Rude Naysayer

I may have told this story before but it always sticks in my mind. After I had discovered wholesaling real estate I ran into a person I hadn’t seen in years. She asked the inevitable question, what I’ve been doing?
I told her I purchased a book on how to do real estate with no money and no credit and make big profits.
She rolled her eyes and without hesitation says “Oh, that’s a scam”
I smiled and told her, no, it works, I’ve done it.
Then she says, well, just because you did it once doesn’t mean you can do it again…
I gave her my best bug eating grin and told her, I’ve done it multiple times and I just closed on a deal that paid out $12,000
She gave me this weird look and I can only assume she thought I was lying my ass off.
It defies logic, I wud have thought she wud want to know how did I do it, can she get in on it.
I wanted to tell her the whole story how my life was improved and how fun it is etc.
But she ended our conversation quickly.
But, I think I been there, negative mindset and bad attitude.
I’ve had moderate success, buying some more books, and some absentee owner lists, I’m ready to up my game
Let’s make some Money…


I love your stories!

I feel like I’m throwing pearls to swine, whenever I mention what I do, to someone who’s not a fellow investor.

Non-investors’ eyes glaze over if you get into any depth. Never mind the distrust and second-guessing you get about your profession. I think prostitutes get a better reception.

I rarely share about the deals I’ve done, because the boring ones are boring, and nobody would be impressed, or care, and the interesting ones, makes me look like a liar. I mean, when I tell someone that I bought a 5/3/3 for twenty dollars, they think I’m stretching the truth, or leaving something out.

Yes, I am leaving many things out. Such as a down payment I didn’t make; a title insurance policy I didn’t buy; a credit check I didn’t do; and an appraisal I didn’t want.

Without all those things, and a twenty dollar bill, I took ownership of a fully landscaped, two-story executive home with five bedrooms, three baths, three-car garage, a bonus room, and zoned a/c, and seller-financed it for a seventy-thousand dollar equity profit.

Never mind the deal where the sellers wanted to pay me to buy their house (a technique I was challenged to put to work by a fellow poster here).

To be fair, I had to pay the transfer tax and a notary, and I had to advertise for buyers, but beyond that, I gave the sellers a twenty-dollar bill for their equity, and I walked with their deed, with a promise to make their house payments.

Did I mention the house was only three years old?

It would probably be worse, if I said I was a landlord. IDK

Yea, taking Title to a house subject to the existing loan seems crazy as hell and then making a big profit on it sounds even crazier.
Who would believe it?
I’m always amazed how some knowledge and taking action can make a big difference in our lives.

Most don’t. I suppose that why I don’t have a lot of competition. The rest think it ‘must’ be illegal.

My parents were doing sub2 deals before there was a name for it. This was also when FHA loans were fully assumable without qualifying. What nobody understood was, the original borrowers remained on the hook for those FHA loans for at least three years after they were assumed. So much for “fully assumable.”

Of course, non-qualifying assumable loans were all the rage for single family investors like my parents. So much so, the FHA began limiting the numbers that could be originated/assumed by one person. Undeterred, my parents got my brother and me our very own social security numbers and …they started assuming FHA loans in our names. I can honestly say, I was a homeowner at 9 years of age. In fact, my brother and I owned a portfolio of homes by the time we were teenagers. And my parents had me working on those suckers starting at eight years of age.

Interesting little fact here. We were assuming loans on relatively new, bread and butter houses, with little equity.

I’m doing a similar thing today, except on higher priced deals. It’s all percentages. I can make 20% on a $150k house with virtually no equity, or 20% on a $500k house with virtually no equity. It’s the same qualifying, and the same objections, and the same closings. It’s just the dollars are different.

As an aside, when the market is hot, the naysayers are out in droves warning of impending doom. When things are cool, the same doomsayers are out in droves saying, it’ll never get better.

If you’re in this for the long haul, and willing to let your renter pay off your mortgage, does it really matter what you paid?

You stirred my memory. One of my very first deals was going to be a sub to. An old ranch house on the edge of the city with an acre and zoned for livestock. Lady called on my I buy houses ad on CL. It was seriously underwater. Sellers owed 160K and it was worth 120 on a good day. But, they had a crazy low interest loan on it and the payments were less than $1100
Seller was a 70 year old truck driver and wanted to get a mobile home and retire.
I explained that the only way to sell this houses is to keep the loan in their name and sell to a qualified buyer. They agreed and signed my contract. I ran an ad on CL that afternoon and by morning I had 4 calls. One couple wanted to see the place immediately, went to see it, sellers gave them the tour, and they agreed to take it over and pay me an $8,000 fee
I remember thinking this is too easy.
Next day the sellers wife left me a message that she believed she had 3 days to resend the contract and was cancelling.
It was devastating, I went into a 3 day funk.
Then I got mad and determined to make it work. I did do a few more shortly after and made a ton of money, $4,500 on one and $15,000 on another.
But I come across much more wholesaling opportunities.
How do you get your Sub to leads?

My primary and highest-quality lead generation is from direct mail. That lead source generates specific, predictable leads, since I hand-pick the property profiles I send to. As a result, I don’t get calls where the sellers are upside down, as much as they are sideways on their loans. Also, I sift out leads on acreage, and condos, and mobile ‘estates.’ I only want newer homes with high mortgages.

However, I maintain several other lead generators where the sifting is necessarily less precise. I still try to sift using the ad copy, but still get calls from prospects I have no intention of buying from. For example, I don’t want rehabs, or house more than 10 years old. Houses built before 2005 smell like rotting fish heads for my purposes. You want the house gone in a week. When you’re guaranteeing a loan payment on a house, you don’t want to end up guaranteeing several of them, because you bought a house that your market doesn’t consider ‘fresh’ anymore.

That said, ‘sub2’ is a fantastic financing tool for rehabbers. Rehabbers need down payments, good credit, carrying capacity, reserves, and ‘sub2’ eliminates most of that liability. In other words, it saves a LOT of time and financing costs.

It might take a seller months to find a buyer willing and able to buy his fixer.

A smart rehabber might offer:

  • to take over the seller’s payments,
  • give him a note for his equity,
  • get the deed,
  • fix the house,
  • sell for cash,
  • pay off the seller,
  • do it all in six months’ time,
  • and everyone wins.

The seller gets out of the payments, and still gets his cash in just a few months. The buyer gets in and out fast, and saves a LOT of financing costs.

In this way, if worse came to worse, the buyer could less expensively refinance the loan, rather than buy new financing.

Never mind financing is a terribly expensive element in real estate investing, and this is a sophisticated way to minimize that expense, and put it toward the bottom line instead.

Great info, I want to go out there and find some more Sub To deals.

I had one sub to deal go south on me. I’m embarrassed to say it was my own Moms house. It was a new house completed right b4 the crash. It was seriously underwater, she owed 200 and worth 140, She was offered 300K right b4 the meltdown but turned it down.
Anyways I got it sold for balance owed and collected a 15K down payment, I kept 4K and gave mom the balance. Well fast forward a few years later and it wasn’t underwater so much anymore and dear ol Mom decides she wants it back.

The buyers started a lawsuit and walked away with their 15K settlement.
Mom had to borrow on her credit cards to pay them off.

Mom recently passed away and the mortgage balance is now 170 and is worth 240. It actually has a $100 cash flow each month and I got a renter in there.
$12,000 is still owed on the credit cards, I decided that was Moms debt, not mine and of course it doesn’t affect my credit.

I felt sorry for the young couple my Mom screwed over and I was totally embarrassed over the entire episode.
It was a great lesson in my study of human behavior.

Another sub to deal I did was on an underwater farm house. I was listening to Ron LeGrand and following his methods.
The bird dog and I split a $7,500 down payment and the seller actually lowered the payments $400 a month for a year to make it more attractive to the buyers cuz the payments were a bit high. Seller made up the difference out of her own pocket cuz we were having trouble finding a buyer. That deal was about 4 years ago and now the house is above water and buyers and sellers are still happy with the deal. The elderly sellers had owned this property since the beginning of time and had taking out a huge equity loan on it.

So, you got any stories? Of deals gone South?