Subject - to: Marketing suggestions and expertise needed
Investor · Vancouver, WA · Member since 2012 · 194 posts · 125 votes
Hi folks,
I am a successful lease option wholesaler, but I'm interested in branching out and expanding into buying and holding homes utilizing subject-to as my finance vehicle.
In doing so, I need help with effective marketing, that is also cost effective. I currently have a 3 part voice blast campaign to all expired listings within a 75 mile radius, but that isn't bringing enough deals. I am about to begin voiceblasting absentee owners very soon as well. And last but not least, I bought 100 bandit signs and will be placing them in vacant homeowner's yards in my zipcode very soon (a suggestion from Dwan Twyford)... and I will eventually put out 300-400 per month in vacant homeowner's yards if this first batch proves to be successful.
Can anyone else suggest any other forms of marketing specifically targeting no money down owner financing?
@Curt Smith, to be perfectly honest, I haven't been using this at all yet... because I'm not entirely sure how to target good sub2 leads. I'm putting bandit signs in vacant yards within a week so that's my start, but I think I'm going to use @Michael Quarles's suggestion and direct mail low equity folks after I set out a few rounds of bandit signs.
And the point of this memory? It produced how many deals and at what cost?
K.Marie Poe I can only think of two deals that I can tie directly to my gift of Pencils to children who needed them. Its strange how marketing works...
However I didn't give the pencils with the expectation of creating a direct gain from them. I just happen to believe in the basic rule of success through giving.
Some may believe that catering lunches for teachers or buying Christmas gifts for classrooms of children, even giving pencils away isn't marketing. However I think that anytime I can promote my business and create smiles at the same time I have done my job.
As for my point.. I was trying to express the importance of thinking outside of the box when marketing.
@Account Closed
If you don't get a discount then you let them foreclose. That's in the agreement with the seller, the fact that you have no control over getting the lender to accept a payoff. That's why I prefer house debt that was eliminated in BK. The eventual foreclosure doesn't harm the post-BK credit.
Hello K .Marie
I recently downloaded an ebook (Gonzo) that was based on the subject 2 concept, but I got stuck on how to tie the property up while talking to the note holders about buying the note or lien at a discount. Do you use an option agreement with a special warranty deed or Quit claim deed in your agreement with the seller ? Thanks :)
If you don't get a discount then you let them foreclose. That's in the agreement with the seller, the fact that you have no control over getting the lender to accept a payoff. That's why I prefer house debt that was eliminated in BK. The eventual foreclosure doesn't harm the post-BK credit.
Hello K .Marie
I recently downloaded an ebook (Gonzo) that was based on the subject 2 concept, but I got stuck on how to tie the property up while talking to the note holders about buying the note or lien at a discount. Do you use an option agreement with a special warranty deed or Quit claim deed in your agreement with the seller ? Thanks :)
I'm not trying to buy the note. I think the chance of institutional lenders selling me the notes is very slim, so I'm negotiating a payoff as an owner.
I do a purchase agreement that says what I'm going to do and get a deed (not a quit claim, which btw, one of the lenders told me "they don't recognize"). I also get an authorization to release info from the borrower so I can talk to the lender about the loan.
@Account Closed Thanks for your responce I Understand the Purchase agreement & authorization to release but, how do you "get the deed" before you know if the lender will settle for less than what is owed ? Thanks again for your time.
The seller signs the deed, not the lender. I don't wait to know if the lender will sell for less than owed. That's what a short sale is for. I don't do short sales. I buy the property subject to the existing debt and all title issues. And with the risk that the lender won't settle. Not for the faint of heart.
The seller signs the deed, not the lender. I don't wait to know if the lender will sell for less than owed. That's what a short sale is for. I don't do short sales. I buy the property subject to the existing debt and all title issues. And with the risk that the lender won't settle. Not for the faint of heart.
This is the part I always wondered about. I know you are a smart lady, but no matter how smart you are you can never know what a lien holder will accept to release a lien. What do you do if lien holder won't discount, just suck it up and pay the negative? Somehow I think not.
@Account Closed I have read many of your posts & concider you a very smart person. Thanks for taking time out of your day to answer my questions :)
Mark G
The seller signs the deed, not the lender. I don't wait to know if the lender will sell for less than owed. That's what a short sale is for. I don't do short sales. I buy the property subject to the existing debt and all title issues. And with the risk that the lender won't settle. Not for the faint of heart.
This is the part I always wondered about. I know you are a smart lady, but no matter how smart you are you can never know what a lien holder will accept to release a lien. What do you do if lien holder won't discount, just suck it up and pay the negative? Somehow I think not.
Correct, I would not pay the negative. So far the properties I've discounted were massively over encumbered. Additionally all the borrower's I've worked with had their house debt eliminated in BK. Not sure I'd be willing to do one without the BK to be honest. My purchase agreement discloses to the seller that foreclosure is a possibility and that I cannot guarantee a lien release.
So without a lien release deal with the lender, I'd let it foreclose. I'd lose any money I'd paid the seller and any other expense I paid on the property (in order to get the deal--HOA liens and judgments, etc.). So far, I haven't been in more than $5K.
The seller signs the deed, not the lender. I don't wait to know if the lender will sell for less than owed. That's what a short sale is for. I don't do short sales. I buy the property subject to the existing debt and all title issues. And with the risk that the lender won't settle. Not for the faint of heart.
This is the part I always wondered about. I know you are a smart lady, but no matter how smart you are you can never know what a lien holder will accept to release a lien. What do you do if lien holder won't discount, just suck it up and pay the negative? Somehow I think not.
Correct, I would not pay the negative. So far the properties I've discounted were massively over encumbered. Additionally all the borrower's I've worked with had their house debt eliminated in BK. Not sure I'd be willing to do one without the BK to be honest. My purchase agreement discloses to the seller that foreclosure is a possibility and that I cannot guarantee a lien release.
So without a lien release deal with the lender, I'd let it foreclose. I'd lose any money I'd paid the seller and any other expense I paid on the property (in order to get the deal--HOA liens and judgments, etc.). So far, I haven't been in more than $5K.
Bk (13) wipes out unsecured debt and restructures secured debt, so, you take grant deeds on property with already restructured debt that have *positive* equity and try to discount liens further? And if further negotiations do not result in desired margins you let lien holders foreclose?
A subsequent foreclosure hits previous owner's (seller) credit new owners (you) credit, I get that, and I guess the possibility of foreclosure disclosed in the purchase agreement relives you of responsibility to pay debts as new owner?
Sometimes the way I write sounds critical, if so, I'm not trying to be. Just trying to understand:)
I know some folks that do this quitclaim back to debtor (borrower, previous owner, whatever you want to call them) if unable to negotiate adequate discount, do you ever quitclaim back?
@Account Closed I've only worked sellers who eliminated their house debt in Ch. 7 BK. No equity so trustee abandoned asset. No reaffirming and no restructuring. Foreclosure does not affect post Ch 7 BK credit.
Re foreclosure and my credit: I'm not the borrower. So unless the lender were to go judicial and name me in the suit, a trustee's sale doesn't report against my (or the purchasing entity).
Never even thought of deeding back. I bought it, I'll deal with it or the lender will sell it at trustee's sale.
@David C. I've only worked sellers who eliminated their house debt in Ch. 7 BK. No equity so trustee abandoned asset. No reaffirming and no restructuring. Foreclosure does not affect post Ch 7 BK credit.
Re foreclosure and my credit: I'm not the borrower. So unless the lender were to go judicial and name me in the suit, a trustee's sale doesn't report against my (or the purchasing entity).
Never even thought of deeding back. I bought it, I'll deal with it or the lender will sell it at trustee's sale.
I'm not familiar with Ch 7.
If the trustee has abandoned the asset, it must still carry all the secured debit, so how does "Additionally all the borrower's I've worked with had their house debt eliminated in BK." figure into it?
You say "Foreclosure does not affect post Ch 7 BK credit". A foreclosure is going to show on borrowers credit, BK or not, no?
Account Closed I've only worked sellers who eliminated their house debt in Ch. 7 BK. No equity so trustee abandoned asset. No reaffirming and no restructuring. Foreclosure does not affect post Ch 7 BK credit.
Re foreclosure and my credit: I'm not the borrower. So unless the lender were to go judicial and name me in the suit, a trustee's sale doesn't report against my (or the purchasing entity).
Never even thought of deeding back. I bought it, I'll deal with it or the lender will sell it at trustee's sale.
I'm not familiar with Ch 7.
If the trustee has abandoned the asset, it must still carry all the secured debit, so how does "Additionally all the borrower's I've worked with had their house debt eliminated in BK." figure into it?
You say "Foreclosure does not affect post Ch 7 BK credit". A foreclosure is going to show on borrowers credit, BK or not, no?
Sorry, I'm not explaining it well. The foreclosure shows on the credit report. But my understanding is that that as long the house debt was included in the BK and the creditor notified, that the foreclosure isn't a ding.
The borrower is relieved of the personal responsibility for the house debt. The secured lender is only entitled to foreclosure to recover the collateral. There can be no def. judgment.
@David C. I've only worked sellers who eliminated their house debt in Ch. 7 BK. No equity so trustee abandoned asset. No reaffirming and no restructuring. Foreclosure does not affect post Ch 7 BK credit.
Re foreclosure and my credit: I'm not the borrower. So unless the lender were to go judicial and name me in the suit, a trustee's sale doesn't report against my (or the purchasing entity).
Never even thought of deeding back. I bought it, I'll deal with it or the lender will sell it at trustee's sale.
I'm not familiar with Ch 7.
If the trustee has abandoned the asset, it must still carry all the secured debit, so how does "Additionally all the borrower's I've worked with had their house debt eliminated in BK." figure into it?
You say "Foreclosure does not affect post Ch 7 BK credit". A foreclosure is going to show on borrowers credit, BK or not, no?
Sorry, I'm not explaining it well. The foreclosure shows on the credit report. But my understanding is that that as long the house debt was included in the BK and the creditor notified, that the foreclosure isn't a ding.
The borrower is relieved of the personal responsibility for the house debt. The secured lender is only entitled to foreclosure to recover the collateral. There can be no def. judgment.
Purchase money loans in CA are non-recourse, BK or not. What makes a property abandoned by the Ch 7 BK trustee any different that any other overencumbered property?
I thought CA's one action rules allowed the lender choose to do a judicial foreclosure on purchase money loans and thus pursue a def. judgment. If that's not the case, then you're right, BK makes no difference for my purposes or the sellers.
Nope. Got it backwards. Never any recourse on purchase money in CA. Extension of credit may seek the security. Hard money (as defined by CC and other codes) may allow releasing the collateral and getting an AJ for a deficiency. One action rule relates to judicial of non-judicial action, in my experience.
@Rick H. Thanks for straightening me out. I just reread Nolo's outline for obtaining def. judgments and it says that def. judgments are allowed after judicial foreclosure. But that they are not allowed on 1-4 unit owner occupied property loans (purchase money) and seller carry backs.
What about when the borrower moves out and it is no longer OO? Is def. judgment still barred?
@Account Closed undefined
Could if be a property in Ch 7 Bk has other types of liens that get wiped out and/or become non-recourse that makes it attractive for you to pursue?
Could if be a property in Ch 7 Bk has other types of liens that get wiped out and/or become non-recourse that makes it attractive for you to pursue?
Absolutely. The debtor in a Ch. 7 is walking away from all kinds of liens and judgments (and debt that can no longer be turned into liens and judgments). That makes getting the deed pretty clean, title-wise. Where the debtor isn't relieved is HOA dues and fees starting the day after they file BK. As well as any abatement liens and property taxes, which are attached but that people seem to worry about anyway. Those two things are getting me calls from owners who still own property that they walked away from and that the lender isn't foreclosing on.
Absolutely. The debtor in a Ch. 7 is walking away from all kinds of liens and judgments (and debt that can no longer be turned into liens and judgments). That makes getting the deed pretty clean, title-wise. Where the debtor isn't relieved is HOA dues and fees starting the day after they file BK. As well as any abatement liens and property taxes, which are attached but that people seem to worry about anyway. Those two things are getting me calls from owners who still own property that they walked away from and that the lender isn't foreclosing on.
Now things make sense. Thanks!
Can you provide a scenario?
Person buys an SFR, refinances the original loan, gets a cash out 2nd, moves and turns house into rental?
Could lender abandon the security and get an Judgment on debt? Don't see why not.
Is this what you're referring to?
Sorry to get off topic, but K. Marie, I love this strategy. How do you market to them? Just pull a list of recent BK7's that own homes from a list broker and mail them all? Can you get a list of ones that dont reaffirm a mortgage?
Sounds like a great niche and pretty easy sale. I used to market to foreclosures back when people had equity and those people didnt think twice about deeding me a house for the most part. If they are post BK7 and just want to walk, they dont really have much to lose deeding the house to you.
What kind of discounts are you getting from the lenders? Are you building a rental portfolio or flipping them?
To the OP, if you are marketing to Sub2's you want to find a good reason for them to deed it to you, I found foreclosures pretty easy. I'd pay the arearages and just take over the payments. Lots of competition there, though.
If you market to frustrated folks without much equity you'll probably get some hits if you find people with a real need to sell, but you're going to have a little more effort explaining the subject to process to them, and just know that everyone they talk to is going to tell them not to do it. You'll want to start building a credibility kit and getting some references, etc. to overcome all that stuff. Up to date homeowners in nice areas are generally very concerned with their credit, I dont know that just marketing to low equity folks would be enough, but I haven't tried it in a while. I'm pretty lazy, I like to market to people with high motivation so I'm not trying to talk anybody into anything when it comes time to sign papers.
Person buys an SFR, refinances the original loan, gets a cash out 2nd, moves and turns house into rental?
Could lender abandon the security and get an Judgment on debt? Don't see why not.
Is this what you're referring to?
The above seems like a good example to me of how purchase CA money loans aren't always non-recourse.
Sounds like a great niche and pretty easy sale. I used to market to foreclosures back when people had equity and those people didnt think twice about deeding me a house for the most part. If they are post BK7 and just want to walk, they dont really have much to lose deeding the house to you.
What kind of discounts are you getting from the lenders? Are you building a rental portfolio or flipping them?
I've only done a few so far. They came my way via my other marketing to tax defaults and/or abatement liens. In spite of my recent efforts to actually target Ch. 7 BKs with such properties, I haven't gotten any that way yet. I"m submitting a lot of info to the lender when negotiating the discount. Multiple repair quotes and all related debt info. They are settling for numbers that work for me. But if the properties were required to be listed, as in a short sale, I doubt I'd get the discounts that work for me. So far I've sold them as retail rehabs. The right one might be worth refi-ing and keeping.