All Forum Posts by: Account Closed

Account Closed has started 141 posts and replied 4068 times.

Quote from @Account Closed:

Subject To is definitely NOT a “No Money Down” technique”, Here’s why . . .

The obvious question is: "How Do I Keep Finding These Smokin' Deals"

It costs money to locate a willing seller. One of the largest wholesalers in Phoenix says it takes them $2,220 to get a wholesale that closes. It’s about the same for securing a Subject To. Think about the time and money you put into marketing. I do it for a lot less than that, but I’ve streamlined the process. Yet, $2,220 is the normal.

Here is an example of a Subject To I did, in foreclosure, bringing their loan current, taking over their loan and giving them “cash out”, they had a previous loan mod as a 2nd loan. Think of it this way, if they aren’t paying their mortgage, chances are they don’t have money to move, which creates a problem. So, give them money to move.

Bought for $157,100.38 ***

***

ARV

$245,000.00

5 bed 3 bath – Phoenix AZ

These are the numbers from the HUD statement

Bought for $157,100.38 ***	*	ARV	$245,000.00
Existing Loan Amt Payoff $118,145.37	*	Subject To	$118,145.37
****
Closing Costs From HUD
Title			$1,045.00
Escrow			$1,400.00
County Taxes			$538.38
Recording Fee			$120.00
Cash to seller			$10,000.00
Misc other charges			$525.00
Total Amount Due $			$13,628.38

***
Arrears To Bring Account Due
	Total Number of Missed Payments:	11
	Total Payment Amount	$10,095.47
	Unpaid Late Charges	$146.84
	Additional Amounts:
	Foreclosure Fee/Cost	$354.19
	Unpaid Advance Bal	$1,101.75
	Total Amount Due $	$11,698.25

***
	FHA Loan Mod 2nd		$11,582.44
***
	My Out of Pocket		$36,909.07
***
	Total Cost Basis of Purchase		$155,054.44
	ARV (After Repair Value)		$245,000.00
	Repairs Post Purchase		$ 5,000.00 +/-
	Unrealized Profit		$84,945.56
***
	Equity (ARV minus Subject To payoff)	$126,854.63
***

I strongly recommend having 3 months reserves as follows:


	Monthly Mortgage		$917.77
	(Taxes included)
	Electric Monthly		$362.21
	Water & Sewer Monthly		$102.80
	HOA – None		$0

Reserves

3 months mortgage payments @ $917.77 per month = $2,753.31

3 months Electric payments @ $362.21 per month = $1,086.63

3 months Water payments @ $102.80 per month = $ 308.40

Minmum Reserves Total $4,148.34

Then I turned around and sold it on a Lease Option for $265,000 getting $20,000 down on a nonrefundable Option fee, and rent of $1,900 a month.


***
	My Out of Pocket		$36,909.07
	Option Fee To Me		$20,000.00
	My Adjusted Out of Pocket		$16,909.07
* *	My Cash Flow	*	$ 982.00 monthly

So, I sold it for $20,000 more than street value, I get tax write offs, I got $20,000 back immediately as an Option fee, I cash flow at $982.00 a month and if they exercise their Option, I’ll get $146,854.63 (minus the $20,000 Option fee) equals $126,854.63 cash along with any pay down during their Option period. If they don’t exercise their Option, I’ll do another Lease Option.

That’s why you need money to do Subject To, the right way, wisely & legally.

If you would like a copy of the spreadsheet so you can calculate your potential profit when you do Subject Tos, and how much money you should be working with, send me a DM with your email address (don’t post it here, that’s crazy to do ;-) ) and I’ll send you the spread sheet.

No matter what you have heard, there are still a lot of properties out there with owners who will consider Subject To and Seller Finance, you just need to know to find them.

I just posted another in Atlanta

0 Votes

Quote from @Ivorie Walker:

Hi! I’ve been diving into creative financing, reading all the books/posts, listening to all the podcasts, and watching all the videos. But I have specific questions about the steps that I can’t find the answers to. Hoping to get some help here:

1. Is the paperwork needed from the seller the purchase contract plus addendum/disclosures, authorization to release information form, limited power of attorney, and promissory note? Anything else?

2. What specific information do I need to get to do my due diligence after I have the Authorization to Release Info and Limited POA forms? Just mortgage balance, interest rate, and switching the insurance?

3. How long does it usually take to close one of these deals? Do both the seller and buyer need to be there? How does it work if I’m acquiring a property out of state?

4. I feel like this is a dumb question but is it recommended to get an inspection? Do you also get home warranty? Termite inspection?

5. Age old question of to get an LLC or not. Is there anything special about subject to and seller financing that would make you lean one way or another as far as purchasing under an LLC? I've also seen people recommending trusts. Thoughts on this?

6. For subject to, do I simply switch the bank account from which the funds are drawn? For seller financing, what form of payment are you typically using to pay the seller?

7. What happens once the seller is paid off? Does this get recorded?

Thanks in advance. I’m really trying to nail down the details of this strategy and hope this thread helps someone else as well.

@Ivorie Walker: Those are intelligent questions. There are many more questions you don’t know to ask yet, but let’s deal with these.

We train people on this from A to Z to keep people from geting sued.

1. That is pretty much the minimum list. The important thing is to know why they are necessary and what they do.

2. You need a title report and to go through escrow.

3. I’ve closed a Subject To in a few days and I’ve had some take a couple of months. There are a lot of moving parts. A lot of escrow companies have gone to remote signings since Covid.

4. I’ve never had an inspection. I buy it “as is” for the value it is worth “as is” to me.

5. Yes, it's good to have an LLC but not for the reasons people think. It helps you to treat it as a business and when the IRS audits you, that's important. It doesn't protect you or give you tax write offs.

6. You can set up direct payment from an LLC account.

7. The bank will file a “release” once the borrowed money is paid off.

Here's one: What will you do when the Due on Sale gets called and you have no equity and no money? Why is that a serious problem for you?

There are correct answers to this problem but it isn't being taught by any of the "gurus" I've run into, no matter what "pace" they are teaching it at. :-) They ignore the problem or give a really bad solution that actualy makes the situation worse.

Get properly trained. Subject To is a loaded gun, you need safety training.

1 Vote

Charlotte, North Carolina

Quote from @Amanda Rouse:

Hi,

I am trying to find a best win-win for a distressed landlord who owes about $300k on their house through a VA loan. I want to be sure the options I present are protecting them and myself.

My understanding is that most VA loans do not carry a "due on sale" clause, so the options I am considering to start were to do a mortgage transfer, or have the owner seller finance.

I am curious, if we go the seller finance route, what are the possible implications or options for the owner’s preexisting loan?

I appreciate any input! Thank you!

Amanda

I suppose you should train the attorney who says "

"The Due on Sale Clause can be found in most mortgages and simply states that a loan is due in full upon the sale or transfer of ownership of the secured property."

https://alblawfirm.com/case-studies/due-on-sale-clause/

0 Votes

Quote from @LaBonnie Wells:

Need a mentor and partner my name is LaBonnie Wells

Wells, (pun intended) LaBonnie, what is it you are wanting to accomplish?

0 Votes

Tampa, Florida

Quote from @Robert Fry:

Hello all. I am looking at options in the near future to take the house my parents currently own off their hands as they will be moving to a new state in the next couple of months. My goal is to eventually own the house and rent out the rooms. I am trying to find the best way to do this so I eventually own the property out right. It would be a house hack. Any ideas would be great, thanks!

If they have lived there for 2 of the last 5 years, they could do Subject To, Contract for Deed, and probably get the tax exemption. Their loan would not be paid off, you would make the payments. If they don't qulaify for the exemption, probably a renewable lease option. If you inherit the property eventually, they are not taxed and you are not taxed.

0 Votes

Quote from @Michael Adrales:

Hello Everyone,

I'm new to real estate and currently trying to absorb as much information as I can about the various types of real estate investment strategies. The strategies that most interest me currently are house hacking, BRRRR, and wholesaling. If you could tell me more about any of these strategies or are new to real estate yourself feel free to reach out I'd love to connect with you. I live in Ames, IA but am from Bettendorf, IA originally and travel home frequently.

Excited to start this journey,

Michael Adrales

I've actually been to Bettendorf, in Febuary, in a white out. But, had a great steak at the restaurant on the cliff overlooking the river, if the restaurant is still even there.

What questions have you got?

0 Votes

Des Moines, Iowa

Quote from @Lily Miller:

I signed up Propstream and started texting offers, and I got my first lead. The seller is going to call me, and I don't know how to close. I need help! Should I contact "constant close" that I have seen on youtube? It is the best not seller know this is completely new to me, isn't it?

This seller's info: pre-foreclosure on 2/23/22. Equity 35%

I started texting pre-foreclosre houses.

Generally it takes $10,000 to $20,000 cash to bring a pre-foreclosure current. Do you have that amount of money available? Then they will need moving money and you will need to make the mortgage payments, all if they are even willing to do Subject To. Otherwise you will be paying off the entire loan. If they refuse to move out after you have brought their loan current, that becomes a nightmare.

Are you well funded?

0 Votes

Philadelphia, Pennsylvania

Quote from @Philip Traynor:

I spent over 11 years representing major and regional banks in various default and foreclosure cases, handling several thousand cases per year. In that time, I saw a total of three loans get called for the "due on sale" clause. All three were true transfers to different people that basically amounted to unapproved assumptions. I have seen dozens of cases where borrowers transferred a property into their own LLC or trust, and I have never heard a first hand account of a lender calling the loan for that. The absolutely have the right to do so, but I've never seen it.

@Philip Traynor: Any opinion on the following video clips?

I've been buying on Subject To for 30 years, in fact many of the properties I bought Subject To were in the last stages of foreclosure. I've had 2 DOS called in 30 years. Like you, I'd say that it's rare. Then this:

This guy says a few weeks ago
"Yes, I've had the Due on Sale called on me 10 times" - those are recent and he goes on to say he has a dozen or 2 dozen students who have had the Due on Sale called on them recently.

Click to enlarge

Then he goes on to say "the bank doesn't care if you buy the house subject to"

So, he goes on "if the due on sale gets called" deed it back to the seller and do an "executory contract because it gets rid of the Due on Sale clause altogether"

and he says "20,000 of those members are actual trained students of mine"

They paid big money for this "training".

(I don't think he understands what he is doing)
*************

So, when I read the Due on Sale clause it says this:

18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.

If all or any part of the Property or any Interest in the Property is sold or transferred

0 Votes

Quote from @Tom Hall:

Quote from @Account Closed:

Quote from @Tom Hall:

I need someone to explain to me, why it is a GOOD/BAD time to buy a house? most people say the price of the houses wont go down why? Price of the house s will go up why ?

I know there are a lot of petty casual answers to this but i want to learn more about todays market and what's gonna happen IN YOUR OPIONION based on your past real state buy and sell experience...

So, did you find a house?

Thx for following up, still in the process I was outbit the first 2 times by 93k and 73k.

It is hard to believe that people are offered 93k above the asking price but it is what it is happening. This market is insane

You might find there is more profit and less competion at https://www.biggerpockets.com/forums/311/topics/1166342-with...
But you have to be able to make decisions. These go away fast.

0 Votes

Quote from @Sino U.:

Honestly, I thought I would go ahead and start with Columbus market and based on some of the data that I have seen it made sense. Now I am just not sure. I guess for few reasons;

1) fear of out of state investing - yes I have read all the posts about how some oos investors made it, podcasts sharing their stories and etc. My issue is finding it hard to believe someone's be it realtor or PM word oh how they can help and etc.
2) Realtors - I mean based on my few interactions, they all seem to be enthusiastic and stuff but when you jump on call it's like YES and NO answers and pretty much.

For those who started with out of state investing I would love to hear some of your advice that you can give to me.

Cheers.

This might get you started
Time Wasters: Lurking & Never Getting Started – Never Buying https://www.biggerpockets.com/forums/311/topics/1166874-time...

1 Vote

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All Forum Posts by: Account Closed

Account Closed has started 141 posts and replied 4068 times.

Post: Subject To – Why You Need Money To Buy Using "Subject To" (SubTo) - Safely, Legally

Post: Specific Subject To Questions

Post: Distressed landlord with VA mortgage

Post: Real estate investing

Post: Creative Finance Strategy To Buy From Parents

Post: New to Real Estate, Excited to Learn!

Post: I need help! I got my first lead and don't know what to do NEXT.

Post: Quick Claim deeds: Moving Rentals to an LLC

Post: why it is a good / bad time to buy house?

Post: Feeling Unmotivated and Lost