All Forum Posts by: Ken M.

It's a VALID question. I have over $50K of equity on a SUBTO property I acquired 3 months ago. For every problem there is a solution! And if there isn't one then the people who ask these questions while you laugh at them are the very people who will create these solutions.

Stop shaming ppl for asking questions. This is a community and we should be helping each other. If you don't have anything positive to add...ZIP IT!

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Your comment: "Stop shaming ppl for asking questions. This is a community and we should be helping each other. If you don't have anything positive to add...ZIP IT!"

Helping ppl commit fraud is not helping them.

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2 Votes

Quote from @David Abarca:

I have a question for all the subject to people out there. How do you pull your equity out of a property that is subject to? I have a property that we took over payments of the loan on and it has a 3% interest rate on it. I would not like to refi it since rates are around 7% as of this writing. Is there another way or company that allows you to pull that equity out?

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Your Question: "How to pull equity out of a subject to property?"

You can't, without going to jail.

0 Votes

Quote from @Jasmine Jasmine:

Hello, I own a property with someone else but they have been MIA, what can I do if we have papers to sign?

Check the local pokey. He may be playing poker with a cell mate.
You can always hire a private investigator.

0 Votes

Upstate New York, New York

Quote from @Duncan Forbes:

Hello Everyone!

. Hope all is well. I wrote a message a long time ago about Preforeclosures, and I have researched a lot of information and learned alot about the pre-foreclosure process. I would like to have a program / calculator for Preforeclosure deals and came across REIPro that has calculators for pre-foreclosures.

Can someone recommend other calculators / programs that have helped them out with Preforeclosure deals? And can recommend a good Real Estate lawyer in the NY Westchester Area?

Thank you so much!

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@Duncan Forbes: There is a lot to know about preforeclosures/foreclosures/REOs/Short Sales
I've done them for30 years.

1. There are Federal laws you have to follow
2. Each state has their own laws and they vary from state to state.

When people do it incorrectly, they wind up getting sued and or law enforcement gets involved. Take your pick, neither one is pleasant.

Here is a document that tells you what NOT to do, I suggest you read all 81 pages. The 56 people and entities believed/were told that what they were doing was "okay". I think they may not have paid attention to what they were being told and slipped into what was "convenient".

Click on the images to expand them to read.

Download the lawsuit by the attorney general of AZ by clicking on the link.

CLICK ON THE LINK TO GET A COPY OF THE LAWSUIT. IT IS ALLEGED THEY WERE OPERATING IN CA AND TX AS WELL.

The problem is much more than buying using SubTo (Subject To). It was their misunderstanding of how and when to apply the technique.

https://www.azag.gov/sites/default/files/2025-03/CV2025-0084... **Lawsuit Link Download**

Some highlights

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I'd be happy to answer any questions. Do not assume that someone on a forum understands the law though. It's clear the advice given to these characters was insufficient. They either didn't know what they were doing or they were simply ignoring the law and ignoring best practices.

0 Votes

Upstate New York, New York

Quote from @Christopher Bell:

Quote from @Ken M.:

Quote from @Christopher Bell:

I might be crazy but…..would you?

Scenario:

Have a chance to assume a loan that has 28 years remaining, 5% interest, and in a very quickly growing suburb of Raleigh NC.

The townhouse would lose approximately $300/mo. Total payment is $2150/mo and market rent is $1850-$1900/mo.

Loan assumption Is essentially at market value $298k, but the $0 down outside of closing cost on loan assumption are what’s hooking me. I can put 25% down and get a $300k Townhome to cashflow near 0.

Also, the family is looking to buy a SFH and would be using my wife (realtor) to buy. Therefore, we would make about $8000-$12000 in commissions from the purchase.

Am I crazy to be considering this?

I don't see where you stated what you would do with the property

LTR

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LTR means a lot of capital expenses downline.

0 Votes

Quote from @Christopher Bell:

Quote from @Drew Sygit:

@Christopher Bell have done several assumptions, land contracts, etc.

You state property value is $298k, but what is loan amount?
- What would the sellers walk-away with if they sold on market and paid agent commissions?

What will happen to property tax & home insurance amounts once you convert to a rental?

Even with 0% down, negative cashflow ONLY makes sense if something offsets it.

If the property has no equity, can't see any value-play.

Tax and insurance would remain the same - Loan amount is $296k. If they sold with an agent they would walk away with about $280k. My wife is an agent and her getting the commission helping them buy another hose was attracting me because with the commission we get a rental for about the $280k with her commission so more/less below the market value. Plus the commission pads the negative equity for about 2-3 years (assuming 100% vacancy and self managing - which is tight).

It does seem that the general consensus is that it's likely not a very good idea. There is a lot more risk than reward on this deal it appears. I just like the area, see a future in appreciation here, and thought being able to get an asset for $0.00 down and maybe tlose $300/mo in the long run might pan out in 3-5 years. I'm in a position were earning the 4-5% on the current cash can be utilized to offset that $300/mo loss in cashflow.

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I always ask myself, "for the risk and amount of effort, can I do better on this project or by using my time to find a better project. Time is the big unknown, we only know if we were right by looking back. Going into to it is by "best" guess. With my experience, my best guess is find a better project.

0 Votes

Quote from @Miranda Bilodeau:

From the looks of the filing, the plaintiffs are angry that third parties are encouraging homeowners to use equity stripping techniques to make their properties appear encumbered to avoid lawsuits or liens. However, I could be misreading the provided information.

Equity stripping can be helpful for homeowners and for rental owners to prevent third parties trying to place a lien on a property or pursuing legal action to claim the property through a frivolous suit. This can be effective, especially for high-value properties.

LLCs can be helpful entities to protect assets, if they are used correctly and the operating agreement governing the entity includes necessary protections.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

You obviously know the difference between equity stripping (when done legally for asset protection) and equity skimming which is a type of fraud that deprives a homeowner of their equity. "Normal people" ;-)   i.e. the average investor, doesn't know that technique and I'd say probably doesn't have enough earned equity to worry about protecting equity.

In the case mentioned above, the AG is complaining about using deceit to gain the confidence of distressed homeowners in order to transfer ownership of a property with substantial equity from the distressed homeowner to the fraudster. The fraudster receives all of the benefit through deception. The homeowner receives no benefit. The state argues that the homeowner in distress, at least receives the excess funds from the foreclosure sale if it goes that direction. There are numerous other charges as well.

Some people use "equity stripping" and "equity skimming" interchangeably, of course there is a difference, one being legal, one being illegal.

But, for the purposes of addressing the slang usage which is common among unsophisticated investors and for getting the message across, "equity stripping" was used. They will hash out in court if this case was either one.

The matter before the "lurkers" and this is for those of you who are, is that just because someone in the Subto community says they "made" $40,000 "helping someone save their home from foreclosure" does not mean that it was a legal transaction, does not mean that it will be overlooked, does not mean you won't eventually be charged. These people have been doing this for 10 years according to the complaint. They are now facing millions of dollars in restitution, loss of the ability to transact, and a possible referral to the DOJ.

Don't do what they have been doing. Some of it is pretty subtle stuff and is said to be "okay" by some "gurus'. It is not "okay", it's just a matter of time.

0 Votes

Quote from @Christopher Bell:

I might be crazy but…..would you?

Scenario:

Have a chance to assume a loan that has 28 years remaining, 5% interest, and in a very quickly growing suburb of Raleigh NC.

Also, the family is looking to buy a SFH and would be using my wife (realtor) to buy. Therefore, we would make about $8000-$12000 in commissions from the purchase.

Am I crazy to be considering this?

I don't see where you stated what you would do with the property

0 Votes

Quote from @Steve Brown:

Greetings from California. My wife and I have four properties in CA and FL (not interested in selling) and we are considering small to medium multifamily properties. My wife loves real estate and is an agent and well, although I'm onboard with it, I don't have a good handle on how to go from finding a deal to owning the deal using non-traditional finance. I heard of biggerpockets through Subto and others and well, here I am to learn without (hopefully) a lot of marketing fluff.

Your comment "I heard of biggerpockets through Subto"

is confusing. Do you mean you are a member of the Subto community but have not learned how to find a Subto or to own a Subto??

0 Votes

Quote from @Jay Scott:

Thank you for your feedback. After brainstorming with some colleagues, I have come up with a strategy. Just putting the numbers together, and will present to the owner tomorrow. I will let you all know how it goes!

I wouldn't touch it. Too many weak links.

1 Vote

Fort Lauderdale, Florida

All Forum Posts by: Ken M.

Ken M. has started 59 posts and replied 765 times.

Post: How to pull equity out of a subject to property?

Post: How to pull equity out of a subject to property?

Post: What do I do about A Missing Borrower

Post: Need advice on a system/program for Preforeclosure

Post: Assume a Loan - Negative Cashflow?

Post: Assume a Loan - Negative Cashflow?

Post: LLC Being Sued - Supposed To Protect Me Isn't It - Ya Gotta Know What You're Doing!!

Post: Assume a Loan - Negative Cashflow?

Post: Hello, somewhat of a Newbie here

Post: Feedback is greatly appreciated!