Originally posted by @Chelsea Cummings:
@Pierre A. I had a consultation call for the mentorship program yesterday evening. It seems to good to be true. How long have you been in the program, and, if you don't mind me asking, what results have you had from it?
Do you feel like you are getting everything they said you would? I am really wanting to pull the trigger on it, but I am nervous!
I've done Sub To, Wraps and Lease Options for 30 years: here are some pointers to look for in any program teaching those techniques
1. If they say you need "No" money, Run and don't look back. You have to use money to give the seller "moving money", money to bring the loan current if they are behind, money for title reports, money for escrow, money for advertising, money for making the payments after you take ownership, money for repairs if needed, money for cleaning the property, money in reserve in case everything falls apart (just to mention the big ones, there are also Insurance, water, electricity, power, property taxes and so on). If you use VAs (virtual assistants) that costs money. You can't borrow money from a bank for the purposes of taking a property Subject To.
2. Depending on the market I can spend $5,000 in advertising to get a deal. Or, it can be $500 sometimes. The better neighborhoods and better markets take more money. The less expensive markets are more trouble afterwards.
3. I cash flow at least $500 a month or I won't take the deal. Houses have ongoing expenses. (roofs, water heaters, plumbing, electrical, updates, etc)
4. Yes, there is a Due on Sale clause and yes, there are at least 7 ways to deal with that effectively.
5. If you don't work at it, you won't buy a property. You have to make offers to buy a property. That means being on the phone, a lot. If you don't like people and you don't like being on the phone, do something else.
6. Record the Warranty Deed. Don't use a Quit Claim deed.
7. You are not doing anything wrong or questionable (if you do as I do) so you are proud to record your Deed and don't try to hide things in a "Trust".
8. Use disclosures with both the seller and the buyer (if you do as I do and sell to tenant buyers) and disclose everything, such as that the loan will not be paid off, that they understand they are selling the house, etc.)
9. Be fair. Make it a "win/win" for both the seller and you. If your goal is to retire on one house, "ferget about it. Ain't gonna happen". 10 houses cash flowing at $500 a month is $5000 a month income. That's a start. If you aren't committed to doing at least 10 houses, that is unfortunate for you.
10. When you talk to sellers, use "solution selling". You are there to solve a problem. Ask questions about why they are selling, are they moving locally or staying in town, etc. Try to solve their problem for them by taking over their debt, taking over their payments, give them some cash to move, and allow them time to move in a reasonable time frame.
11. Enter into joint ventures "very cautiously". People have "very different" opinions on how things should be run. You can waste a lot of time sorting issues out. If the mentor says they provide the funding, give them a scenario and ask them to walk you through point by point on who has ownership, how much are they putting in, how much are you putting in, what happens if the deal "goes south", etc. Ask them " say I found a property and the owner needs to move fast, he needs $5000 to move, the ARV is $260,000 the mortgage is $202,00, their payment is $1507 a month and they are 5 months behind." How would you handle that? How much money would I need to do the deal? How much would you put into the deal? What is the exit strategy? How much would we make on the deal? Who would have ownership?"
If they won't take time to go through the scenario to tell you how things work, they are the wrong mentor, obviously. Most "mentors" have only done 2 or maybe 3 Subject To deals so they probably can't answer with any specificity.
You want a mentor that can be presented with any number of scenarios and outline the solution and show the results, on his feet without needing "time to think about it". "I'd have to think about that one" is an excuse for not knowing things he already should know..
12. Pay every payment on time or you are in big trouble. You can be sued by the seller for ruining their credit (no matter what some "guru" may tell you). You can be visited by the Atty General if you are cheating "vulnerable" sellers (foreclosures, handicapped, veterans, elderly and anyone else the Atty General deems vulnerable)
13. Treat it like a business. Track your hours, keep records of who got paid what. Keep records when collecting rents, etc.
14. Learn the local landlord tenant laws.
15. Most mentors are good for getting people energized - Good mentors work with you step by step to get a house or two and teach you how to move along on your own - Great mentors teach how to buy and manage the properties, set up "systems & methods", along with providing other high level contacts, tax planning, asset protection & generational wealth, strategies for changing markets, and changes in the law.
I don't know the individual you mentioned for possibly mentoring you, but these are some basics to find out from them before you put your hard earned money into a mentor.
