All Forum Posts by: Account Closed

You misunderstand. I would never join Pace Morby's group. His information is faulty, his approach is to "overleverage", "zero down" and in my opinion the information he leaves out is either lack of experience on his part or intentional deception, neither of which I am willing to be associated with.

He leaves out very important information, like what my buddy recently posted at 

https://www.biggerpockets.com/forums/311/topics/1188416-usin...

We teach even the downside of Subject To and how to avoid the pitfalls. You have to be an accredited investor to be trained by us. That means you have enough money to do these safely.

I’m sure he's an enthusiastic and nice guy, most of his ilk are. But that doesn't keep the regulators away. By contrast, we just teach “stick to good underwriting, using title reports and escrow and having sufficient capital to make sure the seller is cared for”. Very conservative approach that protects the seller.

There is a long thread that covers what I'm talking about at

https://www.biggerpockets.com/forums/79/topics/1001612-pace-...

Great Britain, "a large country with a powerful military, did collapse.
France, "a large country with a powerful military, did collapse.

Germany, "a large country with a powerful military, did collapse.
Spain, "a large country with a powerful military, did collapse.

There were two main reasons 1. Constant war 2. Inflating their money

Anyway, the people you've been talking to lack historical perspective. I was around when the vietnam protests would attract 500,000 people each, in multiple cities, in the same day, in the USA. When gas lines were two hours looong and you weren't allowed in that line except every other day. It was long before iPhones were avilable so it was a long boring wait. We actually read books to pas the time. 

And of course we were "going to end up being fried like a potato in nuclear holocaust", How do you plan your investing when everyone will be living in a Mad Max world. 

Yeah, I could go on and on, but the point is most people live in their "here and now" and that is what their reality is to them. Most people live pretty well, but the changes are real, it's just not that obvious yet.

Tough call to make. That should have been worked out and put into the Joint Venture agreement you both signed. What, no Joint Venture Agreement? Well, that's a fine kettle of fish. This is headed the wrong direction already. We will be hearing from you again on issue after issue.

Seriously now, go to a search engine, find a Joint Venture agreement, work out the details now before everything happens and save your selves a lot of hassle later. Better yet, have an attorney draw it up since he will know what questions to ask you two.

We always teach Lease Options first because they are the easiest and safest. Locating, marketing and negotiating the deal, understanding the underwriting, using escrow and title, and all of the basics are used so that it prepares for the more complicated techniques. It's like learning to ride a bike, first you introduce the basics, learn how the breaks work, learn to steer, and how to peddle. You don't start your learning at the top of a hill headed into a busy intersection. You start in a playground.

I often buy using Subject To to buy properties. If you choose to use this technique these are some of the Pitfalls to watch out for. You can build a very strong portfolio, if you take proper precautions.

Subject To Pitfalls

1. The bank can call the loan due (due on sale cause).

2. You need money to do a "no money down" Subject To. The seller needs moving money, there are oftentimes an arrears that has to be paid on the loan, there are oftentimes HOA fees that are due, there are title costs, there are escrow costs, usually there is deferred maintenance, you have to make mortgage payments out of pocket until you get a renter in there, you have to pay utilities and taxes, and you need reserves in case it all doesn't go as planned.

3. You can really mess up the seller's credit if you miss payments and they can then sue you.

4. If the seller files bankruptcy in the future you have to prove to the court that you bought the house fairly. That means you have to hire an attorney with uncertain outcomes.

5. If there is a fire and you haven't set up your insurance properly you could be in for a big surprise and not receive a payout.

6. A common source of Subject To deals is people in distress (foreclosure) who have a pending sale date. If you promise them a "rescue" and you don't get it done before the foreclosure sale they can sue you and the local authorities can investigate you.

7. In many jurisdictions (Washington, Oregon, California & others) it is unlawful to contact people in foreclosure unless you are an attorney or real estate agent or loan officer .

8. If you miss payments on the underlying loan you can go to jail after a very unpleasant investigation.

9. The seller can come back in a year or two and say the sale was unfair and they were taken advantage of and an attorney will believe them and sue you.

10. You can use a Quit Claim Deed and that can be rejected when you go to sell the property.

11. The seller can disappear from contact over time and not be available when you go to sell - you need their assistance oftentimes depending on the lender.

12. You can't contact the lender directly, they won't talk to you.

13. The payment can change and you won't be notified.

14. You can find out later that there was someone else on title that you weren't told about until you get sued.

15. You believed the "Subto community" and now you are in deep doo doo and in a world of hurt because of what they didn't tell you. The judge isn't interested in your "explanations" or finger pointing.

16. The "Subto community" is NOT a good source for learning how to solve the Due on Sale clause. The "guru" just had 10 Due on Sale called. They are factually, actually and legally just plain wrong on how to STOP Due on Sale. (Ask an attorney)

17. Paying for proper training, "one on one", with someone who has been doing this for many years, is the only answer to learning Subject To legally and safely. You can NOT learn this in a group setting. It's like learning to drill teeth by video.

18. Lawsuits begin years after taking over the property, they do not appear right away. They sneak up on you.

19. If you can't afford proper training, you can't afford to do Subject Tos.

20. Of course there are more Pitfalls. Did you think this was easy? ;-)

There are solutions for all of these. But it is not "no money" needed, should never be overleveraged and has serious consequences for those that are undercapitalized. If you don't understand that last sentence, do not even attempt it. But, help is available.

Your comment: "I can sell my home and after paying off my mortgage and selling expenses I could net approx 750-900k"

You have to consider capital gains. 

If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home provides rules and worksheets. Topic no. 409 covers general capital gain and loss information.

The rest will be taxed, so a big chunk of that money will go to your uncle who happens to be a partner of yours. 

In California, capital gains are taxed by both the state and federal governments.

On the state level, California’s Franchise Tax Board (FTB) taxes all capital gains as regular income. Depending on your tax bracket, the tax can be anywhere from 1% to 13.3%.

Quote from @Erin Bergold:

Good morning everyone! I'm researching the concept of investing/acquiring pre-foreclosure and foreclosure properties for STR/MTR/house hacking. I have a strong background as a title abstractor, so I wanted to see if my research skills could help me land a nice deal or two this year.

That said, as a newbie to the field, I wanted to see if anyone could tell me on the example listing below, is the listed price the "buy-it-now" price, or can it be negotiated? If the latter, is there a certain methodology to conversing with banks about their REO properties?

I'd love to connect with any experts out there on this topic. Any relevant article/book recommendations are welcome also. Currently listening to "Bidding to Buy" on audible.  

REO means it's "Real Estate Owned" by the bank. It's already been through foreclosure. It is being offered for sale by the bank. Usually there is a real estate agent involved and they try to stick to the listing price. Sometimes a bank will sell for less than the REO price since in reality all prices in real estate are negotiable if both sides negotiate.

The back story is that a bank may sometimes allow a good offer to be denied because of internal politics. Always make an offer that makes sense to you.

You make your offer and go off to find a better deal. You may hear back from the bank but if your offfer isn't list don't be offended when they turn it down. Just resubmit or wait while it doesn't sell and try again.