All Forum Posts by: Brian Gibbons

Are you using a RMLO re selling to owner occupants seller financing to comply with Dodd Frank?

@Cody L.

Hi @James Hamling

How close is a CFD to a LO?

depends on the state.

You being in MN CFDs are common.  If you are in a contract and default, see 

https://mn.gov/commerce/consumers/your-home/protect/real-estate/contract-deed.jsp

If you are in LO, and it is a lease and seperate option, most courts it is an eviction, unless you sue and claim a "disguised installment sale."  Lease Options according the US Tax court can be construed as a disguised installment sale:

1. The rent should be at or near fair rental value. Breece Veneer & Panel Co., 232 F .2d 319. Get a written opinion of the rental value from a qualified real estate professional.

2. Keep rent credits toward the option price to a minimum. Generally, 20% or less is considered reasonable.

3. The option price should be at or near fair market value. Get a written opinion of the market value from a qualified real estate professional. Breece Veneer & Panel Co., Ibid.

4. Try not to tie-in substantial lessee improvements with the option exercise.

5. Do not pass legal (or equitable) title to the optionee\lessee\buyer.

6. Demonstrate that you intend to do a lease-option and that you believe the rent and option price to be reasonable. See Benton, 197 F.2d, 745; Lester, 32 TC, 711. Use arm's length lease-option documents along with the counsel of qualified professionals.

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If you want home ownership, I would buy on contract for deed, make 12 payments, and refi into permanent FHA financing.

IMHO, contract for deeds are not even close to lease options.  

Equitable interest is a problem selling on a CFD. Lease and separate option no equitable interest when buying.

Dodd frank is involved with selling a lot of CFDs or Wraps to owner occupant.  If selling to investors, no dodd frank.

Dodd frank summary link 

https://www.dropbox.com/s/n8u2...

This is 4 and less units for Dodd Farnk Residential.  Over 4 units Residential, no dodd frank.

No, big thing, sell to an investor on a financing conrtract, no Dodd Frank, only Owner Occupant (aka OO)

Hope that helps

PS in Ohio, they have a WONDERFUL land contract law, for a seller-owner trying to get out a defaulting vendee, 

The law states that, if the vendee has less than 60 payments - 5 years of payments, and under 20% equity in down payment and monthly payments, the owner seller can EVICT instead pof FORECLOSE a defaulting vendee.

See 

https://ohiolandcontract.com/buyer-fails-to-pay-ohio-land-contract/

NC has good sub2 attorneys, I would use a Land Trust with the purchase.

@Matthew Askew

Learning more about seller financing method and its really discouraging because there is no true 0 money down strategy. 

WHOS SAID THIS, YOU?

Is there a general rule of thumb number i can use from people who have done this before. Attorney and title fees inspections etc.? I want to buy a 4 plex or something worth my time like 10 units.

ARE YOU BROKE?  WHAT DO HAVE TO PURCHASE?

Even if I find a seller that will accept 0 down payment, I would still have a lot of costs associated with closing. I really want to get started in real estate but I do not have the capital to really do so. Not sure what everyone's secret is.

DO YOU THINK THERE IS A SECRET?  WHY?

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SOURCES OF MONEY

A. TRADITONAL SOURCES

A.1. Savings and loans

A.2. Mutual savings banks

A.3. Insurance companies

A.4. Commercial banks

A.5. Credit unions

A.6. Real Estate Investment Trusts

A.7. Mortgage brokers

A.8. Mortgage bankers

A.9. Pension funds

A.10. Fraternal associations

A.11. Individual lenders including sellers

B. MORE SOURCES, TYPES OF LOANS, ASSETS TO SELL

12. Conventional mortgages

13. FHA

14. VA

15. Private mortgage insurance

16. Farmers Home Administration (FmHA)

17. Family loans

18. Federal National Mortgage Association (FNMA)

19. Insurance policy loans

20. Employer advances and other employer-employee loans

21. Finance companies

22. Vested pension benefits

23. Second mortgage/ second trust deed companies

24. Wrap-around mortgage

25. Blanket loans

26. Passbook savings loans

27. Car loans

28. Personal or signature loan from bank

29. Line of credit

30. Credit card cash advance

31. Borrowing against trust of which you are beneficiary

32. Borrowing against inheritance

33. Assuming, or buying subject to, existing loan

34. Giving real estate broker a note for his commission

35. Checking account overdraft privileges

36. Corporate finance subsidiaries (e.g., Westinghouse Credit Corp., GMAC)

37. Pawnbrokers

38. Trust fiduciaries

39. Margin account loans

40. Selling stocks and bonds

41. Cash in savings bonds

42. Education loans, scholar shi ps1 fellowships, grants

43. Land contract

44. Appealing your property tax assessment

45. Lease/purchase acquisition method

46. Option to purchase

47. Sale-leaseback arrangement

48. Small Business Administration loans

49. Small Business Investment Corporation

50. Economic Development Administration of U.S. Department of Commerce

51. Venture capital firms

52. Investment clubs

C. EVEN MORE SOURCES

53. Tax refunds.

54. Withdraw the interest from your rent security deposit account.

55. Offer to settle for cash now, any lawsuits where you stand to gain.

56. Cancel unneeded insurance policies for refund of premium which was paid in advance.

57. Increase use of credit cards to buy meals and other products and services.

58. Encourage tenants to pay rent in advance.

59. Check recent closing statements for overcharges.

60. File an amended tax return to get a refund of taxes you overpaid in previous years.

61. Apply for any property tax refunds for which you may be eligible.

62. Don't forget semi•-forgotten "rainy day' accounts and insurance policies.

63. Cash caches: Some people are in the habit of stashing cash or traveller's checks in various hiding places.

64. Settle an estate.

65. File for reimbursable expenses.

66. Cash in your Keough and IRA plans.

67. Cash in certificates of deposit.

68. File for rebates.

69. Sell personal property.

70. Recover deposits lleft with landlords, utilities.

71. File insurance claims for vandalism or losses you've been meaning to claim.

72. Collect "uncollectable" debts.

73. If your annual mortgage loan escrow analysis showed an escrow excess, see if the servicing agent will refund all or part of it to you.

74. If you've performed services or sold a product but not yet sent the invoice, send it.

75. Pledge accounts receivables as security for a loan, or sell the receivables.

REI is alot of things, but most of it is PEOPLE. To get people to like you, and trust you.

You must WORK ON YOURSELF.

Take one of these every week and meditate on the saying.

Tape it to the bathroom mirror at eye height.

Say it OUT LOUD 5 times (yes your wife - husband - dog - cat - boyfriend - girlfriend - kid(s)) will laugh at you.

But you are working on your sub conscious, your "mind talk"

Here you go.

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“Everything you want is just outside your comfort zone.”

“Don't let the opinions of the average man sway you. Dream, and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand.”

“It's a tough business if you don't know what you're doing. But it can be extremely lucrative and very rewarding when you learn the ropes.”

“I count him braver who overcomes his desires, than him who conquers his enemies, for the hardest victory is the victory over self. ARISTOTLE”

“FIVE-STEP SUCCESS FORMULA
Determine what you really want.
Set a specific goal to obtain it.
To be effective, this goal must include a specific time frame and plan for its accomplishment.
The goal should also be written down and studied regularly.
Gain knowledge about your goal—listen to tapes, talk to experts, go to seminars to learn about it.
Associate with people who share your goals and attitudes while avoiding those who don’t.
Don’t stop until you get it.”

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”

“There is no security in this life - only varying degrees of risk. Yet millions unquestioningly sacrifice their lives on the altar of security.”

"The future you see is the future you get."

"Your life~the way it looks today is a result of your choices...What will you choose today for your tomorrows?"

"Success will come when you choose to feed your dreams and starve your doubts."

"Don't let the opinions of the average man sway you. Dream, and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand."

"Life is a mirror. You get what you see. If you project anger into the mirror, that is what you get back. If you project joy into the mirror, it reflects joy right back to you. Failure for failure. Success for success. What you project is what is reflected back to you."

"Words transform. Speak only with a good purpose. Say only things that serve you and others. Choose your words wisely."

"In todays uncertain economy, the safest solution to be wealthy, be in total control and enjoy freedom for you and your family is to have multiple streams of income."

"Your current thinking got you here. Only new thinking will get you out."

"Don't wait to buy real estate. Buy real estate and wait."

"Successful people rely heavily on their mentors. Ordinary people don't. It's that simple."

"Don't think of your goals - think FROM them. Tap into your genius.'

"Fear begins to melt away when you begin to take action on a goal you really want.'

"Whatever you focus on, expands. If you see the world through your dreams, prosperity materializes before your very eyes. If you see the world through your fears, poverty multiplies all around you."

"Creating success is a tug of war between your mind and your heart-your fears and your dreams. If your fears win, you lose."

"Your goal, as a creative investor, is to launch your ship into financial orbit ... and then put it on automatic pilot."

"Many things can make you rich, but only a few things can enrich you."

"Sit me at the keyboard of any computer in the world with access to the Internet, and in just 24 hours I’ll earn at least $24,000 in cash."

"Rejection reveals your character."

"The fundamental level of success is doing the hard things first - If you go for the feared thing first, then the rest of the day is easy."

Stories are the shortcut to the heart.

"No matter what your product is, you are ultimately in the education business. Your customers need to be constantly educated about the many advantages of doing business with you, trained to use your products more effectively, and taught how to make never-ending improvement in their lives."

Without knowledge and a workable plan, you are gambling, with little or no chance of success.

"Pursuing your passion is fulfilling and leads to financial freedom."

"As I became more mature I realized that failure is part of success."

"If you really want to do something, you'll find a way. If you don't, you'll find an excuse."

"One of the greatest gifts you can give to anyone is the gift of attention"

"Be grateful for what you have, while in pursuit of what you want."

"We must teach our children not to spend their money a dollar at a time. If you spend your dollar at a time, you'll wind up with trinkets instead of treasures."

"You are what you are today because of the choices you made in the past"

"Don't wish it was easier, wish you were better. Don't wish for less problems, wish for more skills. Don't wish for less challenges, wish for more wisdom. The major value in life is not what you get. The major value in life is what you become. Success is not to be pursued; it is to be attracted by the person you become."

"If you want to have more, you have to become more."

"Asking is the beginning of receiving. Make sure you don't go to the ocean with a teaspoon. At least take a bucket so the kids won't laugh at you."

"If you don't change what you are doing today, all of your tomorrows will look like yesterday."

"Your life does not get better by chance, it gets better by change."

"Make sure the outside of you is a good reflection of the inside of you"

"One of the first things successful people realize is the old adage, “If it is to be, it is up to me.” That is, for you, the fact that your success and your course is up to you. This doesn’t mean that you do it all alone. It simply means that you take responsibility for your life and your career."

"How sad to see a father with money and no joy. The man studied economics, but never studied happiness."

You cannot change your destination overnight, but you can change your direction overnight.

"Never begrudge the money you spend on your own education."

"Your family and your love must be cultivated like a garden. Time, effort, and imagination must be summoned constantly to keep any relationship flourishing and growing."

"Success is nothing more than a few simple disciplines, practiced every day."

"Don't set your goals too low. If you don't need much, you won't become much."

"Be a student, not a follower. Take interest in what someone says, then debate it, ponder it, and consider it from all angles."

"Don’t join an easy crowd; you won’t grow. Go where the expectations and the demands to perform are high."

"The challenge of leadership is to be strong, but not rude; be kind, but not weak; be bold, but not bully; be thoughtful, but not lazy; be humble, but not timid; be proud, but not arrogant; have humor, but without folly."

"Only by giving are you able to receive more than you already have."

"You must either modify your dreams or magnify your skills"

"Don't ask for security, ask for adventure. Better to live 30 years full of adventure than a 100 years safe in the corner."

"At the end of each day, you should play back the tapes of your performance. The results should either applaud you or prod you."

Here is a summary how I got started in Real Estate Investing.

I was in a bar, and I just lost my job. I am 61 now, but at the time I was 25, fresh out of the US Marines. The year was 1983. Interest rates were high, over 10%.

At the bar was this smiling guy, and he said,

"Who just died?"

I looked at him. He must have smelled the self-pity on my face.

Here is what just happened to me.

I worked for a small firm in Constriction Engineering Products, Johnson Controls, that sold air and water control equipment to large apartment and commercial building contractors. My math and science background helped me.

But the J O B paid $400 a week and was an advance on future commissions. I had over $10K in commissions due to me, and asked my boss for my commissions now. He laughed, and said I would get paid when he got paid.

I got in an argument with him and he fired me.

So this guy at the bar said to me,

"Tough break. What are you gonna do now?"

"Look for work I guess," I replied.

So he says, "You like real estate?" You like solving problems for people?"

I was taken aback by that comment. Was this guy trying to hire me or what?

I smiled, and asked him, "are you looking hire someone?"

He chuckled, and said, "Well, I'm always looking for great salespeople that hustle."

Here's what happened. The man's name was Glenn, and he owned a real estate investment company.

He never called it a real estate investment company, he called " a place where we solve problems for people."

The thing that was amazing about Glenn as he knew a little bit about everything and I mean everything.

He knew about business, legal issues, tax issues, marketing, sales, promotion, networking, and most importantly he knew about people (psychology).

The first thing he did was tell me that I have two ears and one mouth, and I should listen more than I talk.

Second thing he did was have me read "How to Win Friends and Influence People" by Dale Carnegie.

Then he taught me how to set appointments was home sellers, go out to their home, and write up a letter of intent to purchase or lease.

He said to me, "your job is to bring me potential home sellers will consider a creative offer."

I was very confused the first few months working there. I did know what a wraparound mortgage was, or subject to, or subordinating notes, or lease option assignments.

So I stumbled along.

What allowed me succeed was Glenn had an awesome direct mail marketing machine, and even had an appointment setter, so I just needed to get my car and go talk to 3 to 4 sellers everyday. I'd use the same presentation with everyone. And I've get them all letter of intent to buy for cash or on terms.

One of the things Glenn told me was "some will, some won't, so what!"

What that means is that some sellers will do what you want to them to do, and some will not.

The law of large numbers cures all problems.

What surprised me even more is that some sellers would call the office, in 3 to 6 to even 12 months later, because they appreciated my first meeting with them.

Especially some sellers that were very angry with me in the beginning, called me names, said things like "you just try to rip me off!!"

In my first six months I must have seen 20 people a week, 80 a people month, almost 500 people in that six months. I think we did three to five houses a month grossing between $5000-$10,000 per house, and I didn't make that money, Glenn did.

The arrangement for pay for me was I would make $500 cash every week, that's cash. No benefits and no 401(k). Was it legal, I don't know. I didn't own the business. I was hired hand.

After a few months, Glen said "you're do a good job keep it up. I'm going to give you a few more duties. I want to be able to travel so you can run the office while I'm gone."

I was scared at first, having never run a business. I was like the security of a paycheck.

But I loved being able to make decisions, being the captain of my own ship.

I think what made me more pissed off than anything though was making $500 a week, and making bank deposits of 10,000, 20,000, even 30,000 a week.

So after to have years of making $500 a week cash, and living frugally, I said the following to Glenn,

"Glenn, I've "I learned so much here. You taught me about sellers, buyers, legal, tax, marketing, there is no way I could have learned this in school.

"I saved up some money and start my office. I wont compete with you. I'd like to give you four weeks notice."

Glenn leaned back in his swivel chair, smiled and said,

"Brian, you're irreplaceable here. You came to me knowing nothing and now you know everything you need to know. You never asked for a raise or a partnership stake in the business.

I can honestly say that without you over the last two and half years I would not have made the kind of money that I have. I have two things to say to you before you go onto greener pastures."

My God I was really nervous. What was Glenn going on to say?

"The first I want to ask you is, what took you so long?"

Then he laughed.

"I expected you to hang in there for about six months and move on.

You're really smart and you should have started your own business long ago."

"The second thing I want to tell you is I'm going to give you a bonus, (he takes out his checkbook, and writes this check out) "and I don't want you to look at it until you sit down to car and drive away, deal?"

I said, "deal!"

I got to my car, exhale, and take the check out of my pocket.

It was for $15,000.

Back in 1985 that was a lot of money.

In the memo I remember what was written,

"for my good friend Brian."

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With everything I learned over that 2 1/2 years, it didn't take me long to be profitable.

I got a modest office space, with neighbors that were white-collar professionals, and attorney and CPA.

I had a secretary part-time for 3 months, then full time.

And Glenn even took me to lunch every week, said he missed me.

That first business was very special to me.

I have had several businesses since then, but that first one was my favorite.

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My wish for all that reads this is 

I hope you find your "Glenn" and 

you bust your tail working and reading. 

And learning.

@Chris Moss

As you probably know you do not ASSUME a sub2, just promise to pay the mortgage; mortgage stays in the seller's name.

@Jackie Lange

@John Fedro

A Title co is where you start, who can possibly refer you a good contract attorney.

See this link for NC Title company sheet

https://www.dropbox.com/s/3ceg...

@Gerardo Dominguez

Wow I missed this!

See this vid to get a great summary of Creative Financing