property. What I’ll do is make the payments and I’ll maintain the property and take care of it for you and make sure you guys are whole.’
Joe: And they said, ‘No, you can’t do that. If you don’t do this, we’re going to file a notice of default.’ And I said, ‘I understand that, but let me just tell you – as soon as I get the notice of default on this property, that’s the day I quit making the payments, so I want you to understand that before you file that.’ They said, ‘I understand that. We still have to do it.’
Joe: They got off the phone. They called me back 15 minutes later. They said, ‘I just talked to my supervisor and he said please continue to make your payments. We’re not going to file a notice of default.’ I said, ‘That’s great. I’ll continue to do that’. And I still own that property.
Joe: So, that’s the closest I ever got to anybody ever trying to exercise their due on sale clause, which is what I think you’re talking about here. But if it did happen – if somebody was in a property and they suddenly said we’re going to foreclose on his property, then you can either help that buyer find another property – it’s going to take months and months for them to take that property back, you can continue to make the payments…
Joe: If they refuse to take the payments and you’re not able to get the original owner to make the payments for you or have them write a check or whatever to figure out a way to do it for you – because you can do it as a property management company (you can do it a lot of different ways) but if you couldn’t solve that problem, just get your buyer and put them into another property. You can always find them something else, and just help them understand what’s going on and keep them abreast of the process so that there’s not a big issue.
Joe: I’ve never seen anybody get into legal trouble because of a situation like this. The reason people get into legal trouble is because they don’t pay attention, they don’t solve the problem when it happens and they get angry with people or piss people off, so if you can avoid those things, most of the time – 90% of the time you can avoid a lawsuit. 10% of the time, you’re going to get into a lawsuit no matter what you do, and then you have to deal with it and you have to deal with an attorney and all of those things…
To read the rest of this transcript and more of Joe Crump’s articles, click here: http://joecrumpblog.com/what-happens-if-the-bank-refuses-to-take-your-payment-on-a-subject-to-deal/?utm_source=Youtube&utm_medium=EndLink&utm_campaign=Youtube
Real Estate Investing ‘Subject To’ The Existing Mortgage. Here’s a Video On Investing ‘Subject To’ For Real Estate Investors…
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Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got a quick video on investing subject to the existing mortgage..
To fully understand Subject To investments, we need to first break the process down into two components, the title and the financing. Many investors think they are related in this type of transaction, but that’s a common misconception.
In a ‘subject to’ transaction, the seller will Deed the title over to the new buyer, making the buyer the new owner of the property, but the loan remains in the sellers name. The buyer will then make payments on the mortgage in place of the seller.
It’s important to understand that a loan does not indicate ownership of a home, the deed does. The property itself is a collateral asset to lenders in case payments are not made by the borrower.
There is risk on both sides, for the seller, their credit is on the line, and for the buyer, they could potentially lose the property if not managed correctly, or if the Bank executes the “Due On Sale” clause which we will discuss later in this video.
In most situations, buyers/investors will keep the property for themselves as a cashflow investment or a potential Lease Option.
Simply, Subject To’s create a way for investors to own property with little or no money out of pocket, or using their own credit.
Why would a seller agree to sell you their home using their existing mortgage?
They must be Motivated in order for this strategy to work well
– They want to stop making payments because they want to move
– They are getting transfered to another city, which is paying less
– They were given the house and now have 2 mortgages
– The house was purchased under a dual income home, divorce, now single income
*There many situations that can create a motivated seller, and its not just because they are behind on payments.
“Due on Sale” Clause
(25 years ago and prior it was not uncommon for ownership of a residential property to change with the financing staying in place.)
DOS clause – Varies by lender documents – conventional, FHA, VA
– Most contracts state – The Loan balance MAY be called due in full upon sale or transfer of ownership of the property. This is one of the ways lenders protect themselves.
In addition to qualifying the initial borrower, the lender required the borrower to pledge the property as additional collateral for the loan.
– But, in most cases, but not always, as long as payments are being made ON-TIME, lenders usually won’t care. Even if payments are made in the name of someone who is NOT on the original loan. But it’s still the banks choice.
– Once again, this is a risk you need to be aware of, and its important your seller is made aware of this too. The risks of this type transaction vary by state and by lender.
When you make payments, be sure to make them directly to the lender, and NOT to the seller. Reason why, you can’t guarantee that the seller will make payments for you, and if they foreclose, YOU lose the property and your money. If the seller asks that checks are mailed to the seller, then ensure the payee is the lender, NOT the seller. And make sure you have a way to verify each month that the payment has been made.
Make sure the seller signs documents stating their understanding of this situation. You could even go so far as to videotape their understanding. Do not make any promises about when the seller’s loan will be paid off.
The regulations behind ‘subject to investing’ varies per state, so it’s important that you verify that this is a viable investment option for you. Although this is a “no money down” strategy, that doesn’t involve the use of your credit, there are still risks. It’s important you educate yourself on these potential risks before using this strategy.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you’ll be automatically notified when we upload more quick video tips for you. Take care and good investing.