All Forum Posts by: Jay Hinrichs

Quote from @Jay Hinrichs:

Let me break your post into parts, as each concerns a different subject and as such requires a different response.

1. It should be evident that so far he led me to ask questions how to be in legal compliance while following his model, rather than jump off the cliff blindfolded, believing that the "deals" are hanging all over the trees down the abyss, waiting for me to pick. 

2. As to effort, most of his students find those deals on MLS. They go on Zillow or Redfin and just look for properties that meet the criteria, put them on spreadsheet, analyze the potential deal, pick up the phone and call listing agents. It's not free, you have to spend your precious time to do this. But it does not require DM campaign or SEO. 

3. Why do you think you have to live where you do these deals? Why can't you do it remotely?

4. Big profit spread in this model is not a result of lucky strike, like with probates or desperate seller who is dying to get ten cents on a dollar and needs it yesterday. Usually, the price you pay for the  property is what the lowest per sq ft listings appear to go for on MLS. You may rightfully ask: Are sellers of those properties idiots? Why can't they sell it for double the price Scott pays to buy them? And Scott's answer would be: because no one who wants to buy a house in those areas has 40,000-50,000 cash sitting in their bank accounts. Banks don't lend so little on traditional mortgage and hard money lenders don't go there , so no option for average Joe to get a qualified mortgage or for Jim the Handyman to finance it. But there are John Does who pay monthly rent in excess of what would it cost to finance a purchase of home bought for 70.000-80,000. So, you basically sell this home to a proverbial John Doe, who signs a contract to pay for 30 years little less in monthly payments than what he currently pays anyway to rent apartment where he lives, with no prospect of ever owning it.

5. I would go ahead and buy his training, rather than ask questions here, if I was hyped up and looking to sign up with the program.  But I do the opposite :) And it doesn't cost me money to ask questions on BP. Nor do I see any costs involved (other than time spend searching for properties and making some phone calls) if I ever wanted to try it myself. My only concern is to make sure, if I ever do it, to comply with Dodd Frank/TLA/Safe Acts. 

Quote from @Nicholas L.:

@Eric N.

I totally agree, hitting home run is not as easy as watching a Youtube video :))

And it's generally true for any endeavor, there is one Lebron James for thousands of wannabes. That's the reason there are few successful entrepreneurs, most fail rather quickly, and the rest of the population is working 9 to 5 jobs. 

I will note though that Scott's "slow flip" pitch is that you don't have to do any rehab at all. I looked at his videos and I could locate similar houses at similar prices on Redfin, the ones that need rehab but are not in horribly dilapidated state. You will not find them in Pittsburg, they are more in rural areas, away from cities like Pittsburg. 

Wherever you are finding your Sub2 information, ask these questions there. Most of the regular posters here on Bigger Pockets have a negative view of Sub2, especially after a couple of individuals spammed the site to promote their training.

There was already a negative view of Sub2 on Bigger Pockets due to most of the regular posters did their deals in a different manner therefore, as is human nature anything out of our own personal preference can look mighty sinister.

Quote from @Jay Hinrichs:

 Why this Youtube "BS'er" How I sold a $36k Slow Flip for $169k in Virginia has not been sued for all the false, misleading information and incitement to violate laws?

In the real world we live in you can't get away with massive crime and massive publicity at the same time, unless your name is Hunter Biden or you donate big bucks to you know who.

Quote from @Eric N.:

Quote from @Jay Hinrichs:

Defaults are handled by keeping a Deed. You don't transfer the Deed, you write a contract whereby they will get a Deed once they pay off the loan. If they default, you keep deposit and anything they have paid prior to default and simply evict them. They have no Deed, so there is no foreclosure, just eviction for breach of contract and non-payment of dues. You evict them and sell the property to the next end buyer. 

 Buying for $40K and selling for $80K with no improvements doesn't make any sense. As Jay said, someone is getting screwed. Most likely, it's a home with serious problems and an unsophisticated borrower who is probably a first-time homeowner who doesn't know what they are in for. Any attorney general is going to frown upon this seriously.

Contracts for deed are not what they used to be. The CFPB made it very clear recently that all of the same consumer protections apply to them: CFPB Takes Action to Stop Contract-for-Deed Investors from Setting Borrowers Up to Fail There are very few if any places these days where you're just going to easily toss a borrower out with a land contract. Even if you can, why do you want to create a note that has such a high risk of default?

That system is basically: 1/ take advantage of PMLs who don't understand the market, 2/ Take that money and use it for a predatory lending scheme. All the various consumer laws exist specifically to stop bad actors from doing stuff like this.

Two things not covered so far:

1) If a buyer challenges a seller-financed transaction, the Dodd-Frank penalty is that the lender must make the buyer whole. Basically, refund any and all down payments, interetest charges, processing fees, late fees, etc.

2) I beleive Dodd-Frank only applies to owner-occupied properties. 
- Hence why all the DSR loans we've seen have a required document the borrower signs that states the lender will start foreclosure proceeedings if the borrower ever occupies the property.

Please correct me if I'm wrong or clarify anything I missed.

Thanks @Jonathan Greene

I will look them up, but I don't believe you have to "lowball" a seller to get a deal done. The point of the contract is to provide value to both buyers and sellers and  this deal saves the buyer over $1M in interest and easily $100k in furnishings while getting the seller their full equity and saving buy side/sale side realtor commissions. I would say it's more of a scam to offer a seller <70% on a property that needs $5k in material repairs  and flip it for 125% without stepping foot in the property. I've only ever sent out an offer like that once, and that was to a preforeclosure lead that refused to discuss the property, instead telling me "that's not how real estate works, just make me an offer". 

Chris, interesting niche on non-performing mortgages/ rtl's. I guess every problem has it's price. And probably not a lot of competition. I've always found inventory rates (and how they've moved over time ie previous 1-2 years) to be the starting point for where a market's health is at. Thanks for the insight!