All Forum Posts by: Account Closed

This is the best way I've found toinvest in real estate. i agree " to reduce taxes and maximize profits."

@Guy Gimenez: Lol, you're in good company. I was booted too. I said that buying off the MLS at full cost, using secondary lenders for the down payment, closing costs and cash out was foolhardy. If the Due on Sale clause was called, there was no room to refinance or sell, the seller would have their credit trashed, the buyer would lose the property and the 2nd lender was going to lose everything. I guess that information doesn't sell memberships. ;-)

What you have stated is correct in all of the things that can go wrong with Subject To and there is more that can go wrong. That is one reason I'm adamant about people not over leveraging when they buy properties.

Except my students have been vetted, have substantial capital reserves and in the event of a problem they have a LOC with me or I will buy the property cash. If they are not high income, they must have substantial reserves, or they can't play. Since all of the properties are bought at below value, we've taken those events into consideration.

But beyond that, there are a couple of techniques that work that address the Due on Sale.

"now that Mike has scared you into his camp." - I Hope so. I don't believe in overleveraging ;-) Lol

Even with a Lease Option, he has a contractual obligation to the Optionee he can't afford to violate. So for instance, if the lender calls the note due, he has some of the same issues selling on Lease Option.

@Jay Hinrichs: I know you wouldn't do the following and I sure wouldn't do the following, but the following is the main push by a popular "guru".

I'm working on the assumption he did things the way the popular "guru" teaches, he bought at full price off of the MLS using a secondary lender for closing costs and cash out. (since this "guru" claims it can be done with zero of your own money down)

If there is little equity, and the DOS gets called, the only choice is to sell & bring money into closing. That's a problem, people who use secondary lenders to buy at full price, aren't the ones who have money in the bank to bring into closing. No bank will touch them for refinancing and I don't know any HML that will bail them out either. It's a real problem.

That same “guru” said on one of his recent videos, he has just had 10 Due on Sales called and dozens of Subto students have too. 

He said you have to talk the lender into stopping the DOS, well good luck with that.

Or switch to an Executory Contract. Well, the Due on Sale says:

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

(That's the exact definition of an Executory Contract that he says to switch to if you get the DOS) Banks aren't stupid. They know about Subject To and Executory Contracts.

I’m waiting to hear how those Due on sale calls turn out.

We Solve Subject To Problems

Well, let's look at this from the 40,000 foot perspective. You bought using Subject To.  Let's say you sell on Owner Financing, what happens if the lender calls the note due? You know, the Due on Sale. 

Since you've sold it, you no longer control  the property. What will you do, foreclose on your buyer and take the property back? No can't do that because they've been paying on time. 

If you have a non-paying buyer you have to foreclose and in Florida, that takes a loooong time. After serving missed payments notice, in Florida, it usually takes between 140 to 215 days (4.5 to 7 months) to foreclose

How about paying of the lender. Well, if you can come up with the amount to pay it off in 30 days, that might work.  If you don't and it goes to foreclosure you get sued by the person you bought from for breach of contract, equity skimming and trashing their credit and you get sued by the person you sold to for violating your contract with them. 

I guess at that point the Attorney General looks into things. No, can't go that way, too much at stake. Don't need that kind of attention.

It's situations like these that people hire us to sort out for them and keep them out of trouble. I'm always available for a phone call, just DM me.

What concerns me, among all the other things you mention is "The inspector noticed that the water barely flows through the pipes". Having old plumbing that has been doctored over will cause that problem. It could need an entire plumbing upgrade. (Rusted pipes) And the sewer should be scoped. That could be a hidden problem.

You should check to see if the power box is 200amp and that the wires are copper and that the connections are good.

There is a check-list we provide our students before we let them go and buy a property like this.

It's where you find a property "off market", don't need a 20% down payment or a bank loan, you take over the existing loan, start making the payments and you own the property. You do need some money for closing and reserves and things like that. You then offer it to be Lease Optioned, you get money down from the buyer, usually 10% which you keep or you can buy another property with it. The link directly below explains more. That's all we do. It's learnable.

Creative Finance would work there too. Do you want some info?