Creative Real Estate Acquisitions

Introductions

• A little about me
• How I got into creative finance
• Why are you here?
• Are you built for doing creative deals?
What we’re going cover in this class
• Define exactly what Subject-To investing really is
• Legalities of Subject-To financing
• Benefits of buying a house using the existing financing
• Pitfalls of buying houses Subject-To
• Dispel some of the most common assumptions that real estate investors make about
Subject-To deals
• The Due on Sale Clause
• One-Trick Ponies (investors who only know how to do one type of deal)
• Ways to ease anxiety about how you’re going to fund your deals
• Show you a couple of lead sources that can get your phone ringing TODAY!
 Build Systems –
Live a Better Life
 A strategy for acquiring real estate
whereby the buyer assumes the
debt that the seller has secured
What the through a deed of trust and
promissory note without assuming
Heck is the note itself or even qualifying
for the loan. The buyer simply
Subject-To takes over the responsibility of
making the payments from the
Investing? seller in exchange for legal title to
the property and other
consideration.
What are some of the benefits of subject to investing?

•No bank qualifying

•It’s possible to buy real estate with very little money
•Can buy houses that many other investors would pass
on
•No limit to how many properties you can buy
•Tax advantages for buy and holds
•Interest rates on owner-occupied mortgages
What are some of the pitfalls of owning a home
that you purchased subject to?

•Responsible for all aspects of owning a home

• Taxes
• Insurance
• Hoa’s
• Repairs
•Inability to pull equity (HELOC or 2nd mtg.)
Common
Assumptions
•Assuming the Loan
•Getting the house under contract sub2 and then flipping the
house to an investor

•Buying a house subject-to and promising to pay the loan off in

a certain amount of time (balloon)
 How I Define Subject
To
Earning enough of a sellers trust that the seller
is willing to deed a property, of which they
have an enormous personal stake in, to me in
exchange for the promise of managing that gift
in a reliable, trustworthy and diligent manner.

• You are making a promise to your seller that you

should regard as an honor. The seller is trusting
you to do what you say.
• You’re promising the seller that you will make
timely mortgage payments.
• If you can’t afford the payment right out of the
gates, do not do the deal.
 The
Dreaded
“Do On
Sale”
Clause
 DOS – What is it?
• The Due on Sale Clause is a provision written into every deed
of trust, and mortgage, that allows a lender to call a note due
upon the transfer of legal title if the transfer takes place without
simultaneously paying off the note at the time of transfer. (or
going through the process of assuming the loan if the loan is
assumable)
• The dos clause can be enforced for a number of reasons except
for those explicitly listed in the Garn-st. Germain act of 1982
• https://www.law.cornell.edu/uscode/text/12/1701j-3
 MAKE
I’ll Let YouTHE
Here is the secret sauce that
In On A Secret…
will keep the bankers at bay!
PAYMENTS!
Here’s the way that banks work…

• Two primary columns in

a banks ledger
• Performing
• Non-Performing
• Bankers are happy when
assets are performing!
Debunking The “Subject To Is Illegal” Myth

HUD-1
One Trick Ponies
Let’s get creative
• Approach every deal with a
creative mind
• Shift any anxiety you might have
about the deal to building rapport
and trust with the seller
• Understand that the deal has
already been funded
• Start with the seller first
Checkpoint
•What is your definition of
Subject To Financing?
•What are the facts around
Subject To Financing that you
can use to debunk the
“Subject To is illegal” myth?
Creative Real Estate Acquisitions
Marketing
Converting using Existing Marketing

You already
have the deals. You just
don’t know it!
Referral Network
• Tell everyone what you do
• Wholesalers
• Podcasts
• Youtube
• Be specific, making sure that your network
knows exactly what you’re looking for
• They will pre-qualify your leads for you
• Follow-up with your referral network
regularly
• Think e-mail drip campaigns
Online / PPC Marketing
• There is no better lead than one that is seeking out
what you offer
• Avoid “tire kickers”
• Assume motivation right away
• Dangerously expensive if you don’t know what
you’re doing
• Not for non-techy types or the faint of heart
• Worth every penny if you can get it right
Offline Direct Response Advertising
•Bandit signs
• Affordable
• Effective
• Simple messages work best (we buy
houses for cash)
• Not sustainable
•Bandit signs on wheels
• More expensive but very
sustainable
• Very effective
• Natural compliment to D4D apps
like ProfitDrive
Offline Direct Response Advertising (cont.)

•“Quasi” Bandit Signs

• Credibility
• Give the appearance of a paid
billboard
• Placed back away from the road a
bit to appear more “official”
• Install close to existing billboards
or commercial “for sale” signs
 List Building / Direct mail

Divorce Probates / Inheritance

Pre-Foreclosures Expired Listings

25 I
Creative Real Estate Acquisitions
Creative Real Estate Acquisitions
Recap
• Legalities of subject-to
• Legal in all 50 States
• How to avoid some of the pitfalls associated with Sub2
• Avoid litigious sellers
• Stay in your lane, focus on your criteria
• Avoid assigning subject-to contracts
• How to talk to sellers
• Open, honest, poignant and empathetic communications
• No “Surprises”
• Creative thinking
• Understand that the deal is already funded
• Assessing deals
• ALL numbers must work
• Deal with motivated sellers only
Recap
• Marketing
• Use existing marketing channels
• Referral network
• Revisit “dead” leads
• Entity structure
• LLC vs. Trusts
• “Hybrid” entity structure
• Walk through purchase side deal flow
• Closing deals with or without a title company
• Follow the deal flow
• Insuring a Subject-To Deal
• Trusts vs. LLCs
• Exit Strategies