All Forum Posts by: Curt Smith

I'd forget assumption!!! You PERSONALLY have to get through a typical bank underwriting to qualify. The debt is then in your name. Buying sub to keeps the debt in the sellers name a vastly desirable scenario. Find a sub to closer via joining local REIA groups!!!

I agree with @Doug Pretorius on all his points including how to market to sellers who have no equity, serious problems where MLS sale is not possible or a deep fear/hate of agents and (LOL) wants the house gone asap. I'm marketing via creativereireply.com (new feature of an existing sms tool) to scrapped leads for FSBO, expireds. Got a sub to contract in 6 days, was luck IMHO from a FSBO; was in divorce, living in a big house sleeping on the couch, wanting to be free to buy a camper and drive the country ok with me paying the mortgage. EVERY sub to that closes has hair, issues, problems, and all are different. But yes per Doug I agree all have been FSBO, or expired. Another source but MUCH more difficult are pre-foreclosure. IE the NOD went out on public records but only 4 weeks to solve their problem and close. EXTREMELY difficult and advance deal type. Best to focus on FSBO and expired.

BUT to the OP's question;   I will (but never do) sell to a buyer on a wrap note where I stay in the middle.  Agreeing with Doug. I will guarantee the sellers bank gets paid.  But I net an arbitrage interest rate and term and sale price vs the balance for my profit.

Any closing attorney can write up a wrap note and mortgage (security deed) and close your so called assigned sub to.  Step 1) would be YOU close on the buy side.  THEN market and sell on a wrap.   It would be very advanced to do this in one step.

Connect with me, then PM;  I can send you sub to training doc I give away because I hate to hear of the very complicated sub to closing steps getting screwed up.  Lots to do correctly to find, negotiate, close, then POST CLOSING steps.

Best to all.

Hi Roger,  I have not done a sub to in AL, but its my main deal scenario here in GA.   At the least, connect with me and PM me I'll send you my free sub to training PDF.   Then email me re your deals specifics.  I just hate to hear of a sub to closing screwed up.

Googling:  GA vs AL closing laws are the same

That discovered; I can share that 2 yr ago the closing attorneys I had used to close sub to changed their mind and said no.  That sent me scrambling to  close a deal.   

#! tip: Join your local REIA!!!! Old timers are in REIAs, Real Estate Investor Associations. Find REIAs in meetup.org in your area. These folks can refer "investor friendly closing attorneys".

I called all my investor friends, REIA contacts and was referred a fantastic closing attorney who knew sub to and closed several deals. Read my training. YOU BRING ALL DOCS YOU CREATE to closing. Folks think toooooo much of their medical Drs, and tooooooo much of an Attorney. You need to be MORE educated about your deal then anyone else! Then your task iis to find service folks who will do as YOU tell them to do. :) This puts you in the drivers seat.

My favorite Attorney rant;  do you know how little it takes to become an Attorney?   Just 3 years in law school on top of ANY 4 yr BS degree including Art History.  Yup, they basically don't know ANYTHING.  Except what their main day gig has been for the last 10+ yrs.  They do not know anything more then a narrow set of laws/practices and the simple docs they deal with daily.   Bring them a Sub to with a Trust, POAs, Affidavits etc and they fear the sky will fall and say no.

Best to all, curt

Hi Jason, I sell double wides (houses) on land contract, contract for deed, many names for the same thing;  title stays in sellers name till the terms of the contract are met.  Typically a down payment + monthly payments on terms;  interest rate and term.

The buyer must not be that educated, guessing, its in the buyers advantage to instead make an offer: financing via a traditional note and mortgage.   The deed transfers and the buyer now owns it.  If the buyer fails its a foreclosure to get the deal back.  As investors, sellers, I strong reco you DO NOT do note and mortgage in a judicial forclosure state.  In these states I agree the only way sanely and safely sell with financing is contract for deed, land contract.

FWIW land contracts are NOT well accepted in the South. But have good statutory support in the North. IE I've had lots of problems closing sales with financing via CFD in Georgia. I read of Ohio (for example) has great statutory support for CFD. So not only is use of a CFD state statute based but whether your state is judicial foreclosure.

I have a few CFD templates I can give you plus some dialogue about issues. Tersely if a buyer is weak enough to not be able to get a bank loan to buy, needs seller financing, there's other issues in play the seller / lender needs to protect themselves. Not unique to CFD, in play with all seller financing tactics. They stop paying, they under insure or drop insurance, they don't keep maintenance up and the place gets run down (you may get back a wreck) to name a few.

Selling on terms can be an additional source of interest income.  My CFDs offer 8% to 10% interest rates. Yup, in commercial (not an occupant) anything goes.  I do tune the term so that the monthly payment is affordable.   Chose:  monthly payment first, then selling price, then interest rate = the term.  If you use a financial calculator.   Term is the variable;  monthly is fixed by what the buyer can afford,  interest rate is just a number I feel I can get, selling price is important to keep it justifiable in the market place;  term is the variable.

But often you don't need the interest income, or the property is too weak and you don't want the risk (maybe 30% to 50% chance of getting the deal back) you just want a cash or financed sale so its gone for good.  :)   I sell dogs/junk for cash.  Decent deals on terms.

Best to all, curt

Hi Jeff, I got my start by joining all the local REIAs in the Atlanta area. There still are 4. Each a bit different, each with differing numbers of experts as members, each with differing willingness to help new folks. I suggest you use meetup.org and find all the REIAAs join them and choose which works best for you. Local experts, old timers are in the REIAs historicaly. They know the local ropes, willing to help you learn. I learned a ton at the REIA I ended up deciding on was best for me, GaReia. I find their google group for getting contractor referrals, legal issues commented on invaluable. Etc.

I like helping buy and hold folks figure out whats a deal, I even enjoy walking deals they are in contract for.

Read the paper linked off my BP profile, how to buy a bullet proof rental portfolio.    

Good luck, curt

 I see I forgot to add above;  connect with me, then PM, then BP lets be send back a file. 

@Jason Wray  tnx, and nice exception.  But what about a URL to the USDA map of what areas qualify?  IE "rural".

I was a partner in buying a mobile home park near Foley AL, we qualified for a USDA perm financing due to the small town/rural area of AL.   

The underwriting process was hell, took 3 months to close on that park. So much back and forth with the small commercial bank that served that area. In the end we closed with either 20 yr or 25 yr amortizing loan, with a 5 yr pre pay penalty. Pre pay penalties are common in the commercial/DSCR space. BUT fully amortizing is NOT which is a reason to go after a USDA loan if your asset, your team and the address qualifies. But tell the seller that the close will be long very long.

Most easier to get commercial loans are balloons, 5,7,10 yr more likely you'll be offered a 5 yr. I strongly suggest you do not take 5 yr but at least 7 yr. Long story on the math of value add and a REFI (like the purchase) needs a T12, 12 mo look back on your books so to raise rents, do rehab, fill the place up, increase NOI you need alot more time then most new buyers realize. Its possible in a 5 yr balloon to do some work, do some increasing NOI, and have the REFI appraisal come in low and the new lender not offer you enough to take out the balance on the current loan. Especially if you did like so many buyers, offered TOO MUCH and time and increased NOI didn't increase the "appraised value" enough. Anyway I wandered a bit.

Best of luck, curt

If its vacant, they are netting zero plus negative due to expenses!!   Your offer can be less then you think.   Find the seller in tax assessor, skip trace and phone call.   Letters are 1/10th as effective as phone calling.   Say you've been watching the house on zillow rentals.  You like the house and would like to buy it.  Then keep quiet.  Just ask "why", "what" questions and listen.  The owner will give you deal scenarios they'd be open to.   

80% of all deals are after 6 mo and 6 phone calls.

Best of luck.

All above are good. Plus "bank loans" fannie/freddie won't lend with title in an LLC. You need to move the ownership (via warrantee deed or buy in your personal name to start) to get the lower rates an occupant can get. Worse say you do buy into an LLC (or trust) Fannie/freddie require 6 mo seasoning of the title to be able to put purchase or refi financing as an occupant. Commercial lending via DSCR/non-qm lenders do NOT allow you to occupy and are higher interest rate loans.

True about no homestead. Counties doubt LLCs are occupants but this really is up to each county and the tax assessors office std practice. I also had a problem titling into a family trust. Had to show the county the trust docs showing the original owner was still the beneficiary. Hint: sign 2 signature pages, one with the original owner as beneficiary and another to an LLC if thats what you _really_ want. :> Private trust docs are flexible, in havinng multiple versions depending on who you are giving them to. Forget about anonimity via trusts, too many other public foot prints. I wandered off...

Also, because of the above lender limitation, buy into your personal name, even rentals to get best fannie rates, then POST closing move the title into the LLC or trust with a warrantee deed at the same attorney who did the original closing and have him amend the title insurance for the new owner. Most will do this at no charge, and yoour cost is the attorney filing fees. $100 or so. But this is for rentals. For a residence, maybe move into a trust, for estate planing (this is the only value of moving the title into a trust), but you still have to work with the tax assessor to move / keep homestead. THEN update the insurance naming the new owner as the named insured. Too many folks forget to update the insurance and technically they are un-insured..

Sooo many issues with these complicated scenarios. Just keep it simple!!! Even if a rental, the facts are, there/s little benefit of titling into an LLC, due to 99% of folks do not do the annual paperwork to prevent the trail attorney from "piercing the corp veil" and negating the LLC. I use LLCs as tax strategies, NOT so much for liabillity containment: [multi member 1065 pulling Sched Es off my 1040, S corp for my Prop Management co and to hang our solo-401ks off].... For liability I do:

- maintain the houses tip top, and treat the tenants very well.  Friends dont sue friends.

- Carry high liability insurace $1M each door and another $2M via an umbrella over all rentals.  I use nreig.com for both.  Other carriers will not give an umbrella over many entities like my scenario;  solo-401ks, LLCs, personal etc, its a mess.

Best of luck, curt

Beatriz,  good luck in your moving and life style adventure!!!

You'll learn that gurus tout tactics that don't work in most areas!!!   For many reasons they never mention.  Everyone likes being a hero and looking smart.  NOW that said I'm not saying that folks (like me for example) don't have helps and stories of things that worked that aren't useful to learn from.  I'm saying that these stories don't come with enough context on where the worked and ..... WHEN.  IE 5 yrs ago in a different market..

That said (again) CA is a different real estate world.  It will take alot of mass exodus to switch from a sellers market to a buyers market and may never happen due to nice weather and places to visit.  We just spent 2 weeks traveling along hwy 101 from LA to SF.  NICE!!   So high demand for $1m shacks will be with those folks probably for along time.  

Your best bet is to join the local REIAs,  real estate investor associations, find in meetup.org, and learn what works in that area.   Most REIAs have an online/zoom optioon now so remote membership is doable.

I primarily buy subject to and have a free training doc on the complicated docs needed to close a sub to.  connect, then pm me.  I also like to help wil real deals.

Best of luck!!  curt