All Forum Posts by: Lou Castillo

I looking to find out what new investors are looking for in education. What do they wish was offered out there by anyone to help them take the first step.

If you could find the perfect program to help you invest what would it be? What would it cover? How would it be delivered? Would you rather pay more and get personal/private attention or pay less and be part of a large group?

Dream a little and finish this sentence...

I wish one of these REI guru's would just ________

Thanks for the feedback.

What info would you find most helpful as a new investor? What frustrates you as you search for REI info? What do you wish was offered?

Yes, the Seller's credit would be affected. That's why you should never do a "subject to" unles you know that you can make the payments. It is also wise to have a disclosure signed by the seller which states that they understand that the loan is remaining in their name. The bank also has the right to cal lthe loan due when title transfers but they don't as long as payments are current becasue it doesn't make financial sense for them.

I always tell my students that rentals is a great wealth building strategy. Just be sure that you are ready to own - in other words that you have the resources available to handle the property in case of vacancy or unexpected repairs. The next thing is to make sure that the numbers work. Be sure to include all of the expenses: at least an 8% allowance for vacancy; a 6% allowance for maintenance and repair; taxes, insurance; any utilities that you'll pay; marketing for tenants or managment company fees, etc. If it works, then go forward.

In a subject to situation title to the property is transferred to the buyer, but the original loan stays in the original borrower's name. The buyer makes the monthly payments, but the loan does not show up on their credit report thus not impacting their ability to get more credit in the future.

So for instance, if you purchased 7 rental properties over the next year with your own credit, you might reach a point where you could not get any additional mortgages. Now, let's say that you wanted to buy a new personal residence, your ratios might be weak and your loan turned down. If however, all those properties had been purchased subject to the loans, none of them would show up on your credit and your ratios would not be affected, so you would be able to get your personal loan.

You are still responsible for making payments on all of the loans. It is not about getting out of paying - it jst doesn't affect your credit. In other words, you still need to make sure that your portfolio is performing well enough to take on responsibility for an additional loan before purchasing a house subject to.

To evaluate your plan adequately I'd also have to understand what you are trying to achieve long term. I see many investors tie up their cash and credit in their first few deals, then are out of both resources for future deals. Worse case, they don't even have enough reserves to handles bumps in the road. If you have plenty of resources, and want to use some now to get your first deal, then what you are saying seems to make sense.

You should also look to buy rental properties from motivated sellers where you can buy subject to their existing mortgage - that way you don't have to tie up your resources. The rates may be higher than you can get, but you won't face a cap on how many you can do. Just something to think about.

It is basically a virtual RE investing club with a forum and eucation products and other resources.

It's a small world isn't it? I hope you liked my talk.
Good luck with your investing.

I may really be out of the "know", but I have not heard of banks accepting 40-50% discounts on their loans. Under 20% is a good bet. 20-30% is tough and requires a lot of follow-up. Over 30% is almost impossible.

Given your numbers, I would say that the MOST you could pay for the property is about $190k which leave about $10k in it for you and $25k for the rehabber. At $190 you are talking about a 33% discount.

Get other opinions, but if I were you I wouldn't put a lot of effort into this deal. Submit your offer to the Trustee and see what happens, but I think that the chances of success are low unless the bank is really desperate to get rid of this house.