Investor · United States · Member since 2020 · 202 posts · 284 votes
Heard about this on Pace Morby's Youtube channel - it's a zero down creative strategy that works when 1) the seller is open to seller finance, but 2) needs a sizeable DP for various reasons (i.e., pay off their existing loan, closing costs, and/ or put some cash in their pocket, etc)
There are 2 "legs" of the transaction. My understanding is it works like this:
Example: purchase price = $1M, seller still owes $200K, seller also needs addl $150K cash at close for whatever reason. But the buyer wants the property at zero down.
First leg:
-- Buyer secures a loan (1st position) for $350K and sends to title company (this is the amount needed to pay off sellers loan + their required cash at close)
-- Buyer also sends $650K cash to the title company (can put in your own cash, or do a temp loan from a transactional lender)
-- First leg of txn is now complete, and the $1M stays at the title company (this is bc you customized escrow instructions upfront to instruct them how to disperse money before escrow began)
Second leg:
-- Buyer and Seller enter into an agreement through an LLC which allows them both to be on title, and seller agrees to seller finance the buyer $650K of the purchase price (on whatever terms they agreed on). Being on title protects the seller from the buyer defaulting - it seems this is an alternative to "officially" putting them in a 2nd position)
-- Title company sends seller the $350K they require
-- Title company sends buyer back $650K (which they can use to pay off their transactional lender if they used one)
So now the seller is happy bc they got the $350K they needed, the buyer is happy bc they acquired a property for zero dollars out-of-pocket, and from what I understand the 1st position lender is happy bc due the LLC arrangement the seller finance component is not technically considered a second lien on the property. Plus all parties were protected throughout the entire transaction through the title company.
Have any of you completed a deal w/ this method? Am I understanding this right? I would love to hear your thoughts on the pros/ cons/ risks involved
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
3y
Pace has an agenda to make it sound easy.
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
There are many ways to buy a property with zero down, not just the Pace Morbey method. This works and is only risky if you don't understand what you're doing. You need a good attorney and title company to do one of these
Heard about this on Pace Morby's Youtube channel - it's a zero down creative strategy that works when 1) the seller is open to seller finance, but 2) needs a sizeable DP for various reasons (i.e., pay off their existing loan, closing costs, and/ or put some cash in their pocket, etc)
There are 2 "legs" of the transaction. My understanding is it works like this:
Example: purchase price = $1M, seller still owes $200K, seller also needs addl $150K cash at close for whatever reason. But the buyer wants the property at zero down.
First leg:
-- Buyer secures a loan (1st position) for $350K and sends to title company (this is the amount needed to pay off sellers loan + their required cash at close)
-- Buyer also sends $650K cash to the title company (can put in your own cash, or do a temp loan from a transactional lender)
-- First leg of txn is now complete, and the $1M stays at the title company (this is bc you customized escrow instructions upfront to instruct them how to disperse money before escrow began)
Second leg:
-- Buyer and Seller enter into an agreement through an LLC which allows them both to be on title, and seller agrees to seller finance the buyer $650K of the purchase price (on whatever terms they agreed on). Being on title protects the seller from the buyer defaulting - it seems this is an alternative to "officially" putting them in a 2nd position)
-- Title company sends seller the $350K they require
-- Title company sends buyer back $650K (which they can use to pay off their transactional lender if they used one)
So now the seller is happy bc they got the $350K they needed, the buyer is happy bc they acquired a property for zero dollars out-of-pocket, and from what I understand the 1st position lender is happy bc due the LLC arrangement the seller finance component is not technically considered a second lien on the property. Plus all parties were protected throughout the entire transaction through the title company.
Have any of you completed a deal w/ this method? Am I understanding this right? I would love to hear your thoughts on the pros/ cons/ risks involved
Your comment: "Buyer and Seller enter into an agreement through an LLC which allows them both to be on title"
Your comment: "Being on title protects the seller from the buyer defaulting"
That isn't how things work. The buyer can still default.
Wow, that's one of the riskiest transactions I've ever heard of. Having someone on title with you that you don't know, as a "business partner" puts you in lawsuit risk for anything they do. Nope, wouldn't do it, "wouldn't be prudent" as George Bush Sr used to say.
WHOA! "due the LLC arrangement the seller finance component is not technically considered a second lien on the property."
Either you misunderstood what was said, or you are extremely likely to get yourself into all kinds of grief following that line of thinking.
There are many ways to buy a property with zero down, not just the Pace Morbey method. This works and is only risky if you don't understand what you're doing. You need a good attorney and title company to do one of these
@Eliott Elias: Your Comment: "This works and is only risky if you don't understand what you're doing"
Just curious, do you not see the extreme risk of this transaction? and no, a competent attorney wouldn't touch this transaction. Lol
Good luck finding a seller who will essentially take an unsecured 2nd on a property that is 100% leveraged. Creative as in fantasy land. This transaction has forced sale written all over it.
There are many ways to buy a property with zero down, not just the Pace Morbey method. This works and is only risky if you don't understand what you're doing. You need a good attorney and title company to do one of these
@Eliott Elias: Your Comment: "This works and is only risky if you don't understand what you're doing"
Just curious, do you not see the extreme risk of this transaction? and no, a competent attorney wouldn't touch this transaction. Lol
Investor · United States · Member since 2020 · 202 posts · 284 votes
3y
Thanks everyone for your input! I did a bit more digging on the topic ... it seems the better way to do this is different than I originally described the "second leg" of the txn ... instead of bringing the seller into the LLC itself, you instead create a note and pledge your interest in the LLC as collateral (w/ a UCC filing w/ the state showing this)
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
3y
Pace has an agenda to make it sound easy.
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
YUp these are all convoluted fantasy land.. your going to find very few sellers will even remotely understand what your doing and if they go to legal advisor they will kill it.. your correct though its this sort of stuff that sells books tapes mentorships susbscriptions etc.. Sub too is super easy in the right market conditions and we are coming into the right market conditions you just need a little jingle in your pocket t o pull these off.. All these folks are trying to do RE with no money and well thats again what sells .. make millions with no money
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
YUp these are all convoluted fantasy land.. your going to find very few sellers will even remotely understand what your doing and if they go to legal advisor they will kill it.. your correct though its this sort of stuff that sells books tapes mentorships susbscriptions etc.. Sub too is super easy in the right market conditions and we are coming into the right market conditions you just need a little jingle in your pocket t o pull these off.. All these folks are trying to do RE with no money and well thats again what sells .. make millions with no money
Have you encountered any owners willing to accept no money down on a multi-family
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
YUp these are all convoluted fantasy land.. your going to find very few sellers will even remotely understand what your doing and if they go to legal advisor they will kill it.. your correct though its this sort of stuff that sells books tapes mentorships susbscriptions etc.. Sub too is super easy in the right market conditions and we are coming into the right market conditions you just need a little jingle in your pocket t o pull these off.. All these folks are trying to do RE with no money and well thats again what sells .. make millions with no money
Have you encountered any owners willing to accept no money down on a multi-family
personally No but I dont really try for them.. I am sure there are deals in the hood that can be bought with no money down or creatively.
Nothing down does not happen very often and I’ve been doing sub2 for years brother. Of course I’m not selling you a course or Mentorship so I have no reason to ham it up. Even the few no money down deals I have done wasn’t really no money down deals, because I spent thousands upon thousands of dollars in marketing and typically I had to do some sort of rehab to the property once I got it.
The last Sub2 deal idea I had to give the seller $17,000, pay all the closing cost, repaint the whole house, and make payments on the thing three months while I was getting it ready.
The one before that the guy was behind almost $7000, I had to change the carpet, I painted the whole house, I made a number of payments while I was getting it ready, and I paid the closing cost, and I probably spent close to $7000 on a marketing campaign .
YUp these are all convoluted fantasy land.. your going to find very few sellers will even remotely understand what your doing and if they go to legal advisor they will kill it.. your correct though its this sort of stuff that sells books tapes mentorships susbscriptions etc.. Sub too is super easy in the right market conditions and we are coming into the right market conditions you just need a little jingle in your pocket t o pull these off.. All these folks are trying to do RE with no money and well thats again what sells .. make millions with no money
Have you encountered any owners willing to accept no money down on a multi-family
personally No but I dont really try for them.. I am sure there are deals in the hood that can be bought with no money down or creatively.
I am gonna be curious how all the people that paid 120% of value with little to no down payment are doing in 12 months when their property value is down 20% and taxes and insurance have skyrockets. Those who paid $220k for a $200k house that is now worth $180k and costs continue to climb are gonna be stuck. But hey their interest rate is 4.5%.
Investor · Boulder, CO · Member since 2017 · 304 posts · 347 votes
3y
Hey @Sean Bramble. Most of my deals have been "no money down". It is not for the faint at heart as you will mostly hear "no" from sellers. But when you find a seller and property that is a good candidate for this, it can certainly be done. And it can certainly be done ethically. The key is communication. You don't advertise or say "Hey Mr. and Mrs. Seller do you want to seller finance the sale?" or "Hey Mr. and Mrs. Seller can I create a note and pledge your interest in an LLC that we will create?". I mean, most of these people are in a rock and a hard place and need help. They are not real estate professionals. You guide them to the best solution for all of you. Sometimes you can't help them and make a profit so you politely walk away. I often tell them exactly how I make money bc I run a business where inherently, being in business means making a profit.
I agree with @Joe S., "no money down" sounds nice and I was taught and certainly live by only putting my money and credit on the line when I have to. It's a whole strategy where your marketing and language is critical. My scripts and marcom is based on some of the principles of NLP. And as @Jay Hinrichs says, the market needs to be right for this strategy and you need a little "jingle in your pocket" ;) Most the time you are bringing a seller current on payments, providing moving expenses, and tackling deferred maintenance/updates - or all three on sub to. For L/Os it's a similar concept and this strategy works well with newer or fully remodeled homes and also needs to be the right market conditions.
Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
3y
First time I've heard of this method but certainly sounds creative - The end buyer is probably likely to still come up with close to $100k on transaction costs with the double dipping of loans and other processing fees most likely.
Investor · United States · Member since 2020 · 202 posts · 284 votes
3y
UPDATE: I've been digging into this topic for several weeks now and have learned some things that I feel are important to share since I was the author of this post. I've spoken to a handful of people on the topic, most notably 2 separate well known investors in the creative finance space. Won't name names, but one owns a creative finance education platform, and the other is a well known creative finance podcast host (neither are Pace Morby).
Both told me the same thing: Not disclosing the second position lien to your first position lender is mortgage fraud, regardless of how it's structured
This method is certainly interesting, and may in fact be allowed by your lender if you disclose it, but it seems disclosure is the name of the game. Would they catch you if you didn't disclose? Who knows ... but I personally would not risk it.
Hope this helps to orient anyone reading this post in the future - best of luck investing!
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
3y
@Tom Gimer since I know you have a background in law, and @Account Closed since I know you have defended a creative transaction of yours in court...
To me this discussion of Morby method only sounds ok from the perspective of 'mechanics of a transaction'. E.g. you can structure two separate transactions where you close on a purchase and then separately borrow cash from your recent seller....the problem here is the intent. There is clearly intent to purchase using a loan for the majority of the purchase, and then borrow back the down payment portion from your seller. Effectively buying at 100% CLT with a 1st position portfolio or DSCR loan combined with a seller 2nd that the lender wouldn't otherwise approve....
It sounds like this is a recipe for getting sued at best, and arrested if it rose to a sufficiently large scale where charges were brought against someone. Any thoughts?
@Matt Devincenzo Agreed. This is a substance of the transaction vs. structure issue. Once the buyer and seller agree on this scheme it's no longer an arms-length sale. The "customized escrow instructions" simply document the intention of the parties to hide the subordinate financing arrangement. Not good.
@Matt Devincenzo Agreed. This is a substance of the transaction vs. structure issue. Once the buyer and seller agree on this scheme it's no longer an arms-length sale. The "customized escrow instructions" simply document the intention of the parties to hide the subordinate financing arrangement. Not good.
Will be interesting to see if Pace writes about this method in his upcoming Bigger Pockets book … 😬
@Tom Gimer since I know you have a background in law, and @Account Closed since I know you have defended a creative transaction of yours in court...
To me this discussion of Morby method only sounds ok from the perspective of 'mechanics of a transaction'. E.g. you can structure two separate transactions where you close on a purchase and then separately borrow cash from your recent seller....the problem here is the intent. There is clearly intent to purchase using a loan for the majority of the purchase, and then borrow back the down payment portion from your seller. Effectively buying at 100% CLT with a 1st position portfolio or DSCR loan combined with a seller 2nd that the lender wouldn't otherwise approve....
It sounds like this is a recipe for getting sued at best, and arrested if it rose to a sufficiently large scale where charges were brought against someone. Any thoughts?
@Matt Devincenzo: Your Comment: "I know you have defended a creative transaction of yours in court..."
Well, you've stepped on the third rail . . . (The rail that supplies the high voltage to power a train on an electric railway.)
I'm not even sure where to start – first I am not an attorney, I didn’t attend law school, I “Lived” Law (experience) It’s not theoretical to me. ;-)
I’ve only done Creative Finance Deals. I have not done any “Traditional Investor” deals. I’ve actually been involved in creative real estate cases (suing and being sued) in Small Claims court in two states multiple occurrences, in Superior Court in two states multiple occurrences in each state, Bankruptcy Court (which is Federal Court) multiple occurrences, and 9th
Circuit District Court of Appeals (which is also Federal Court) multiple occurrences. I won every case at every level. (using attorneys for the important parts). I read the motions, the replies, the discoveries, the depositions, the briefs and the rulings then the appeals and on and on.
I’ve spent more time in court than most attorneys ever will.
I know how to keep a property from going to foreclosure, how to buy a property in probate, how to buy a property in bankruptcy, how to keep a bankruptcy from being dismissed to save a property from going to sale, bankruptcy adversarial suits, and how banks, foreclosure and bankruptcy play the finance fiddle together. And what they want.
That is not to brag nor something I wanted to spend my time doing. That is just to say, when the need arises “I don’t settle, I fight”. And, I’m being a nice guy about it in the process.
The biggest case was $2,000,000 and ran from when I bought the property in August of 2001 just days before 9/11 through each court level and finally ended in July 2012 after Court of Appeals remanding to Bankruptcy Court. Very, very complex. It took about 11 years. It’s a long story. ;-) He claimed he never signed the Deed and therefore it had to be adjudicated. He lost and then appealed. Yes, notary and all that but it doesn’t matter to the judge. I’m open to answering questions on this but I don’t want to give the strategy to other “would be” scammers.
Anyway, I’ve learned a couple of things:
The system isn’t built to follow the “clear law”. Sorry, just a fact. “Depends on what the definition of “Is” is - as someone once said.
Cornell Law publishes the FRCP (Federal Rules of Civil Procedure) – I became very familiar with the “process”.
The Court is patient with you, as a pro se (not using an attorney), when you file motions and briefs so long as you follow the ”process”.
The law gets modified by case law. (Who knew? I didn’t and it got me sued) Law is Nuance.
The case law gets interpreted by the lawyers and judges in opposing ways.
It’s about who argues the “facts” better.
Law is not about being “right” or “fair” it’s about trying to resolve issues and to keep two people from buying guns and shooting each other.
Some of the attorneys I hired didn’t know as much as I did. They had “theoretical” knowledge but not much actual court room experience. That showed. I fired them.
Sometimes race and “diversity” pervert the law.
Anyone can sue anyone anytime for any reason.
You have to prove your innocence.
You unfortunately have to be more strategic than the other side.
.
.Too Long, Didn’t Read Version
.
In a Creative Finance Lawsuit, the words “I didn’t understand the transaction” or “I was tricked” or “I was under duress and I wouldn’t have done it otherwise” or anything like that is enough to get you sued.
One of the worst things you can do is a “table top” transaction and not use title & escrow.
Just because you are sued doesn’t mean you did anything wrong. It has to be proven in court by a Trier of Fact. (Judge or Jury).
A lawsuit can run a year and a half and cost between $25,000 - $50,000 with no guarantee of the outcome
The other side will likely file a “lis pendens” which effectively prevents you from selling the property or borrowing against it until the lawsuit is over. Bummer.
Juries side with the “victim” against the investor, so always go with a bench trial.
Most lawsuits settle, about 98% and a few actually go to trial.
A Creative Finance Lawsuit can be brought by the Attorney General, the DOJ, FDIC, and on and on among others because it involves banks, wire transfers, possible fraud, possible identity theft, possible equity skimming, possible violations of the Consumer Protection Act, Dodd-Frank, ACT S.A.F.E. Act, possible tax evasion and so on. It can become a criminal investigation with severe penalties.
Saying you didn’t know you couldn’t do that (whatever “that” is, does not impress the court.
.
I know, Long, Boring, Tedious and you likely Won’t Read this, to your peril. Oh well.
.
When you get sued, you, your spouse, your LLC, your friend in Slobovia and everybody else are all mentioned in the complaint which becomes public record.
If you don't maintain your LLC according to your Operating Agreement, (What? You don't even Have
an Operating Agreement?) your LLC is worthless. Also, An LLC doesn’t protect you from being investigated for financial crimes anyway.
When you lose people’s money they sue you, especially small unsophisticated, first time “investors”.
You are considered to be a “sophisticated investor” against an “innocent victim”.
When you get sued, the other side will do “discovery” and potentially look at EVERY transaction you’ve done and every detail of your finances and tax returns. Ask me how I know. ;-) You had better be “squeaky clean”. Keep excellent records and don’t fudge & certainly: Know What You Are Doing. I don’t think the original post describes a process that the alleged individual understands the potential consequences of, if that is in fact what they are teaching.
In a Creative Finance Deal, when you use people’s money or put their credit at risk, all of the above consequences can apply to you.
When you don’t disclose your intentions and facts, you subject yourself to fraud and all of the above.
Mis-information (not mentioning pertinent information) on a loan application or lender when needed, can become mortgage fraud. When you hold back information on loans, you are most likely committing financial fraud. The lender has a right to know and to decide if they want to take that risk. You are depriving them of that right. Most bank loans are Federally Guaranteed which makes the omission potentially a Federal Crime.
.
The government was very active in prosecuting creative deals after the great melt-down.
If we go into another melt-down of some sort, they are likely to take an interest again.
I bought a property, as I said, in Aug of 2001. That lawsuit was filed in Jan 2008. That’s 6 ½ years AFTER I bought the property. The Statute of Limitations is 3 years, but the judge let it proceed. Whah?? Yep.
Everybody is a genius when home values are going up. Creative Finance Deals always win, right?
But, as we enter into a down cycle (we just don’t know how bad it will be yet) “experienced” and inexperienced people who have done Creative Finance Deals can find themselves underwater and missing payments and in deep trouble with the law.
That is why you don’t or shouldn’t do the things this Post was originally opened about.
There are legal and ethical ways (that have survived legal scrutiny) to do Creative Financing. I’d stick to those ways.
I haven’t yet but am actively offering that way. Hopeful to do my first deal in that manner soon.
did you end up doing one of these?
Oddly, several people post about how exciting the learning they paid the $8,900 mentor program is, but no one seems to have done a deal or made money from it. Very curious indeed.
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Jay Hinrichs
I agree. These newbies don’t realize the reason many got in trouble 15 years ago was 100% financing and real estate prices dropped and these loans were to unqualified people
Basically this is the same thing as these people are not qualified to own a home but paid $10k on some course that most likely sells a lifestyle and some fairytale scenario that occurs once in a blue moon.
I agree. These newbies don’t realize the reason many got in trouble 15 years ago was 100% financing and real estate prices dropped and these loans were to unqualified people
Basically this is the same thing as these people are not qualified to own a home but paid $10k on some course that most likely sells a lifestyle and some fairytale scenario that occurs once in a blue moon.
“Nothing down” is a possible and legitimate way of structuring a real estate transaction, IF, there’s full disclosure to all parties involved and structure of the transaction is not merely a way to try to work around the problem of mortgage fraud. In my mind, at least, this eliminates this “send $650k to the title company with instructions to send it back to you”. In the old days this was known as “flash money”.
“No down” is a real misnomer. If a buyer has good credit he can get a personal loan to buy a property, and hence “nothing down”. Further, if a buyer has a great reputation, strong financial statement, and is just temporarily cash short, I’d consider selling a property I own to him for “nothing down”. What the gurus are trying to sell is someone with marginal borrowing capacity, little cash, and no experience being able to use “the (name of guru) method to purchase unlimited properties using none of their own money, with bad credit and no experience. Perhaps those people ought to instead try something easier; like performing cardio vascular surgery.
Now’s where the unknowledgeable, the dreamers, and the people with a vested interest in people buying $25,000 mentorship’s chime in that I give terrible advice and I just want to kill someone’s dream. No, I’m just trying to save them from wasting $25,000 and 6 months time on something that won’t work, and if it did would probably put them in a precarious legal position. But then again I don’t have a vested interest in their buying in to the hype.
The other side of the “nothing down” methodology is that in many, if not most instances, being able to put together a nothing down deal results in paying over market value for the subject property, or over market interest rate for the financing. When I sell a property with owner financing I want an interest rate of 2-6 points higher than the Lowest commercial rates. And a price that’s a 10-20% premium over what I could sell for cash. It would seem very unlikely to be able to structure the purchase of a desirable property, at a market or below market price, with a true nothing down” transaction, and not have a heavily negative cash flow. Could it be done? Sure, about one in 2000 times, by someone experienced enough to recognize a very unusual situation, having the capacity to act on it, having the financial strength, experience and tract record to be able to attract the needed capital, having the knowledge and ability to structure the deal, having the ability to manage and or reposition the property after purchase, and having the capacity to carry the negative cash flow until turning the property around or obtaining lower cost financing.
Columbus, OH · Member since 2023 · 427 posts · 254 votes
3y
Having a good title company, good title insurance, and clearly communicating to the title company how the transaction will look from start to finish is key to the viability of this deal.
"What the gurus are trying to sell is someone with marginal borrowing capacity, little cash, and no experience being able to use “the (name of guru) method to purchase unlimited properties using none of their own money,
with bad credit and no experience. Perhaps those people ought to instead try something easier; like performing cardio vascular surgery."
You summed it up in brilliant fashion.
*********************************************************** "Subject To" is not the place to start an investing career. Subject To comes much, much later.
Save the Guru fees, Mentor fees, and invest, instead of gambling with someone else's credit and life.
I haven’t yet but am actively offering that way. Hopeful to do my first deal in that manner soon.
did you end up doing one of these?
Oddly, several people post about how exciting the learning they paid the $8,900 mentor program is, but no one seems to have done a deal or made money from it. Very curious indeed.
It's like church (use to be a minister) I use to call it copy paste syndrome, people listen and spit out their excitement of what they listen to. But no results, improvements, changes in their life habits. Subconscious worship (admiration) for the individual and its message. Vs the ones, the individual that went home study the word, put the methods to practice and elevated. Grain of salt dear friends. For newbies your goal should be read as many forums and self-development books as possible and take action, then a year or two later of non-stop action you will know if your next step is to expand your networking. Getting into real live action (not meta) will connect you to your next real partners, and new stream of income strategies. Shoot, maybe even start selling your own coaching courses to the ones that are in your current position in the future lol. Best wishes.
I haven’t yet but am actively offering that way. Hopeful to do my first deal in that manner soon.
did you end up doing one of these?
Oddly, several people post about how exciting the learning they paid the $8,900 mentor program is, but no one seems to have done a deal or made money from it. Very curious indeed.
It's like church (use to be a minister) I use to call it copy paste syndrome, people listen and spit out their excitement of what they listen to. But no results, improvements, changes in their life habits. Subconscious worship (admiration) for the individual and its message. Vs the ones, the individual that went home study the word, put the methods to practice and elevated. Grain of salt dear friends. For newbies your goal should be read as many forums and self-development books as possible and take action, then a year or two later of non-stop action you will know if your next step is to expand your networking. Getting into real live action (not meta) will connect you to your next real partners, and new stream of income strategies. Shoot, maybe even start selling your own coaching courses to the ones that are in your current position in the future lol. Best wishes.
Once a minister, always a minister. Thanks for your service.
As someone said, "It took me 20 years to become an overnight success".
