All Forum Posts by: Account Closed

@Jason Harris I put together a comparison of traditional financing and Subject To. You can take a look at it here to see how it flows:

https://www.biggerpockets.com/forums/311/topics/46...

I was asked by a couple of people to compare doing a Buy & Hold Rental using conventional financing and buying Subject To with selling to a Tenant Buyer and what that would look like.

This is an actual deal I recently did. I bought a 4 Bed 2 Bath 2000' property in a decent neighborhood in Mesa AZ that was built about 1985.

In this Spreadsheet I am comparing:

OPTION: 1 Conventional Financing for "Buy & Hold" for a Rental  vs

OPTION: 2 using "Subject To" and Reselling to a Tenant Buyer

OPTION: 1 As a Rental, the Kitchen and Bathrooms needed updating requiring about $5,000 of work in order to be ready to be a Rental. From the Renter I would get first month’s, last month’s and deposit. I would have to have a loan from a bank with 20% down or about $45,000 to qualify.

OPTION: 2 Selling it to a Tenant Buyer requires no rehabbing on my part. The Tenant Buyer will do (or not) the rehab to their liking. From the Tenant Buyer I get an Option Payment of $25,000 and a rent payment when they take possession. There is no deposit. Here I simply take over the existing loan and payment & need about $15,000 “Cash on Hand” to cover expenses & reserves etc. I can sell the property for more because he doesn’t have to qualify at a bank and will pay a slight premium.

Let’s see how the numbers work.

The Canadian Real Estate Association says home sales in June posted their largest monthly drop since 2010, with the Greater Toronto market leading the decline.

This is the third monthly decline in a row...

http://www.zerohedge.com/news/2017-07-17/canadian-home-sales-crash-june

@Daniel J. If I remember correctly, restaurant managers work long hours in the evenings and weekends. That makes it a little hard to be available when most people want to meet. You'd be a good candidate for doing some joint ventures to get your feet wet. Once you have some experience you can quit and go full time.

The photo is amazing. Where do they place the Sani-Cans?

 Just curious, how do you buy a property for $65k and two years later sell it for $65k and stay happy? Aren't there real estate agent costs, closing costs, and time value of money considerations? What am I missing?

@Nam Nguyen I haven't bought any turn key but two different people who have approached me to do "Subject Tos" have 5 properties between them, in Memphis, Dallas, Phoenix and Casa Grande and all of the properties are now negative cash flowing and have problems with the renters. I suspect that since they were newbies at the time, they didn't understand the investments, but now they want out. Both told me in separate meetings that they heard the market was hot and wanted something they didn't have to worry about. They wanted "in". Well, they are "in". Just be sure you understand the turn key investment and make sure that it is positive cash flow and that if it is out of state, it is problematic. By the way, both people said the companies they dealt with were honest and easy to work with. They just didn't understand what they were getting into.

@Caleb Heimsoth In your situation, if I had a brother come to me and say they had an opportunity to do the project together, I'd jump at it. It is so much fun when brothers can work together. Just tell him you have the opportunity but not the money and you'll split it 50/50 and you'd love to learn what he knows. The rest will just happen if he is any kind of good guy.

Using Subject To is a relatively safe way to invest in real estate if a bubble concerns you. It is little money in and like any other investment, when done PROPERLY, ( you've got to know the actual technique not just think you know) it gives the returns you are asking about, safely and with great cash flow to boot. You could lend HML and get a great return.

As an investor, if a wholesaler approaches me with their own contract I simply ask them to use the TREK form. It's the one I am familiar with and as has been already stated, lawyers have gone over it thoroughly. It is well accepted and easier to get through escrow.