How to Be Smart in a World of Dumb Real Estate Professionals

How to Be Smart in a World of Dumb Real Estate Professionals

3 min read
Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. Marcus has been named the “Equity King” for his impressive ability to find real estate opportunities with massive amounts of equity.

Experience
Marcus, a high school dropout, went from G.E.D. to M.B.A. Although his education has a major impact on his investment philosophy, the real impact came from his upbringing.

Marcus thrives on completing successful transactions. As a young kid, his parents and grandparents faced many challenges; as a result, it made him think of ways he could help. His mother and grandmother were avid investors—not in the market but in people. Marcus was a recipient of those investments. And his early years were hard work growing up on a farm.

Marcus was a strategist at an early age. To relieve the burden of his family buying him clothes when it was time to return to school, he decided to make a small investment that paid big dividends. Marcus decided to purchase a small piglet at the beginning of summer, feed it until it became fat, and then sell it to a local farmers’ auction before the school year started. This was one of his first transactions and the beginning of his adventure of finding equity in every opportunity.

Marcus’ hard work continues today: He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. Although wholesaling provides great money, he saw the opportunity to buy some of the deals he found and convert them into cash flowing rentals.

Marcus currently holds seven rentals, two of which are commercial units. He’s also done the unimaginable and purchased a school, which was converted to a daycare center. Again, he turns what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to increase his portfolio without any money out of pocket.

Marcus has been featured on numerous podcasts, such as the Louisville Gal Podcast, the Best Real Estate Investing Advice Ever podcast, FlippingJunkie, and many others. He’s currently a featured blogger for BiggerPockets, the largest community of real estate investors in the world.

Along with completing transactions and working to build his portfolio, he provides mentorship to aspiring investors. This is done through one-on-one interactions and through his successful YouTube channel and blog.

Marcus does utilize his M.B.A. for more than real estate. As a consultant for a successful non-profit institution south of Chicago, he uses his expertise in the development of human capital. His philanthropic efforts help existing stakeholders develop in their capacity to serve those in need of assistance.

Education
Marcus completed his M.B.A. in 2011 from Olivet Nazarene University.

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I always encourage people if you are not informed about a topic; educate yourself about it…. There are too many resources available not to know a little information about a lot of topics.

Aristotle put it like this “The roots of education are bitter, but the fruit is sweet.”

There are many free resources to educate yourself about a topic you are unfamiliar with. Some great resources are found at your local Title Company, Real Estate Brokers, REIA, College or University, Bigger Pockets, CNBC and other media outlets.

Related: Getting Started in Real Estate With Less Than $1,000

I am not a subscriber of the often stated “jack of all trades” philosophy but again a little education and information can go a long way.

I have been listening to and watching a lot of investors work their craft at executing deals with subject 2 (wrap) financing and some are using this as their primary deal structure, and others are using it as an alternative offer if they can not secure the deal via traditional means. I bring this up because I have found that there are many real estate professionals that are still unfamiliar on subject 2 (wrap) financing, and when I say professionals I am referring to Realtors.

Hold On I Have to Lay the Foundation….

I recently attended a 3 hour workshop on subject 2 financing to brush up my skills on the deal structure. The class was  held by a well established title company, and as usual I was the only minority in the room, but that was not the shocker… I was the only Investor….that’s the shocker

The irony was that the room was filled with Realtors that were totally oblivious to subject 2 financing…..WOW!!! I was amazed, but at the same time I realized that Realtors are finally trying to learn other ways to structure deals in lieu of the traditional sales process. I applaud them for trying to learn, but I am dumb-founded that this strategy is not being used as an alternative resource.

One Realtor asked…Is subject 2 financing ILLEGAL?

Related: Is There a Problem with Buying Properties Subject-to Existing Financing?

As hard as it was for me not to laugh to be respectful of course… I sat comfortably in my seat to see how the Senior Escrow Officer address the question… quite well I must say, but that was to be expected she has been closing subject 2 deals for years.

Others asked…What are the benefits of this type of transaction for my clients, and how do I receive a commission for the deal?

Again, she was able to address all the questions tactfully, and provided handouts that would help them fill out the documents needed for a sales transaction.

Here are Some of the Homework Questions She Challenged Us to Identify and I Pass this Homework on to You….

What type of seller or buyer does this deal structure help most?

What are the benefits of subject 2 financing?

What kind of financing can not be structured as a sub2 deal?        Conventional          FHA                VA

Can you structure a sub2 with an ARM?

Why is the lender important when structuring this type of deal?

How often does a the lien holder execute the due on sale clause?      Often         Sometime          Hardly Ever

What is the difference between a Seller Carry and Subject 2?

If you can answer the majority of these questions you are well on your way to be able to structure a sub2 or wrap deal.

I wrote this article not to drive home the importance of sub 2 financing; but to inform all investors to take advantage of free workshops and educational classes.

Remember there are professionals that have been working in real estate that are either uneducated or misinformed about alternative deal structures, but are now utilizing these free classes to learn. Are You?

By the way how many of the above questions were you able to answer correctly, and how often are you using sub2 as a deal structure? I would love to know!!!

Be sure to leave your comments below!