All Forum Posts by: Ryan Urban

Thanks John.

I have a meeting with a real estate attorney tomorrow, and I'm going to ask him his impression of the Subject To strategy.

I must admit I'm afraid of looking like an infomercial victim -- on the other hand, I've seen many posts in here that treat it as a common practice.

What is your opinion of this strategy? Assuming it's legal in Colorado, are mortgage companies willing to let a stranger take over a loan in order to save it? Is it difficult to find sellers? Is it easy to get burned by hidden loans & liens?

It's like I'm missing something here.

Couldn't agree more.

Between the proliferation of both rehab/flip TV shows and "guru" infomercials, I suspect there are many who are getting into REI thinking they'll be able to buy that first yacht next month.

I was discussing this with my realtor. She rolled her eyes and said, "if I'm contacted by another guy with no money, poor credit and a get rich quick scheme, I'm going to scream."

If I were to think cynically and selfishly ( :mrgreen: ), I'd look at the silver lining: The probable cottage industry of "saving" these poor souls by taking their properties off their hands dirt cheap.

I guess we'll see...

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Boy, I can really relate to being scared.

I made an offer on my first rental property last Wednesday. It was just about to go into foreclosure, so I was lucky on the timing. We agreed on a price (about 21% below appraisal), and until then everything was just theoretical.

Then my agent faxed me the official offer paperwork for me to sign and return. With a nervous stomach, I did.

Then yesterday I received title and insurance information in the mail. Yikes.

We're waiting for the bank to approve the deal, but believe me, the butterflies are dancing away in my belly. I may be shaking if and when it's time to sign the final contracts.

I'm with ya, and congrats on the deal!!

:clap:
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Nice to know I wasn't the only one amused by that post, and curious about its intent.

"Doing your homework" on the stock market may or may not help you realize "big gains". There are plenty of "experts" with a great deal of knowledge and experience who don't beat a simple stock index fund, and in fact, more than 50% do not.

Also, different people have different interests, priorities and aptitudes. Thinking that "you can easily make more than the best players on this forum" by being in the market is naive, at best.

As for me, I like diversification, investing in both the market and real estate. But to each his own. There is no "right" or "wrong" -- it's how well you do what you're doing.

I'm confident you'll come to realize this as you mature.

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Thanks again Kathleen.

I'll check this out. My next step will be to meet with a real estate attorney.

Consider me a new faithful reader!!

:clap:

Ryan

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Kathleen, thanks, excellent information. I've read dozens of articles on this, and I finally have some info I can use.

And be careful what you ask for - I have more questions!!

I would think a lender would not be thrilled when I called. Yes, I'm bailing out their deliquent borrower, but they don't know me from Adam. Is that usually OK with them? And will the lender be satisfied enough with the Purchase Agreement to talk to me? Seems like I'd occasionally run into some less-than-willing mortgage companies.

Thanks again, I'll be visiting your blog frequently.

Ryan
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Okay, I think I understand how to get the property, but I'm not clear on what's the best thing to do with it. Let's take a hypothetical:

The property is worth $200,000 with a total of $160,000 in loans against it. The owner is broke and his bad credit is stopping him from re-financing or getting an equity loan (I'd guess this is pretty common right now).

Do you offer $10,000 to take the loan over subject to, then either rent or flip the house? Would you offer less? Would it be a good idea to structure the deal where you put the house on the market (relieving the seller from his monthly note) and split the profits after all your costs?

And the biggest problem right now is the fact that many people are trying to dump their homes due to their ARM exploding on them. That would mean you could be stuck with a 10% loan to take over. Yikes, no thanks.

I've also seen articles where the home is then offered on a lease option, where you would not see profits for perhaps two years. What's the point here, are you hoping for positive cash flow?

I may be missing something, but I'm still learning. What kind of situation are you looking for in a Subject To, and what's the best way to deal with it?

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Durable Goods Orders and New Home Sales both reporting in strong for July. This doesn't mean we've hit bottom - the credit crunch wasn't in effect in July.

On the other hand (and yes, I'm a positive thinker to a fault - I drive some of my colleagues crazy), I look at it this way:

If foreclosures and home prices continue to get worse (and that may well happen), people are still going to need a place to live. They'll have to go from their $1,500 mortgage payment to my $650 rental payment.

And when the housing market turns around, the value of my properties will improve dramatically, so I want to buy while the market is bad.

There are exceptions to every rule, of course, and we haven't bottomed, but in twenty years I think that buy-and-holders who took advantage of this environment will be glad they did.

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Check out Prosper.com, it's essentially a dating service for people looking for personal loans and people willing to loan it. :D

They do a credit check on you and assign you a rating from AA down. The lower your credit score, the higher the interest you'll have to pay to attract investors.

Wow, wow, wow, great point. It's about the portfolio as a whole, not its individual parts. Personally John, I'm waiting for a book from YOU.

I also agree that leveraging equity is a great strategy -- as long as you're careful and the numbers work.