All Forum Posts by: Jason B.

Hi Dominic. My brother, Nick Bridges, is a broker serving primarily Madison and st Clair counties. My father, Nick, and I have been partners for 20 years in the metro East area. We flip houses and have a rental portfolio in the Belleville area. Nick is probably the most investor friendly broker in southern Illinois. 

Jason

@Gerardo Lewis I use Lima One. They're a hard money lender and they'll work with new investors. You'll need some amount of liquid. 100k is PLENTY for mid range properties. They loan up to 90 +/- of the purchase price and 100% of rehab cost. Individual terms may vary but the property is the collateral. Like most hard money lenders, you need to have money upfront to start the rehab and they will reimburse you as you progress. Maybe you'll spend $20k the first two weeks and then you request a draw to be reimbursed. It's fairly easy. I sent you a connection request. DM me if you want to discuss or send an email to Adam Corona at Lima. Good luck!

@Scott Matthew C. I usually call a local broker office and ask who does bpos in their office. They'll let you know. Try independent brokers first.

@Somer Wheat Find your local meet up group and engage with other investors. Find out what investment strategy they're using and what type of leads they're looking for. Use that info to search propstream or other prospecting process to find potential deals for them. Off market properties are gold. Find the properties that other investors don't know about and you'll become very popular as a bird dog. I'm in a much smaller market than Houston and vacant properties are my bread and butter. I suggest starting with vacant properties as a lead source and work yourself into the deal.

@Bailey Rentz Hi Bailey! After choosing your contractor, have a plan B, and plan C. Those plans could include your 2nd pick contractor, you doing some or all of the work yourself, changing your plan from flipping to renting, or selling to another flipper. Just try not to be caught by surprise. Also visit the site DAILY to stay on top of the project. It helps if you're familiar with the process from demo to finish but you can learn that along the way. Showing your confidence to your contractor helps build mutual respect. Let them do their job but also guide them with your vision. If you see something you don't like, bring it up immediately. Also, stay on top of code compliance if applicable. Permits and inspections are a pain and I hated every single one of them when I first started but you learn they're necessary. Hope this helps. I could go on and on. Good luck! We're all rooting for you.

@Doug Spence I just closed a cash out refi with Lima One. It's my 3rd loan with them so the underwriting was super fast since they already had me approved as a borrower. I'm currently in underwriting for my 4th loan with them which is a fix/flip. I work with Jack McGinness. He and their entire team/system is perfect for me. I'll stick with them as long as they continue to offer great service and terms. Hope that helps. 

Zar Properties is a multi-service preservation company that I've used multiple times personally and I've seen them all over the STL and metro east area. They do trash outs, eviction set outs, lock changes, etc. 

I've used Missouri Registered Agent LLC for the last few years. No issues with them.

@Ciria Y Hinojosa I don't have any suggestions for experts. I got my feet wet with sub to at least 15 years ago and I can't remember the source of info I used at that time. Pretty much just put the pieces together with my team and jumped in. 

Our lease is a separate document from the option agreement so that the tenant is bound by all typical lease obligations just like a traditional tenant would be without the option. The lease doesn't mention the option. We are specific that we are not "rent to own" and they will have no equity in the property including the non-refundable option fee. The option agreement is basic but does state that any default on lease payments or other specific terms of the lease will result in a default of the option and may be immediately terminated. We also don't allow them to sell the option without our approval. Upon execution of the option agreement, the option fee is applied toward the purchase price.

I consider subject to deals as an advanced strategy for RE investing. Of course that doesn't apply to everyone but there are a lot of moving parts and some of those parts can put you in a very bad situation if you don’t structure the deal correctly. Assuming you’ve got the basic concepts of selling, buying, closing, valuation, etc., you must also understand the position you’re in as the middle person orchestrating the transaction. Our deal structure requires that the seller deeds the property to our company which is a huge responsibility considering the seller’s mortgage stays in place. They remain liable for those payments although they no longer own the property. Developing that trust with a seller is the key to getting the deal to work.

You should also have a few months of reserve funds in case you have trouble finding a tenant or lease option tenant/buyer. Our purchase contract gives us 60-90 days to rehab the property, market it, and find a tenant/buyer. The seller pays those 2-3 mortgage payments before we take over the payments. We have multiple disclosures to the seller and also the tenant/buyer who is fully aware that the lender may call the loan due (due on sale clause). We operate with full disclosure to everyone. All of our documents are prepared by a local attorney who is willing to defend them in court. This is a key element to successful sub to deals.

The pros to sub to investing is the ability to take ownership of a property with minimal funds. We generally spend at least a few thousand per property to prepare it for marketing but we specifically look for move in ready or near move in ready properties so that our costs are minimal. Another pro is that we sell to a tenant buyer who pays us a non-refundable option fee, enters into a standard but separate lease agreement (which is key in our area as we don’t want the lease to be tied to the option) providing a monthly positive cash flow, and finally completing the purchase which gives us the balance of our profit.

The cons start with the spooky “due on sale clause” that has been debated for decades. My opinion may differ from many, but we cover ourselves with disclosures to all parties except to the lender. Sellers acknowledge the risk as part of the contract. We use an insurance company that prepares certificates that show the lender and seller are still covered. We’ve yet to be challenged by a lender so far. Do your own homework on this issue. There are plenty of sub to experts that have much more experience that I do and I encourage you to research it yourself.

Another con is simply not being able to put all the pieces together. Another is the amount of responsibility to all parties.

All that said, it’s one of my favorite ways to put a deal together. When it’s done properly, every party involved is thrilled to be a part of it. The seller offloads a property they don’t want. The buyer becomes a home owner in a creative way with time to get their finances in order. And we benefit monetarily for orchestrating it all.