Sub2 Empire

In Part 2, some of the most common creative financing strategies are covered. This is meant to be a high level overview so there is a baseline understanding when the generic term of "creative financing" is used.

We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com.

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As the end of the year is rapidly approaching, we take a look at the major items impacting the current real estate markets around the U.S. These factors all lead to upcoming opportunities for real estate investors, especially for creative finance strategies. Join us for this video series to bring in the new year.

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We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com.

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Don't forget to check out our bio page for tons of valuable info and real estate investing resources at https://bio.sub2empire.com

As always, we thank you for liking and subscribing to this channel Don't forget to ring the notification bell to get notified every time a new video is uploaded!

Subscribe to Sub2 Empire on Soundwise

📢 We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com.

So you've heard all about the benefits of using land trusts in your real estate transactions but you're not sure how to set one up and now you're wondering "who are the parties to a land trust?". In this video, I break down the parties to a land trust and their respective roles.

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In my real estate investing business, we create and use (almost exclusively) trusts to purchase properties, especially if we're using creative financing strategies like "subject-to". Buying sub2 has implications that can destroy a deal unless you know how to structure a land trust and place the property into the trust.

Trusts can seem intimidating to the new real estate investor or wholesaler, so the first step in understanding what a land trust is, is to explain the roles that the parties to a land trust play.

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📢 We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com.

Sometimes, buying a property sub2 isn't the wisest decision you can make. In this live, I'm going to let you know when it's NOT ok to buy a property subject-to.

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When any one of the following three criteria are not met when we’re evaluating our deals.

⚆ When up front costs (cash to seller, closing costs, arrearages, etc.) put you into negative equity that you cannot break even within 12 months time.

- Eg. You buy a house that’s worth 200k (FMV)

- We work off of FMV when we buy, ARV when we sell.

- Seller owes $180k

- In arrears $25k (you’re negative $5k)

- Can you net enough cashflow to break even at 12-months?

- If you seller finance this property, it may be possible to break even and maybe even profit from the sale up front.

- We like to be no more than 90% LTV on any of our deals

- We can get to 90% LTV if…

- The deal itself will support it (costs to acquire fall within that 90% LTV)

Or

- We can seller finance that deal and earn enough of a down payment to “buy” our equity back

⚆ Cash flow

- Our monthly cashflow must meet our minimums.

- Set a minimum for yourself (ours is $350 / month / unit)

- Doesn’t matter if it’s a rental or if we’re seller-financing our buyer.

⚆ Backend profit (profit when we sell or our buyer refinances)

- For us, as long as we are 100% positive that we will not have to come to the closing table with cash, we’re good.

- We would like to make as much on the back-end sale/refi as possible.

- We’re all about CASH FLOW.

- When you’re dealing with a potentially litigious or pain in the ass seller.

- This is why we don’t “close” sub2 sellers.

- No sleezy sales pitches.

- No begging.

- No talking them into it.

- No asking them to “try it out”

- You are going into business with your seller.

- You’re going to be dealing with this seller for a long time, IF you’ve done your job right and get a long-term commitment on the terms of your deal.

- We don’t like to make promises to our sellers on when their property will be paid off.

- We want to utilize that low interest loan for as long as we possibly can.

- The last thing on earth that you want is a “jaded” seller.

⚆ For the most part, you want to stay away from adjustable rate mortgages.

- ARMs, have a “lifetime adjustment cap”.

- It's the “ceiling” for how much the lender can raise the rate

- When you are evaluating your deal, you want to be super conservative

- Run your cashflow numbers at whatever that cap percentage is.

- So if the cap is 8%, run all of your numbers at 8%

⚆ If you are expecting to pull equity using a HELOC or a second mortgage from an institutional lender.

- Institutional lenders do not like to lend on properties where you’re name isn’t on the original mortgage.

- If you find one, don’t ever lose their number.

- There are other ways to do accomplish pulling equity out of your subject-to deals.

- Line of credit.

- Let’s say that you are applying for a line of credit (Not a home-equity line of credit, but just a regular old personal or business line of credit.)

- What is the 1st thing a lender is going to ask for when applying for a LOC? A personal financial statement listing all of your assets and liabilities.

- Assets will include the houses you’ve bought subject-to.

- Your liability’s column, you list all of YOUR loans that you have on your properties.

- Do you list the loans that aren’t in your name? Are those loans YOUR liability? The answer is NO.

- If you stopped making payments, is that reflected on your credit profile?

- I absolutely would not recommend to stop making payments on the loans that you’ve taken subject-to. It can get you into a lot of legal trouble that you don’t want. I am simply trying to show you another method for pulling equity out of a subject-to deal. THAT’S ALL!

- A couple of other ways you can do this (ways that we recommend)

- Private lenders

- A fantastic source for long-term lending

- Target self-directed 401ks

- Equity partners

- Similar to private lending but you’re giving your lender and equity position

- Percentage of ownership

- Percentage of cash flow

- Percentage of net profits upon the sale

- One of our promises to our equity partners is that once they buy into our deals, they never have to put any more money into that deal. If we lose a tenant or a buyer, they may not see a check for the time the property is vacant, but we will never ask them to put more capital into the deal.

"Just because you can do a subject-to deal doesn't mean you should!)

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📢 We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com.

Here's what to avoid if you want to convert more leads into deals. On this week's Creative Q&A Roundtable.

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Biggest hurdle is that people tend to think very narrowly and singularly.

They have blinders on and tend to believe only what they know today. They also tend to believe in only what the “masses” believe. In this business, we are dealing with a portion of the population that is so small. At any given time, we’re talking like 1-3% of population has a distressed property to sell. Most have zero motivation to sell a home, whether they’re a landlord or owner-occupant.

You are not your customer.

A lot of new and seasoned real estate investors can’t wrap their minds around why a seller would choose sell subject-to and possibly lose any or all of their equity (whether sweat or monetary). They assume that their customer is going to have the same reaction that they would if someone asked them to sell their house to the, say, subject-to.

YOU ARE NOT YOUR CUSTOMER

Lets talk about what motivates people...

✔️ Time

✔️ Money (although probably a lot less of a motivator than you might think)

✔️ Fix up

✔️ Moving

✔️ Getting rid of stuff

✔️ Distance

✔️ Are they out of state?

✔️ Lack of knowledge

✔️ They don’t know their options

✔️ The answer to this you are not your customer.

...the list is infinite.

You have to get to their motivations

🟠 Asking good questions

🟠 Having a conversation

🟠 Building trust and rapport

Once you have all of that, now you have to present an offer. In our case that offer usually comes in the form of a creative multi-offer strategy. We put our sellers in the drivers seat. We let them pick the best options.

➡️ Do NOT make the mistake of avoiding the offer because you “assume” that the seller won’t accept it.

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We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com. Have you ever wondered how to insure a mortgage wrap? This is the topic for discussion on this week's Creative Q&A Roundtable.

Don't forget to check us out over at https://sub2empire.com

Pick up some free goodies at https://bio.sub2empire.com

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Get your week started off on the right foot! Join me every Sunday morning at 9:00 AM Central for insights into the world of real estate investing and creative financing. Bring your questions, suggestions, advice and even your deals!

Subscribe to Sub2 Empire on Soundwise

Get your week started off on the right foot! Join me every Sunday morning at 9:00 AM Central for insights into the world of real estate investing and creative financing. Bring your questions, suggestions, advice and even your deals!

Check out all of my other videos on this channel and then visit us over at https://sub2empire.com

Also, you can get a ton of goodies on my bio page at https://bio.sub2empire.com

Subscribe to Sub2 Empire on Soundwise

We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com. Get your week started off on the right foot! Join me every Sunday morning at 9:00 AM Central for insights into the world of real estate investing and creative financing. Bring your questions, suggestions, advice and even your deals!

Check out all of my other videos on this channel and then visit us over at https://sub2empire.com

Also, you can get a ton of goodies on my bio page at https://bio.sub2empire.com

Subscribe to Sub2 Empire on Soundwise

Ready to master creative financing? After watching this video, why not head on over to our website and find out more about how we can help expand your knowledge about creative financing so that you can buy more houses, close more deals and build a lasting legacy that you can be proud of.

You can find us at https://sub2empire.com

Don't forget to check out my bio page for tons of valuable info and real estate investing resources at https://bio.sub2empire.com

As always, we thank you for liking and subscribing to this channel Don't forget to ring the notification bell to get notified every time a new video is uploaded!

Subscribe to Sub2 Empire on Soundwise

We're revolutionizing the real estate industry through the power of creative financing. Find out more at https://sub2empire.com.

----------------------------------------------------

Don't forget to check out our bio page filled with tons of valuable info and real estate investing resources at https://bio.sub2empire.com

As always, we thank you for liking and subscribing to this channel Don't forget to ring the notification bell to get notified every time a new video is uploaded!

Subscribe to Sub2 Empire on Soundwise