All Forum Posts by: Pat G.

Jeremy:

Typically most of my Subject To deals didn't have equity, actually the owners paid me to buy their home. If there was equity, they waited for it or if it was a lot I didn't do the deal, if they needed it. One thing to remember, homeowners who are willing to sign over the deed to their house and leave the mortgage in their name are motivated, i.e. two houses and payments, moving out of city, country, etc.

I would do a direct mail campaign into areas that I knew what the houses sold for and then the motivated owners would call me and I would have my Property Information sheet out and start asking questions, like how much they owed, what are their payments, etc. This is the point that I knew if they had equity or not and then would ask them, do you need the equity to make this deal happen? Most if not all, already had another house they were living in at the time. If they didn't want to tell me those things, they are not my clients. 

I always marketed in areas with starter homes, 3 beds, 1 bath basement and garage in a good school system. I knew exactly what the house will sell for (Lease with Option) and why it hasn't as I talked to them. Most callers were listed with a Realtor and were not happy with them, i.e. the house didn't sell. 

Here is the key to "Subject To" I used a worksheet similar to what the Realtor used to figure out what the owner will "Net" from the sale of their house. Meaning a Realtor "Lists" homes and that is different from what the owner actually takes home - "Net". The Realtor sucks you in with a big listing number. (No offence to Realtors out there, :) )

I would take the price that the Realtor listed the home for, minus the 6% Realtor fee, the 3% closing fee and any repairs needed to get the number I would offer the home owner. They were not scared, because it looks like what the Realtor showed them several months ago, and I have them agree to each line item as well. Typically that number was a negative number. I would shave off a few dollars and say Your House is SOLD for X today! They would write me a check, sign my docs and I am on to the next one. - I may have missed a step or two there, but you get the drift. 

Hope that helps

Pat Gage

P.S. It is all in the motivation of the seller! They have to be motivated! 

I am in talks with an owner of a self storage facility and I am wondering which option is better to purchase it. A Master Lease with Option or Seller Financing and why?

Here are some details of property:

- not listed, owner called me off direct mail campaign

- 260 units in 5 buildings no climate control and 70% occupied (unverified)

- owner has price in head of $1,350,000, probably from a broker

- owner brought up seller financing in talks

- I should receive financials this week from accountant

- property is free and clear

- agent for Penske truck rental - only one in 10 mile radius 

- paved, fenced, and has security system (unverified)

- house/office in front of facility with 2 employees - 1 is live in manager

Thanks in advance for your input. I am also looking for debt investors on this one as well. Owner owns other property in town such as cell tower, vacant land and a sub shop and he has owned this property for 17 years and he is ready to retire, he is 71 years old. 

Christopher:

1. As far as Self Storage there are 15 self storage complexes in Lufkin, TX alone. I searched Google using "self storage in Lufkin, Texas 75901" Maybe if you can offer Climate Control storage you may have something there. 

2. Contact a commercial broker and ask him/her to come out and give their option of what they could lease it to and for ($). 

3. Contact the local Chamber of Commerce and see if any businesses are looking for space.

4. Run Google and Facebook ads for about $10 a day for investors/businesses.

Hope this helps,

Pat Gage 

Jason:

I don't want to scare you off from doing this, but here is some things to think about:

I would go to the City Hall and find out what the building is zoned for, talk to the building department about the elevator and sprinkler systems and other code things that you would need to upgrade to as the new owner. Be honest with them and tell them what you are thinking and if you like what they say, go forward. 

Make sure the building is not "Historical" either or any other reasons for it being a NO GO. 

Ask about the current owner, city hall employees love to talk so let them. Most people are there yelling at them, they love it when your nice. I am sure that the building department knows of the building and owner, if it has sat vacant for years. 

Also ask about the process to get your C of O (certificate of occupancy), some times you may have to go in front of city council to get improvements OKed. This ads time and cost to your timelines. You may also have to hire a architect ($5K-$8K) to draw up plans on what the renovated building will look like for that meeting. I had to do that with my retail strip center. 

Good luck

Pat Gage

Jeremy:

Congrats on taking action. Always be looking for money, but in the mean time you could go buy "Pretty Homes" using a technique called "taking the home subject to". With this technique you will get paid to buy somebody's home. I did this for years here until I got into commercial. It is a good way to get cash flow and any repairs are paid by the seller. 

Here is some resources to check out Randy and Charlie France and Bob Meister offer several courses on this subject. I learned from them. And then for the Mortgage Wrap there is Wendy Patton, here in MI.

This may be a way to get cash flow going while you are looking for money and deals. You will be a landlord with this method. It may not be what you Love to do, but it is an option.

Good Luck

Pat Gage

Ronald:

Welcome and don't be afraid to ask those questions that are lurking in your mind. 

Have you selected a REI type yet? wholesaling, foreclosures, rentals, lease options, etc.

That would be the first step and then go get educated on that subject. 

Good Luck and welcome

Pat Gage

Donte:

Here a few suggestions:

1. Search for local Real Estate Investing Associations (REIAs) in your area and then attend their meetings. Most will have a chance to either have a vendor table or to introduce yourself. 

2. Run some Google or Facebook ads targeting investors in your area. 

3. Make sure the SEO search engine optimizing is top notch for your web site so investors will find you. Offer an investor pricing, etc.

4. You could go to a list broker, like Melissa Data and get the names of investors and then direct mail to them. 

Hope that helps

Pat Gage

Brandon: Congrats on the opportunity. I am sure you did this, but it wasn't in the post. Did you run some sort of comparable for the property?

Also, could you do some type of seller financing with the motivated seller? Do like a 2 year Master Lease with Option. It is worth a try, that way you forgo the banks until you really need them. 

Awesome job on the numbers by the way, that is the way to think to be successful. 

Pat Gage

All have great ideas and help, but I would ask ONE question first - How Much Rent can I get for each unit? What is then going to be my CASH FLOW. You can find that out by going to rent.com as well as looking on the local MLS to see what others are leasing/renting homes for in that area. Check with the local rental companies on campus and see if it would be worth putting your complex into one of their rental programs and have them rent it out for you.

To figure out the neighborhood call the local police and talk to the cops who work in that area, also a lot of policing agencies have their calls on line for you to view. You are looking for the type of calls to that area, stay away from calls like: gun shots, drugs, domestic violence, shootings, etc. I do this for all my properties, most agencies have it all on line so you can print it out as well. 

Good luck

Pat Gage

Kenny:

Great move on getting education. I guess my question is this: in that year with Rich Dad what type of RE investing did your friend go for or like the best. In that year did he/she do any deals? If so, what type and did he/she like that type? If after one year with a mentor no deals were done - find a new mentor Quickly! 

You two need to sit down and make a decision on what type of RE investing you are going to do...Residential - short sales, foreclosures, wholesale, fix and flip, lease with option, rentals, etc. or Commercial - cell towers, billboards, retail, apartments, self storage, etc. Then do find a mentor that teaches that skill and learn all you can.

Good Luck,