Marko Rubel- How to invest in real estate without banks

[Ryan Gougeon]

Anyone have any opinions on this book, or Marko Rubel himself? I find his technique of "Unlimited Funding" without banks and zero down interesting, but some of it is a tad hard to believe.

I'm paraphrasing a lot here, but so far here are my takeaways from his book: 

He advises finding sellers in distress, offering to buy their property (Take over payments) "Subject To", getting the deed put in your name, then taking over payments from the sellers- and/or getting them current on their loan if needed. Since the seller's name and credit are still on the bank loan, they have to be in such a bad position that they fear foreclosure and embarrassment/ bad credit more than they do you not making the payments. 

He then turns around and does a "Lease to own" deal with another buyer, giving them 24 months to line up financing to buy the property from you at an option price, which is, of course, higher than what you paid the seller for it. 

He claims that while banks can call the note if they find out about this "Subject to" sale, it has never happened one time that he's aware of.

I already own 3 rentals, looking to pick up another one. But dealing with the banks can be a drawn out tedious process that isn't moving as fast as i'd like. 

So, for anyone using his system, what are your opinions? Thank you in advance!

[Don Konipol]

@Ryan Gougeon

Subject to deals are perfectly legal. Title is passed to the buyer. Although transferring ownership is a violation of the convents of most mortgages or deeds of trust, this is a civil matter; it is not in any way illegal or criminal. Selling after purchasing subject to is not fraud as you are selling your ownership interest as it is, not a “free and clear” property.

The problem is in the deal numbers, not necessarily the structure. Most, if not almost all sellers willing to sell on a subject to basis have loan that are at, or exceed the value of the property. If they did a conventional sale, paid a Realtor, paid normal closing costs, etc., they’d have to bring money to the closing table. So, to just get out, or put a minimum amount in their pocket, they’re willing to accept the risk of remaining legally liable for a loan secured by a property they don’t own. This can get ugly should any one of a number of issues occur.

The second part of the “deal problem” is that the buyer would have to find a tenant willing to pay above market rent or a 2nd buyer willing to pay above market purchase price. The gurus handle this by suggesting the renter pay additional for a option to purchase, or the buyer pay over market for easy, highly leveraged, built in financing. It may work, or much more likely it won’t.

This is about the same as telling people offer all cash and motivated sellers will sell for 30% under market value. It happens, sure. But not often. And takes A LOT of work to find the needle in the haystack.

None of these, or any other real estate strategies is the Holly Grail. Some people make lots of money in the real estate industry, some do rather mediocre, and some end up in investing he’ll. Education, knowledge, experience, ability, capital and luck have much more influence on success that the strategy chosen. All these strategies are good to have in your toolbox when a deal appropriate to a particular strategy comes across your desk. A few people have even specialized in one strategy and done well. But no one strategy is “the way” to get rich. Unless of course your the one selling seminars, books, mentoring, etc.