Learn To Be Rich » subject to

Short Sales and Interest on Subject To Deals

James — Mon, 26 Jul 2010 17:10:24 +0000

Friday’s episode of The James Orr Show contained the following:

First, James tells listeners that his computers are having some technical difficulties because he is integrating Dropbox in to his business.
Next, James reminds listeners to join the Private Money Mastermind Group, and talks a bit about what they discuss in the group. James also recommends joining before August 1st, which is when the price goes up from $10/month to $20/month.
He also recommends newer listeners to look at the new real estate entrepreneurs resources, which include many articles, videos, and free downloads.
James’ last reminder is for people who are interested in wholesaling or bird dogging. He reminds them that he is looking to buy houses and is willing to pay them for finding deals.
After all the reminders, James reveals the new Affirmation for the Day. James then discusses the affirmation and compares it to The Daily Checklist, which can be found in James’ book, Real Estate Investing Systems.
After the affirmation, James answers some questions on short sales, and ways to do short sales.
In addition to discussing short sales, James answers a couple questions about creative ways to buy houses.
After the questions, he discusses buying subject to. Specifically he goes over interest on subject to deals and how that affects buying price. To go over this in more depth James discusses an imaginary deal where this situation happens.
After James goes over the imaginary deals, he answers a few questions to wrap up the show.

If this episode sounds interesting, you can listen to it below, or, you may find up to the previous fifty episodes of the show on iTunes available as a podcast.

The Advantages of Buying Subject To

James — Mon, 26 Jul 2010 15:37:23 +0000

In this episode of The James Orr Show, you will find the following:

First, James reminds listeners that you can find Wednesday’s show, which was about subject to and the due on sale clause, at the Learn To Be Rich website. He also reminds listeners that they can find up to the previous fifty episodes of the show available on iTunes as a podcast.
The next reminder is for newer listeners to check out the resources for new real estate entrepreneurs, which include dozens of articles, videos, and free downloads.
After the reminders, James reveals the new Affirmation for the Day. James also talks about a deal he had that related to the affirmation.
James then goes over a listeners deal, and talks about money that will be needed for repairs and other property maintenance costs. James also talks about how much money the listener will make on the deal. In addition, James discusses the ways he could sell the property.
Next, James explains why a lot of hard money lenders want deals that are around 70 cents on the dollar.
James also discusses the advantages of buying houses subject to. Some of the advantages he talks about are tax benefits and limited expenses.
After discussing the advantages of buying subject to, James goes over using a trust to buy properties subject to, and talks about a common misconception of being able to avoid the due on sale clause with a trust.
Near the end of the show, James answers some listener questions on subject to deals.
To close the show, James reminds listeners to join the Private Money Mastermind Group.

If you want to listen to this episode of The James Orr Show, you may download it below, or, you may find this, and many other episodes, on iTunes available as a podcast.

Setting Goals Using Graphs in Your Business

James Orr — Tue, 20 Jul 2010 15:08:31 +0000

On this Motivational Monday episode of The James Orr Show you will find:

To start the show, James has a few reminders. First, he reminds listeners that are listening to the show after the fact to attend the show live. He also recommends newer listeners to look into the new real estate entrepreneurs resources, which include many articles, videos, and free downloads about wholesaling.
After the reminders, James jumps in to the Affirmation for the Day with a short discussion about focusing on the things you want to improve on.
Shortly after the discussion on the affirmation, James talks a lot about mailing lists and postcards in response to a listener question. Specifically, he talks about matching the marketing message with the market being mailed too.
Then, James continues his discussion on the affirmation, and talks about setting goals using graphs to track progress. He suggests using graph paper or excel to make the graphs.
Next, James talks about what he learned at the seminar on Friday, and discusses the “subject to” method of buying houses. He specifically talked about what he learned at the seminar regarding subject to.
Near the end of the show James discusses several listener questions and comments about subject to.
To end the show, James reminds everyone to join the Private Money Mastermind Group before the price goes up in August.

If you think this episode of The James Orr Show sounds interesting, you can download it below, or you can find many other episodes on iTunes available as a podcast.

Strategies For Acquiring or Controlling Properties Without New Bank Financing

James Orr — Tue, 08 Jun 2010 14:07:52 +0000

Yesterday on The James Orr Show for real estate entrepreneurs James covered the following topics:

New recording up for The James Orr Show recorded live on Thursday, June 3, 2010 on the post Marketing To Find Deals, Money Concerns About Lease Options and Subject To.
If you are a new listener or subscriber, these live calls supplement the free training and resources that we already provide to you. Video, articles and audio downloads and more to get your started can all be found on the Real Estate Investing Resources page.
Submit your questions, deal analysis, biggest challenge for me now via Twitter.
“Getting The Money Bootcamp” with Patrick, Trevor and Susan over the weekend was amazing. Learned about legally raising private money for your real estate business (actually any business). Learned about how to correctly go about finding private lenders and learned from an SEC attorney the laws and rules regarding marketing for finding money for your deals. Also, learned about doing syndications and group investing. Learned about using government funding from Sean Carpenter (and will probably have him on talk about that with you guys in a future call). If you want to get more information about our Private Money Mastermind group.
James takes another live question and discusses how and when to talk to sellers about your wholesale deal.
Daily Checklist (from Real Estate Investing Systems book)
Review the Goals Checklist and from my mentor, Richard Roop, James talked about an affirmation: “I consistently take action even when faced with fear and uncertainty”.
James discussed a new short video on site that he added last week called “No Money Down Strategies For Real Estate Entrepreneurs”. It is really misnamed… should have been “Strategies For Acquiring or Controlling Properties Without New Bank Financing”. We discussed each strategy: Wholesaling, Partner, Option, Subject To, Lease Option, Assume Seller’s Loan, Buy On Contract, Owner Financing
James then goes on to discuss some strategies for how to improve response rate in all your marketing.
Before wrapping up the call, James discusses the importance of driving by comparable sales.
Bob Diamond will be joining us on Wednesday night to talk about creative no money down and no credit required buying strategies starting at 7 PM MST.
Don’t forget to follow James on twitter.

You can listen to or download this episode of The James Orr Show using the link below or subscribe to the podcast feed on iTunes.

Marketing To Find Deals, Money Concerns About Lease Options and Subject To

James Orr — Mon, 07 Jun 2010 14:30:49 +0000

On Thursday’s episode of The James Orr Show James shared some amazing information for real estate entrepreneurs including:

James shared that the episodes of The James Orr Show for May 28th, 2010 on How To Setup Your Wholesaling Business as well as the episode for June 2nd, 2010 on Why You Should Consider Wholesaling are now posted live on the website for downloading. Or, you can subscribe to the The James Orr Show podcast.
There was a reminder that there would be no live show on Friday, June 4th because James would be in Denver attending a boot camp on raising private money. It was being put on by the Patric, Trevor and Susan who authored Private Money Blueprint. James is actively part of the Private Money Mastermind group (which is recommended for all real estate entrepreneurs looking to network with other real estate professionals raising money for their businesses) and the boot camp would provide additional information.
James began the day with going over the Daily Checklist from the Real Estate Investing Systems book.
When covering the Goals Checklist, James talked about the affirmation for the day which was about appreciating unlimited opportunities available to all of us.
James continued to go over the Daily Marketing Checklist including information on buying and some on building your buyers list.
There were questions covered on doing lease options and especially on the money needed to do lease option and subject to deals.

To download this episode of The James Orr Show, use the link below or subscribe to our podcast:

No Money Down Strategies For Real Estate Entrepreneurs

James Orr — Wed, 02 Jun 2010 21:17:24 +0000

The following is a video I just made about no money down strategies for real estate entrepreneurs (really about ways to be an active real estate entrepreneur without getting new traditional loans in your own name would be a better title).

Click here to view the embedded video.

Some of the resources mentioned in this video are:

Subject To and Lease Option Deal Analysis Podcast

James Orr — Wed, 02 Jun 2010 14:36:01 +0000

Last Thursday, before the Memorial Day weekend, on The James Orr Show we discussed deal analysis and deal structuring when considering doing “subject to” and lease options real estate deals. It was a follow up to the previous day’s podcast where James talked about what “subject to” and lease options deals are, the differences and similarities between them and the pros and cons of doing them.

In this live recording with Q&A of the show, you can hear how James would structure a typical “subject to” deal, how to determine the most he would be willing to pay when buying it with no money down and just making payments with very attractive terms, how he would deal with any needs for cash on the deal and much more.

You can download the podcast using the link below or subscribe the all the real estate investing podcasts of The James Orr Show from iTunes.

No Money Down Investing Strategies: Subject To and Lease Options

James Orr — Thu, 27 May 2010 11:36:38 +0000

In yesterday’s episode of The James Orr Show we started out going over the basics again: working from your daily checklist.

However, James quickly covers the importance of setting goals and keeping your motivation up by referencing the Sowing and Reaping video by Jim Rohn and “The Dickens Process” by Tony Robbins.

For the remainder of the show, James covered buying properties with little or no money down using existing financing on the property. The two strategies he discussed were buying properties “subject to” the existing financing and leasing a property with an option to buy it. James talked about what buying “subject to” means and what controlling a property with a lease and option means from an investor’s perspective. He also compared and contrasted the two showing some benefits and downsides to each one.

On today’s show, he plans to go over some deal analysis strategies for buying properties “subject to” and using a lease with an option as well as start on the checklist for setting up your real estate business.

Subscribe to the podcast or download this episode using the link below.

P.S. If you are not following James on twitter, do it now.

Working With A Real Estate Agent In Your Real Estate Investing Business

James Orr — Sun, 31 Jan 2010 16:31:40 +0000

If a seller is working through a real estate agent, the process of transforming the seller into a motivated seller becomes a bit more difficult; however, it can be done using creativity and persistence. Real estate agents and brokers typically list houses and want to be paid a commission once the house sells. Getting a seller to deed you their house is hard when working through a real estate agent because of the following:

Most agents want to be paid cash for their commission. And most of the time when you buy a house “subject to”, it is because they owe too much on the house for a cash offer, and real estate agents may think, often incorrectly, that there is not enough cash to pay a real estate agent their commission in cash.
Most agents do not understand the concept of buying a house “subject to” or on a lease option and many will discourage the seller from considering such offers.
Agents have told the seller they can sell their house for cash, and the seller is expecting to bring them a cash buyer.

Do not be discouraged in these situations. If you strongly believe the seller will benefit from working with you and is properly motivated to sell their property, be creative and persistent. Here is one way you can work with the real estate agent to attain the end result that will benefit all parties involved.

Real estate agents may be more inclined to work with you if they cannot get a particular house sold and if the seller’s situation is conducive to your solution of buying the house subject to the existing financing. In this case, you can offer to pay the real estate agent their commission on the amount with which you buy the house; however, you will only
pay this commission once you close on the house with a buyer. This can be a year, two or three later. This situation typically works well for the real estate agent, the seller and yourself in situations where the property is unlikely to sell traditionally and the agent will not be paid at all.

Until my next post,

James

P.S. Did you want access to over 124 real estate courses including several full day seminars? Check out our Real Estate Investor Bronze Membership.

About The Structuring Offers Checklist

James Orr — Mon, 25 Jan 2010 05:36:47 +0000

Structuring offers is a deceptively simple concept. You can learn the basics in a couple hours, but it takes analyzing hundreds of deals to really start to understand the subtleties. Use the Structuring Offers Checklist as crib sheet to remind yourself of some of the key concepts you will need when analyzing deals and structuring offers to sellers.

In the Structuring Offers Checklist we cover most of the basic strategies for analyzing deals including an all cash offer which is based on the 70% minus cost of repairs formula. As an aside, some investors use 65% minus cost of repairs and some people use whatever the maximum percentage their hard money lender will loan minus the cost of repairs.

For most of the offers that I structure I want to calculate the net operating income first and so we include that as a prominently placed, early step on the checklist.

We do include sub checklists for structuring subject to, lease option and owner financing offers as well which are very important if you are trying to buy properties using any of those creative finance strategies.

We also address structuring offers if you plan to wholesale the property with the key consideration for doing that being: knowing what you wholesale buyers are willing to pay. Knowing their buying criteria allows you to structure offers where they are excited to buy even with your wholesale fee included.

Until my next post,

James

P.S. Interested in learning more about how to analyze deals? For a limited time you can download How To Analyze Deals Volume #2 for free.

About The Bills Checklist

James Orr — Thu, 21 Jan 2010 20:38:47 +0000

We break the Bills Checklist for property management down into two primary categories: automatic payments and manual payments.

Automatic payments include things that we have set up to automatically be paid like mortgage payments, property insurance and property taxes. We primarily confirm that these were paid and that the correct amount was paid for these. Once they are confirmed we log that it was done.

Manual payments are for most other bills that need to be paid manually. We may still use bill pay to pay them, but not an automatic, recurring bill pay service.

Once we have made the manual payments there usually is some logging to be done regarding the payment and that is included in our system for paying bills manually as well to completely document that payments were made and to keep our files organized for taxes and accounting purposes.

The system we have for paying bills is important, but becomes increasingly more important for real estate investors opting to work with private lenders and buying properties with owner financing or subject to.

Until my next post,

James

Final Day For Download “Secret Subject To Tips And Tricks” For 99 Cents

James Orr — Mon, 18 Jan 2010 22:02:24 +0000

While it may take me a day or two after tomorrow to actually pull it down, you should consider today the final day to be able to download the Secret “Subject To” Tips And Tricks Real Estate Investor Course for 99 cents. It will be going back up in price to $24.99 very shortly after today.

The Secret “Subject To” Tips And Tricks covers information on buying “Subject To” that I discuss in the Real Estate Investing Strategies Working Right Now video that I posted on Friday. If you have not watched the video yet, I would definitely do that before I decide to archive it for Bronze Members only.

Until my next post,

James

Real Estate Investing Strategies Working Right Now

James Orr — Thu, 14 Jan 2010 17:22:23 +0000

Tonight for our Real Estate Investor Bronze Members I am holding a training webinar called Real Estate Investing Strategies Working Right Now. In this webinar I will be talking about which real estate investing strategies are working best right now and highlight some of the training materials we have for our Real Estate Investor Bronze Members that can be used to learn specific implementation strategies, checklists, forms and downloadable training courses on the specific areas.

These are some of the topics that I have on the outline to talk about:

Wholesaling – Wholesaling is a great way to generate immediate chunks of cash as a real estate investor and a strategy that I strongly recommend for new investors wanting to get involved with the business as it will help you earn while you learn.
Virtual Wholesaling – Virtual Wholesaling is similar to wholesaling in many ways except you are able to focus on markets that are not local to you in your wholesaling. You will be growing multiple buyers lists, employ marketing in multiple geographical markets–often out of state–and have key dream team members in those areas to help you.
Buy And Hold – Right now a good long term Buy And Hold strategy is extremely powerful. Interest rates are at or near all time lows, the trend is that more people are moving toward renting and we are heading toward a period of high inflation meaning property values will likely rise considerably. A potential challenge is investor financing which I plan to address in detail for our members.
Subject To and Lease Options – Buying properties “subject to” the existing financing or structuring a creative Lease Option deal are two different, but similar strategies that specifically address the investor’s financing challenges while still solving problems that many sellers have in our current market.
Partnerships – There are many folks that want to get involved in real estate investing but do not have the time or expertise to really learn the business. There are some great opportunities for professional real estate investors that have the time and expertise to partner with folks interested in the benefits of real estate investing (income, depreciation, equity build up, appreciation and, in some cases, leverage) to work on the financing side with professional investors so that each of them could achieve more than they might otherwise achieve alone in a win-win partnership.
Multi-Units and Apartments – While this is not an area of expertise for me since my focus has been primarily on single family homes, I see an opportunity in this strategy and I think for the right person it is something worth at least looking into.

In tonight’s training session, I will also be sharing the amazing resources that we have for the following as well to address the very specific challenges of financing on the side of of the investor buying and also for profitable exit strategies for investors as well:

Owner Financing – Since this is a major area of focus in our business, I have some amazing resources and training materials on this topic.
Private Money – Last year when I actually got licensed in my state to be able to raise private money, I was one of only two people who had gotten licensed in the last 10 years and yet there is a huge opportunity with the low returns that folks are getting on their money for real estate investors to work with private individuals with private money loans secured by investment real estate.
Rent To Own and Lease Options (as exit strategies) – I will also be sharing some of the strategies for offering creative, flexible financing to your end buyers to make your exit strategy more profitable and give you a significant marketing advantage.

As you can see, there is quite a bit to cover on tonight’s webinar so I will be mostly pointing out specific training resources that we have already available including checklists, systems, forms, audio downloads and more. I will, technology willing, be placing the recording of the webinar up on the Real Estate Investor Wiki within a couple days.

Until my next post,

James

Owner Financing – Buy A Home With Help From The Seller

James Orr — Wed, 13 Jan 2010 06:18:00 +0000

The following article was submitted to us for publication and the reason I am sharing it with your is that it has a very common MISCONCEPTION about owner financing. In the overwhelming majority of cases there are strategies for a motivated seller to structure the deal even without paying off their existing underlying debt. Links in the article are exclusive resources for our Real Estate Investor Bronze Members. Here’s the article:

In the current economic climate, purchasing your own home can be difficult. Many buyers would like to take advantage of the low listing prices for properties, but are unable to get financing for the purchase in a standard homeowners loan from a bank. Another option for home buyers is Owner Financing.

Owner financing, or seller financing, means that all or part of a purchase is financed by the seller. Instead of paying a mortgage company or other lender, the buyer pays the original owner. The owner is the one who finances the purchase of the home. The main problem with Owner Financing is that most sellers are not interested in pursuing this option.

A seller must pay off their original mortgage before they can sell their home. Here is an exanple: A seller lists their house for $275,000, and has $200,000 left to pay on their original mortage. If you are financing the purchase price with a bank loan, the seller uses $200,000 to pay the balance of their mortgage, and walks away with $75,000. If the seller wanted to use the option of Owner Financing, they would have to pay off the $200,000 on their own. Most sellers simply do not have this amount of money readily available. Even if the seller is able to pay any remaining mortgage balance, they would then have to wait for your monthly payments over 20 or 30 years to see any return on the property.

Owner financing can be a great option for sellers who are interested in carrying investment properties, and have both the cash and time to do so. The return on a standard owner financed home is guaranteed at whatever the interest rate of the loan is. Sellers can usually charge a higher interest rate than a bank could, because buyers purchasing their home in this way may not qualify for a bank loan. Owner Financing is an attractive deal to buyers who would otherwise not be able to afford a home, even if they end up paying more in interest over time.

It can be difficult to find owners willing to finance the purchase of their home, and even if you can, you may end up paying thousands of dollars more. If you are interested in pursuing an owner financed home purchase, you should think carefully about the possible repercussions in the long term. Once the financial impact has been reviewed and thoughtfully considered, it is entirely possible that Owner Financing is still your best option.

Many real estate investors know how to buy houses with Owner Financing. If you are interested in learning about buying, selling or renting properties using these creative strategies then check out these free resources for Real Estate Investing.

Until my next post,

James

Buying Properties On A Land Contract or Contract For Deed

James Orr — Wed, 13 Jan 2010 01:29:13 +0000

Yesterday, I shared with you a download about buying houses Subject To as part of a series on Strategies For Investing In Real Estate Without You Getting New Conventional Financing (links provided for our Real Estate Investor Bronze Members who are logged in). Today, I am moving forward with the next item on that list: buying properties on a land contract or on a contract for deed.

Unlike buying houses Subject To where you are getting the deed to the property up front and just making payments on the seller’s existing financing, when buying on a contract for deed, you are agreeing to make the seller payments and, if you keep your agreement, the seller agrees to give you the deed to the property after a specified period of time. This is usually when you’ve paid for the house in full.

By having the seller accept payments for the house, you avoid having to get a new loan from the bank. Some sellers will allow you to do this when they still have financing on the property while others will do it only if they do not have any financing on the property.

Different parts of the country call this process different things, so you will want to find out what it is called in your area.

Until my next post,

James

Buying Properties Subject To Their Existing Financing

James Orr — Tue, 12 Jan 2010 23:55:27 +0000

Last week, in preparation for a talk I was giving at a real estate investor group I listed out Strategies For Investing In Real Estate Without You Getting New Conventional Financing (link for Real Estate Investor Bronze Members only) and I am not quite through the entire list.

Today we will be touching on buying houses Subject To The Existing Financing.

Over the holidays, I wrote a series of articles on this blog that answered many of the most frequently asked questions about buying houses Subject To, but to quickly recap: buying houses Subject To means that you are buying the property and leaving the seller’s loan in place. You are not assuming the loan and you do become the owner of the property.

I predict that while this strategy has been very popular with a relatively small group of creative real estate investors over the past decade, it will increase in popularity especially with our current financial markets and the tightening of credit for buying new properties as an investor.

Until my next post,

James

Assuming The Seller’s Loan

James Orr — Tue, 12 Jan 2010 23:52:59 +0000

To continue with our discussion today of Strategies For Investing In Real Estate Without You Getting New Conventional Financing (link is for Real Estate Investor Bronze Members that are logged in only), I’d like to discuss what used to be an extremely popular strategy for real estate investors, but that has declined in popularity as loan documents have changed: assuming the seller’s loan.

While the number of loans that are freely assumable have significantly declined over the past decades, there are still some available and many VA loans are still assumable today (be sure to read the actual loan document for details on assuming them).

Assuming loans is different than buying houses Subject To, which I have written about many times before and will be discussing in a future update relating to this series. When buying Subject To the existing financing you are buying the property and agreeing to make payments on the loan. With a formal assumption of the loan, you are going to the bank and having your name placed on the loan as having assumed it with the bank.

While I have not heard of any cases of this happening personally, the current financial situation may make lenders more likely to accept assumption requests even on loans that are not formally assumable. Rather than foreclose on another house, a lender might be willing to let an investor assume a non-performing loan.

Until my next post,

James

P.S. Want to learn more about assuming loans and buying properties “subject to” the existing financing? Check out the massive amount of resources and training we have on that for our Real Estate Investor Bronze Members.

Using Leases and Options Instead of New Loans

James Orr — Tue, 12 Jan 2010 23:46:12 +0000

Continuing on with my discussion of Strategies For Investing In Real Estate Without You Getting New Conventional Financing (link is for our Real Estate Investor Bronze Members that are logged in only), today I’d like to discuss using leases and options.

Similar in many ways to buying a property Subject To, using a lease and an option can be a great way for you to become active in your real estate market with very little or no up front money and little risk beyond the lease.

With a lease and option you usually have two agreements: a monthly lease or rental agreement and an option to purchase the property.

With the lease you are usually making a monthly payment and then sub-leasing the property to your tenant and making a spread between what you are paying and what your tenant is paying you.

You also usually have an option on the property that allows you to purchase the property–hopefully for a fixed price–within a certain time period. If property values in your market go up, your profit increases. If the property values go down, your profit decreases or completely goes away, but you can, with your option, decide not to buy the property.

Until my next post,

James

Having Trouble Getting Loans? Use Creative Real Estate Investing Strategies

James Orr — Tue, 12 Jan 2010 22:31:02 +0000

I was preparing to give a seminar to my local real estate investor group and this particular month I was speaking about Strategies For Investing In Real Estate Without You Getting New Conventional Financing. Our Real Estate Investor Bronze Members can access the entire outline for free by logging in and using that link.

As the financial markets are still relatively (relative to irrational lending practices of a couple years ago) tight, I wanted to share some strategies for getting involved with real estate investing that require absolutely no credit, no cash and no new financing for you.

Not every option below is a good option or one that will fit every situation. In fact, some are very limited in their ability to be used and some should not be used at all–especially if you have no credit, no cash and can’t get financing.

You can however, use some of these strategies to raise immediate cash so that you can document strong income and put healthy down payments so that you can buy some amazingly great deals that we are currently seeing in the real estate markets.

So, here is the list:

Wholesaler Your Deal – Find a deal, get the deal under contract and then sell your contract to the investor will ultimately buy the deal.

Create A Partnership With Someone That Has Cash Or Can Get A Loan – Find someone else that can and will get a loan and offer to partner with them on the deal.

Control The Property With A Lease And An Option (Lease Option) – Agree to Lease the property from the seller for a fixed monthly lease payment and have the option to buy the property for a fixed price within a certain period.

Assume The Seller’s Loan – With the seller’s permission, go to the bank and see if you can assume the existing loan.

Buy The Property On A Land Contract or Contract For Deed – Agree to make payments to the seller for a period of time and, if you make payments as agreed, after a certain period of time, you will get the deed to the property.

Purchase The Property “Subject To” The Existing Financing – Agree to take over making payments on the existing loan and have the seller deed you the property now.

Get An Option To Buy The Property – If you think the property will be going up in value, get an option on the property to buy it at a fixed priced at some point in the future.

Ask For Owner Financing From The Seller – If the property is owned without a mortgage or has a lot of equity, ask the seller if they will consider accepting payments instead of being cashed out.

Now, armed with that list above, you can use your creative thinking cap to go out and see just how you can structure deals to adapt to our current market conditions.

Until my next post,

James

Buying Houses “Subject To” Using Corporations or LLCs

James Orr — Tue, 12 Jan 2010 21:40:25 +0000

A less thought of but very powerful advantage to buying houses “subject to” the existing financing is the ability to buy houses using your corporation or LLC.

Since you are not qualifying for a new loan your corporation or LLC can be the buyer on properties that you are purchasing “subject to” the existing financing.

If you are concerned about Asset Protection and/or privacy of ownership, using an entity can prove to be very helpful.

Often real estate investors will use a trust–in addition to their corporation or LLC–when buying a property “subject to” the existing financing. This is NOT because a trust will not trigger any due on sale clauses, but because it can add an additional layer of asset protection by keeping your name off public record.

See your attorney for more information about how to structure an asset protection plan for you unique situation.

Until my next post,

James

P.S. We have some great asset protection resources for our Real Estate Investor Bronze Members. Upgrade today to access those.

Insurance And Buying Houses Subject To

James Orr — Tue, 12 Jan 2010 21:38:53 +0000

You will need to find a great local insurance agent that understands what you are doing when you are buying houses “subject to” to the existing financing to make sure that property is properly insured.

An Insurance Agent is a key member of your Real Estate Investing Dream Team (links are both for Real Estate Investor Bronze Members and you must be logged in to access them) whether you are buying traditionally or buying “subject to”, but since the loan remains in the seller’s name, it is important to make sure that your insurance agent writes the correct policy to make sure that you are insured properly.

Remember that insurance premiums can vary widely from company to company for very similar coverage amounts. Be sure to get competitive quotes and to get the quotes BEFORE you buy the property. It is best to know your insurance expenses before you commit to buy a property.

Until my next post,

James

“Rent To Own” As A Common Exit To Buying “Subject To”

James Orr — Tue, 12 Jan 2010 21:35:31 +0000

Once you buy a house “subject to” the existing financing, you’d like to be able to sell or occupy the property quickly and with a huge marketing advantage right? Well, being able to offer the property on a “Rent To Own” can give you that marketing advantage and get your property sold or occupied very quickly–especially in our current credit markets.

By offering creative financing options like a “rent to own” to folks with less than perfect credit, but with enough income to afford the property you offer something that only a small percentage of sellers are offering in your market.

Provided you can collect a large deposit toward the purchase and make sure that the payments your “rent to own” tenant-buyer is making to you more than covers your expenses on the property, it could be a great way to minimize your vacancy and maximize the return on your investment.

Of course, even marketing a property on a flexible “rent to own” program does give you the occasional cash buyer as well. So, by offering a “rent to own” you significantly expand the number of possible candidates that would be interested in buying giving you a huge marketing advantage. A huge marketing advantage leads to more demand which usually translates into a faster, more profitable sale.

Until my next post,

James

P.S. Subject To, Lease Options, Owner Financing, Zero Interest Loans… what does it all mean? Upgrade to Real Estate Investor Bronze Membership to get the full training experience.

A Strategy For Making Subject To Offers

James Orr — Tue, 12 Jan 2010 21:32:26 +0000

In my last few articles, I discussed how buying a house subject to the existing financing is similar yet different from leasing a house with an option to buy. I talked about how one is not necessarily better than another, but that each has its advantages and disadvantages depending on what you are trying to accomplish.

Now, I will share with you a strategy for making an offer to buy a house subject to the existing financing where the similarities between “subject to” and “lease options” are used to make a stronger, more understandable offer to a seller.

First, you might suggest in a trail close something like this: “I’m not sure if I can buy your house for that price, but would it help you at all if you did not have to worry about making the payments any more?” Motivated sellers usually reply, “yes, that would really help.” If you don’t get that type of response you might not be dealing with a motivated seller.

If they ask you what you mean you might say, “well, I could make payments to you for the amount of your loan while I am selling the property if I decide to purchase the property from you. Might that work for you?”

So far, you could be talking about either a lease option or buying the house subject to in the example. How you actually structure it can be discussed on the paperwork. In a future article, I will be discussing some strategies on what to do if you present an offer to buy the house “subject to” and, after discussing it, they do not feel comfortable with it.

Until my next post,

James

P.S. Upgrade to our premiere Real Estate Investor Bronze Membership today and get access to a wealth of additional resources, training and consulting.

How Lease Options and “Subject To” Differ

James Orr — Tue, 12 Jan 2010 21:26:29 +0000

In my last article, I shared with you how lease options and buying a property “subject to” were similar. While the mechanics of how they are implemented is very different, both offer you the ability to control a property–without getting a new loan–and, if you market and structure it correctly, can allow you to profit both on an up front deposit, on-going monthly cash flow and a large back end pay day when you sell the property.

So, what is different between using a lease with an option to buy and buying a property “subject to” the existing financing?

First, when buying a house “subject to” you are actually getting the deed to the house which will make you the owner of the house. This may give you tax benefits that you do not get with a lease option-check with you tax adviser for details of how that might apply to your unique tax situation.

Second, with a lease and an option to buy you have the option to buy, but you are not obligated to buy. That’s different than buying a house “subject to” where you are buying it at the beginning and need to be committed to following through with the deal.

So, it should be a bit clearer that you have more options with a lease option, but lose some potential benefits.

Until my next post,

James

P.S. Want to learn strategies for finding a variety of deals? Upgrade to our Real Estate Investor Bronze Membership now.

How Lease Options and “Subject To” Are Similar

James Orr — Tue, 12 Jan 2010 18:35:43 +0000

For real estate investors that want to find deals that do not require the go through the hassle of applying and paying for a new loan each time they acquire control and responsibility for a new property, lease options and buying “subject to” the existing financing seem like great alternatives.

In this article, I’d like to share with you how lease options and “subject to” are similar and then in my next article, I will share with you some of the key differences.

First, with lease options and buying a house “subject to” the loan stays in the seller’s name. That means the loans on the property remains on their credit report.

Second, with lease options and buying a house “subject to” you usually make a monthly payment that covers the underlying loan for the seller. While this is not ALWAYS true, it is usually true that the seller wants, and often is able to get you to make, payments that pay for his entire principal, interest, taxes and insurance payment.

Third, with lease options and buying a house “subject to” you usually put very little, if any, money down. It is unusual to put down thousands of dollars as a deposit on either, however for the right deal it could make sense to do so. This is NOT to say that you do not need to put money into the deal on BOTH…

Fourth, you will usually need to spend money and time marketing to find motivated sellers that would be willing to offer a lease option or sell you their property “subject to” the existing financing. These are NOT usually advertised in the MLS. The lease options that are usually advertised in the MLS are by investors and these are not the ones you should be interested in.

Fifth, with lease options and buying a house “subject to” you get control of the property and should insist on locking the purchase price in at a fixed amount at the beginning.

Sixth, both… yes, BOTH can trigger the “due on sale” clause that is present in many loans. I will be discussing this in a future article in this series, so please read that for more information.

Until my next post,

James

P.S. Interested in learning more about these and other powerful real estate investing strategies? Upgrade to our Real Estate Investor Bronze Membership today and take your real estate investing business to the next level.

What’s Better: Lease Options Or Subject To

James Orr — Tue, 12 Jan 2010 18:32:35 +0000

The title of this article: “What’s Better: Lease Options Or Subject To” is misleading because each one has its pros and cons. Neither using a lease with an option to buy or getting ownership and paying on an existing mortgage is always better or worse than the other. In fact, there are times when you’d be better off using one and times when it is to your advantage to use another.

In two previous articles, I discuss how “subject to” is similar to “lease options” and how they differ. In this article I will share an example of when it might be better to use one over another. Of course, there are other examples that you might discover based on your unique transaction, real estate market or personal situation, but here are two examples.

Here’s the first example: if you are uncertain about whether a real estate market is going up or down do you want to commit to owning a property? In times when the market has a strong chance of going down, it might be a an advantage to have an option on the property like with a lease and option instead of committing to ownership like you do when you buy a property “subject to”.

Here’s a second example: What if you are uncertain about where the seller will be in a year? I’ve bought houses from folks that were being incarcerated. Try closing out a lease option with someone who is in jail somewhere and is not feeling very flexible about the option at this point. It might have been better to finalize the transaction by buying the property “subject to” in that case.

Since there is so much variation between transactions, markets and your particular situation, you can’t automatically say that lease options are better than “subject to” or that “subject to” is better than lease options. You need to understand the pros and cons of each and make that decision with the help of your Dream Team.

Until my next post,

James

P.S. Want to learn more about actually implementing these strategies? Upgrade to our premiere Real Estate Investor Bronze Membership now.

Advantages For Investors Buying Properties “Subject To”

James Orr — Tue, 12 Jan 2010 18:21:01 +0000

In my previous two articles in this series on what “subject to” is and what a typical “subject to” deal looks like, you learned quite a bit about the big picture of how agreeing to make payments on an existing loan when buying a house actually works.

In this article, I will share with you what I believe some of the benefits are for buying properties “subject to” the existing financing.

First, and this is a big one for investors in our current credit markets, you do not need to go out and get a new loan. There are large numbers of investors that have great credit and can afford payments on a property, but due to our current credit market are being denied new loans. It sure doesn’t help that many lenders have limited investors to having a total of 4 loans in their name before cutting them off from getting new loans. So, being able to start making payments on an existing loan make buying the properties much easier and allows you to buy more than 4 properties that many lenders limit investors to under the new lending guidelines.

Second, there are no loan fees. While there are certainly marketing costs and closing costs and costs for key Dream Team member services like your attorney, title company, accountant or CPA, et cetera, there are none of the fees associated with a new loan. There are no points, no origination fees, no doc prep fees or other costs of that nature since you are just agreeing to make payments on the existing financing on the property.

Third, as Gary Keller pointed out in the Millionaire Real Estate Investor book with the example of the investor accomplish this with a quitclaim deed, you are the owner of the property and, as such, you get the benefits of ownership. Unlike a Lease Option, which has some similarities to buying a property “subject to”, when you purchase a property “subject to” you do get the tax benefits–and responsibilities–of ownership.

Until my next post,

James

P.S. Want access to our huge library of real estate courses, systems, checklists, forms, on-going live training and consulting? Sign up for Real Estate Investor Bronze Membership today.

How Does A “Subject To” Deal Work

James Orr — Tue, 12 Jan 2010 17:14:44 +0000

In my last article, I discussed how I was recently reviewing the Millionaire Real Estate Investor by Gary Keller of Keller Williams Realty fame and found a particularly interesting page where he was discussing how an investor bought a house by just agreeing to make payments on the existing financing. In the creative real estate investing circles, we refer to this as buying a house “subject to” the existing financing.

While there is almost infinite variation deal to deal, how does a typical “subject to” deal actually work?

First, you find a motivated seller. Not all sellers are in a situation where you making payments on their existing loan is an attractive option to them. However, as the record number of foreclosures tell us, there are lots of folks where having someone making payments on their loan is a good option since it would prevent a foreclosure.

Next, you write up a sales contract outlining the exact terms of how you will be buying the house, the price and other critically important details. Make sure you outline that you are not going to be getting a new loan and that you will be buying the house “subject to” the existing financing that is on the property.

Once you have a contract to purchase the house, you double check all your assumptions including everything the seller has told you. This is the time to do all your due diligence. Verify taxes, insurance and the payment. Read through and understand the loan documents so that you know about the loan you are agreeing to pay on. Consult with your dream team to get sound advice on anything you have questions about.

Once you are satisfied, close on the property and begin marketing it to get it sold or occupied. We will be discussing some of the more common strategies investors employ when moving properties that they purchase “subject to” in a future article.

Until my next post,

James

P.S. We cover “subject to” investing strategies in a variety of real estate investor courses including Subject To FAQs, Secret “Subject To” Tips and Tricks, Subject To For Lazy and Poor Folks and more for our Real Estate Investor Bronze Members.

Subject To Real Estate Investing

James Orr — Tue, 12 Jan 2010 17:11:20 +0000

Last week, while preparing to speak at our real estate investor group meeting, I was glancing through the Millionaire Real Estate Investor book by Gary Keller and I came across a page that I did not recall reading when I read the book previously. The page was discussing a motivated seller that could no longer afford to keep his properties and how an investor came in and “agreed to take over the properties and assume responsibility for their debt and payments by using a simple quitclaim deed.”

It is easy to miss what just happened there. Did you catch it? Instead of the investor going out and getting a new loan on the property, the investor and seller agreed to have the investor start making payments on the existing loans on the properties.

The investor did not need to go out and get a new loan on the property. She just paid on the existing loans until she sold the properties. The seller was not foreclosed on because he could not make the payments because the investors was making the payments.

There was equity in the properties so the investor was able to resell the properties, make a profit and, in the end, shared some of the profit with the original seller. So, overall it truly was a win-win deal for all involved.

For those investors that have been exposed to this form of creative finance, it is often referred to as buying houses “subject to” the existing financing. In times like these where loans–especially investors loans–are much harder to structure, it can make creative financing like “subject to”, lease options and owner financing much more attractive.

Over the next series of articles, I will be discussing some of the frequently asked questions regarding investing in properties “subject to” the existing financing (link is for our Real Estate Investor Bronze Members).

Until my next post,

James

Structuring Subject To Offers For Real Estate Investors

James Orr — Tue, 12 Jan 2010 16:31:14 +0000

While you should check with your own legal adviser to find out the legalities and exactly how the mechanics of buying houses subject to the existing financing without getting a new loan works, we do have sections for our Real Estate Investor Bronze Members on how to structure offers on these types of deals.

While I will give you a brief overview of the process here, you can see the details of Structuring Subject To Offers (link for our Real Estate Investor Bronze Members) and if you feel I need clarification on anything in there, please do let me know.

So, here is a basic overview of how to structure an offer to buy a house “subject to” the existing financing.

First, determine the price you will be selling the property for once you purchase it.

Second, determine the amount of profit that you want to see by doing this deal.

Third, determine the entire amount of cash you will need to do the deal being sure to include holding costs of all types, fix up money, cash to the seller, et cetera.

Once you have these numbers, here is the big picture–over simplification–of how to structure the deal.

Subtract from the price you are going to sell the property for the profit you need to make on the deal. Also, subtract TWO TIMES all the cash that you will need to complete the deal as well. The amount that remains is the MOST that you can afford to pay for the house agreeing to make payments.

You will definitely want to run this type of analysis on at least a few dozen properties that you are considering buying to get a feel for how this works and review the more detailed explanation of it that I posted for our members and on the free training downloads we provide to our members.

Until my next post,

James

In Case You Missed the Sub-Prime Crisis: Don’t Get Variable Rate Loans!

James Orr — Sat, 02 Jan 2010 17:44:51 +0000

Just in case you’ve been asleep for the last year: don’t take out variable rate loans on your investment properties!

Come on folks, if you have taken any time to look at what interest rates have been doing over the last forty years, you will notice that the rates we are seeing right now are near all time lows.

If there were a perfect time for locking in a fixed rate loan, when would that be? The answer is this: when rates are at or near their all time lows.

If there were a time for taking a chance on a variable rate loan, when would that be? The answer is, when rates are high and likely to come down AND when variable rates are lower than fixed rates.

If you look at what money is being offered at today, you will see that interest rates are at or near all time lows. Can interest rates go much lower than what we are seeing now? Not likely. So wouldn’t now be a good time to borrow money at fixed rates?

You will also see that fixed interest rates are very competitive with variable rates. Often the attraction of variable rate financing is the teaser rate that is so much lower than what a fixed rate would be.

These teaser rates tempt you with 3 years at rates that are less than a fixed rate loan. If you only intend to be in the property for three years or less it looks very appealing.

Don’t be fooled!

If the recent crisis has taught us anything, it’s that the future is uncertain and you might be holding your properties far longer than the 3 years you originally anticipated. Better to have good fixed rate financing locked in when it is available–and available at a great rate–than to lose the option completely when markets and lending practices change.

My message to you: when in doubt, get fixed rate financing over variable rate financing… ALWAYS!

Until my next post,

James

P.S. Financing your investment properties is something that new investors tend to spend a lot of time learning. With our Real Estate Investor Bronze Membership we teach, via over 100 real estate course downloads you get plus on-going training and consulting, how to do traditional financing with banks and mortgage brokers, owner financing strategies (and yes there is a huge number of them out there if you know how) as well as strategies for using private lenders. Sign up for our Real Estate Investor Bronze Membership to tap into our resources, training and consulting now and take your real estate investing business to the next level.

What My Favorite Real Estate Guru Taught Me About Investing

James Orr — Thu, 31 Dec 2009 21:25:30 +0000

In this audio program, which is part of the Top Secret Courses series of real estate investor courses you will learn to save yourself hundreds to thousands of dollars by allowing the author to pass on a concise abridgment of what their favorite real estate guru has taught them about real estate investing.

Why not learn from the mistakes and experiences of others? If this audio program can save you from making a $10,000 mistake by sharing with you some of the best tips and tricks that the author learned from their extensive real estate study and activity, wouldn’t that be worth $10,000 to you? You can either forge a new trail or follow in the footsteps of someone who has been there before you… it is up to you.

This audio program includes the following:

Subject To
3 Ms of Marketing
Right Side of the Desk
You Don’t Need Money To Invest
Investing for Cash Flow versus Equity
Marketing Techniques To Sell Houses Quickly
Systems
Using Leverage
You can think small or big… why not think BIG!
Ruthless Accountability
You Have To Make Offers To Buy Houses
Beware of the $10,000 Profit per House Trap – Markets Change

Details:

Featuring Jassen Bowman with Sasha
Running time: Approximately 73 minutes
Includes access to members only password protected website with outline and supplemental information
Product ID: TSC0004

There are two ways to access this audio program: first, you could purchase it at full retail by itself and instantly download it. To do that, just click on the link at the bottom of this page to add it to your shopping cart and checkout.

Or, there is a much easier way, less expensive and better way… just upgrade your account to the Real Estate Investor Bronze Membership and you can download this and over 100 other real estate investor courses covering a variety of topics including the topics mentioned above in far greater detail than is covered in this audio program alone. Plus, Real Estate Investor Bronze Members also includes consulting time to get your specific real estate investing business related questions answered and worked on by some of the sharpest real estate investing and marketing minds of our time. Upgrade today to the Real Estate Investor Bronze Membership.

Or, use this link to just buy this audio program:

Selecting the Best Real Estate Deals

James Orr — Thu, 31 Dec 2009 07:45:14 +0000

Not all houses are deals, but you knew that. In this audio program (from the Top Secret Courses series), Jassen discusses how to analyze houses to determine the deals from the non-deals.

Plus, he will share with you how to buy houses with no money down or how to buy houses using other people’s money or credit to put down.

Included on this audio program:

How does deal analysis fit into the big picture?
Why you need to know Fair Market Value (FMV)
How to find comparables sales data so you know what the house is really worth
How to select comparable houses to ensure your value is accurate
How to use comparables to determine the actual Fair Market Value
How to get more offers accepted by giving sellers a choice: the three offer formulas

No money down offers
Hard money offers (none of your own cash)
Hybrid offers

Buying houses “subject to” (with no down payment and no credit checks by agreeing to make payments on the seller’s loan) and using the Rent-To-Own exit strategy for maximizing profit and minimizing expenses (and negative cash flow)
How to come up with cash when the deal requires it

Details:

Featuring Jassen Bowman and a new investor James from Utah
Running time: Approximately 65 minutes
Includes access to members only password protected website with outline and supplemental information
Includes the Special Report: Getting Rich in Real Estate – Full Time Job or Fast Track to Wealth? (as a PDF download)
Product ID: TSC0001

You can order this audio program by itself using the link below or it is included as a free download from the Real Estate Investor Wiki as a Real Estate Investor Bronze Member. Why not upgrade to a Real Estate Investor Bronze Member today and get this plus over 100 of our real estate courses free along with new training and real estate investing consulting?