Chat Session with John Locke

[20:54:58] joel> Hey everybody
[20:57:57] jfmlv1950> hi all
[20:58:16] joel> Hey guys
[20:58:31] joel> I am glad everyone can make it.
[20:58:47] Emily-NC> Hi Joel, how are you?
[20:58:53] johnlocke> welcome to the cashmans nite on the net courtesy of joel's network
[20:59:04] jfmlv1950> sounds like we are up and running
[20:59:13] Emily-NC> Nice to meet you, John
[20:59:30] johnlocke> emily glad to meet you
[20:59:50] johnlocke> anyone doing sub 2's
[21:00:15] jfmlv1950> we're here to learn
[21:00:25] Emily-NC> Well, I'd like to be.
[21:00:42] johnlocke> emily what is your specialty in real estate investing?
[21:01:00] Emily-NC> Well, I just graduated from college in May, so i don't have a specialty per se, as of yet
[21:01:11] johnlocke> backdoorman how about you
[21:01:35] Emily-NC> I'm across the board, been looking at mobile homes, a 45K rental that needs some cosmetics, and a $250K house lately [21:02:03] johnlocke> is the mobile on its own land
[21:02:24] Emily-NC> no, I'm looking at doing some Lonnie Deals...are you familiar with Lonnie Scruggs?
[21:02:40] johnlocke> is he a banjo player
[21:03:17] Emily-NC> hehe, no, he's a burned out landlord that invests in mobile homes, buying junkers for cash, and then selling with seller financing
[21:03:27] Emily-NC> he's about 70, lives in virginia
[21:03:50] Signoff: Emily-NC (Leaving)
[21:04:05] joel> So what exactly is a Subject To John??
[21:04:31] jfmlv1950> -John I've heard that you have never taken any courses
[21:04:48] johnlocke> subject to is buying subject the existing loan
[21:05:02] johnlocke> no john just sales training
[21:05:12] johnlocke> welcome sly
[21:05:33] BackDoorMan> how do you deal with an ex's attorney who points out the divorce decree states the house is to be sold and the mortgage cleared
[21:05:42] joel> What kind of houses do we look for?
[21:06:23] johnlocke> bd man i do not mess with these to many problems
[21:06:37] Signoff: sly (Leaving)
[21:06:53] johnlocke> 1joel 1 to 2 year old houses with little or no equity
[21:06:58] Emily-NC> So, how did you get started, John?
[21:07:08] Emily-NC> and how do you attract motivated sellers?
[21:07:16] joel> I guess because new construction is better??
[21:07:28] johnlocke> newpaper but a big focus on direct mail
[21:08:00] johnlocke> the sellers in a 1 to 2 year old house are the ones most likely to be in trouble
[21:08:01] Emily-NC> really? What type of lists do you buy? or do you collect your own?
[21:08:23] johnlocke> i use dataquick make my own list
[21:08:25] joel> LIsts or going directly to the courthouse
[21:08:48] BackDoorMan> please explain dataquick
[21:09:00] Signoff: sly (Leaving)
[21:09:23] johnlocke> data quick is a service that you purchase and show demographics in your area
[21:09:37] jfmlv1950> dataquick is an information collection company
[21:09:45] BackDoorMan> URL??
[21:09:45] Emily-NC> so do you have unlimited access to databases, or do you pay by name?
[21:10:03] jfmlv1950> dataquick.com
[21:10:09] johnlocke> you pay monthly use all you want
[21:11:18] johnlocke> mobile are a good way to start if you are low on funds
[21:11:27] jfmlv1950> why 1 or 2 yr old houses?
[21:11:46] johnlocke> they are by far the easiest to buy
[21:12:02] Emily-NC> because the people have no equity?
[21:12:13] johnlocke> low equity if they are in trouble they just want out
[21:12:52] Emily-NC> So who would you mail to if you wanted to purchase a home? Can you just target subdivisions that are newly built?
[21:13:15] johnlocke> yes you have got the message
[21:13:34] Signoff: sly (Connection reset by peer)
[21:13:49] jfmlv1950> so how do you make any money with no equity
[21:13:55] Emily-NC> And then you essentially ask them if they are willing to sell for what they owe, and keep the mortgage in their name?
[21:14:06] Emily-NC> What if they need to buy another house?
[21:14:57] johnlocke> yes first question, i use a loan servcing company to collect payments the tell the new loan company the house is sold
[21:15:50] johnlocke> the company handles year end taxes for the buyers plus other benefits
[21:16:04] johnlocke> welcom hud
[21:16:04] Emily-NC> wow, that sounds like a good service
[21:16:16] Emily-NC> Do you get comps from dataquick too?
[21:16:22] johnlocke> yes
[21:16:37] Emily-NC> great, i have been looking for a good source for those.
[21:16:44] johnlocke> they have a lot of services dataquick.com
[21:16:49] Signoff: Hud (Leaving)
[21:17:02] BackDoorMan> can you be more specific? .... what loan servicing company? How do you set this up?
[21:17:33] johnlocke> a loan svc co collects payments from my buyers
[21:18:08] johnlocke> i keepa trust account in case my buyers do not make their payment
[21:18:09] Hud> Hi Group.
[21:18:26] johnlocke> welcome back hud
[21:18:31] BackDoorMan> where do you find the name of a loan svc co?
[21:18:54] Emily-NC> Hi HUD, welcome back
[21:19:00] johnlocke> see a title co or escrow co or in the phone book
[21:19:29] johnlocke> using a lsc help establish credibility
[21:19:35] Emily-NC> So John, once you have the house tied up and the sellers out of your hair, where do you make the money if there's no equity?
[21:20:12] johnlocke> a ha, i sell to no qual people they have to pay for their credit
[21:20:27] johnlocke> which is usually bad
[21:20:48] Emily-NC> So they pay an above-market price to get in a house, bc they can't qualify for a bank loan?
[21:21:05] johnlocke> yes only in america
[21:21:06] Emily-NC> Do they just make the payments to you, then, or you through your loan svc company?
[21:21:18] johnlocke> through the loan svc co
[21:21:35] Emily-NC> So, do you make a monthly cashflow?
[21:21:44] johnlocke> i do not care to handle 500 payments evy mo
[21:22:05] Emily-NC> Hi MM
[21:22:11] MM> hello everyone
[21:22:28] johnlocke> i ad 1% 2% to every loan which brings in about 100 to 400 per mo above the real payment
[21:22:32] MM> glad to see them using a new chat room
[21:22:44] johnlocke> mm howdy
[21:22:55] MM> hi john
[21:23:18] Emily-NC> Can you give us an example of how that might work? A case study?
[21:23:30] johnlocke> mm where are you in the REI industry
[21:23:53] MM> lease options and seller financed flips john
[21:24:21] johnlocke> emily full example is in my book we would be here all night
[21:24:39] johnlocke> how is the flip bus
[21:24:43] Signoff: BackDoorMan (Leaving)
[21:24:58] MM> it's pretty lucerative
[21:25:13] johnlocke> what do you think of the term flip
[21:25:52] MM> i really don't care for it because of the all the negitavity souraounding the term
[21:26:48] johnlocke> i here the term wholesaling do not personally like the term flip
[21:26:49] sly> where do you get your loans when just starting out?
[21:27:19] johnlocke> what loan sly have you got $10 you got a deal
[21:27:51] sly> do you mean "assumtion"
[21:27:52] MM> sly in a subject to you take over the loan already on the home the seller leaves the loan in place
[21:28:20] johnlocke> i give the seller $10 when we sign the contract if you do it right that's all you need
[21:28:24] sly> ok
[21:28:51] Signoff: mrsmooth (Leaving)
[21:28:59] johnlocke> mm you do not take over the loan you only pay the loan
[21:29:25] sly> john, I will be getting your book
[21:29:35] MM> you take on responsablity of making the payments but you don't formaly assume the loan
[21:29:54] johnlocke> mm very good
[21:30:39] mrsmooth> Hey guys
[21:30:49] MM> what made you decide to go with subject to method john
[21:30:59] MM> hello mrsmooth
[21:31:09] mrsmooth> Hey
[21:31:11] johnlocke> thank you sly where can you start a proven successful turnkey business for $149.95
[21:31:20] Hud> hello mrsmooth
[21:31:23] Signoff: Emily-NC (Leaving)
[21:31:34] johnlocke> mrsmooth how do you do
[21:32:01] sly> do you put your properties in a trust?
[21:32:29] johnlocke> yes some but leaning this way more and more
[21:33:22] MM> the trust is basilly designed to circumvent the due on sale clause sly
[21:33:38] johnlocke> sub 2 is the easiest and most profitable in my opinion
[21:34:09] sly> sure!!!!!!
[21:34:10] johnlocke> the dos is highly overated 500 prop no ever dos
[21:34:38] MM> i would agree that it's profitable you don't use your credit witch allows you room for more holdings
[21:34:38] joel> When do people usually refi on your prop?
[21:34:57] joel> No landlord headaches. Aye!!!
[21:35:05] johnlocke> just keep the loan current no dos problems
[21:35:30] johnlocke> joel 2 years i will give another year for 3K
[21:35:53] MM> i know it is john most lenders are happy with leaving the loan in place expeclly now when the existing loan likely has a higher insterst rate then they would earn at a new rate
[21:35:53] johnlocke> never wanted to be a landlord you are right
[21:36:21] johnlocke> you pegged it
[21:36:36] johnlocke> low rates right now
[21:36:45] MM> so whats your exit when you take a home subject 2 john
[21:37:25] johnlocke> sell on contract for deed
[21:37:47] MM> then what refinance or sell the note
[21:38:37] johnlocke> when my buyer re-fi's to me then I cash out the underlying note an pocket the difference
[21:38:54] MM> sounds good to me john
[21:38:57] sly> what percentage of offers are accepted ...high or low?
[21:39:59] johnlocke> 9 out of 10 i would be perfect but somtimes i turn the seller down
[21:40:22] joel> Do you use a lawyer to hold the escrow??
[21:40:24] sly> thats high
[21:40:46] johnlocke> joel no attorneys just my loan svc co and me
[21:41:10] sly> smooth
[21:41:14] johnlocke> thats low 10 out of 10 is high
[21:41:20] joel> What kind of loan service company should we look for??
[21:41:53] johnlocke> use attorney to sit up your paperwork in the beginning
[21:42:19] johnlocke> one that is licensed and bonded in your state
[21:43:09] johnlocke> with my scripted presentation my closing is high because of it
[21:43:28] MM> how did you first hear about the sub 2 method jogn
[21:43:47] MM> sorry john i mean
[21:43:52] joel> How did you do your first deal?
[21:44:42] johnlocke> i did not know i did it until about 2 months ago i read about what i did i just thought the loan stayed in the sellers name nerver had a name for it.
[21:46:10] johnlocke> Joel it was 1995 it was a dark and rainy night i needed a house to live in quickly so i made them an offer they could not refuse
[21:46:38] joel> No horses head on the bed, I hope.
[21:46:53] MM> how would you say your course compairs to the abc's of subject to they use a lease option as an exit in there book
[21:47:05] sly> who owns the property..you or the previous sellers?
[21:47:16] MM> you do sly
[21:47:45] joel> Lease Options could be a good tool, But with Lease Options, you might think that they can be evicted, when you actually have to foreclose on them.
[21:47:47] johnlocke> mine has meat, i have read the course abc, i would not know what to do after i read it seriously
[21:48:39] joel> MM-Vena Jones Cox specializes in the L/O arena. We should have her course on our site in a bit.
[21:48:40] MM> i read it also it seemed like more fluff then actual practical advice
[21:48:47] Signoff: sly1 (Leaving)
[21:49:11] sly1> Hi just got here-Kristy-AZ
[21:49:14] johnlocke> i beleive you learn from any course, i am a percentage person i want the deal now, my book has not fluff it is more of a tech manual
[21:49:27] johnlocke> kristy where have you been
[21:49:37] sly1> Had to show some houses!
[21:49:45] joel> Welcome Kristy
[21:49:51] MM> joel i use a seperate lease and option agreement if you use one it can give the tenant buyer equatible intreest
[21:50:03] johnlocke> good excuse showing houses
[21:50:19] joel> MM- Yeah that is what I was told as well
[21:50:24] sly1> Is that and rental agreement & a purchase agreement
[21:50:40] sly1> i was also painting one of our rehabs1
[21:51:05] MM> also if you credit more then 20% of there rent it can show equatible interest
[21:51:46] sly1> are we talking about Johns course?
[21:51:53] MM> sly it's a lease agreement and an option to buy
[21:51:57] johnlocke> i do not do lease options so go ahead
[21:52:08] MM> no somthing different back to john
[21:52:19] johnlocke> mm do your record on a l/o
[21:53:22] johnlocke> mm its ok we are here to learn
[21:53:34] MM> lohn i record a proformance mortgage i don't record the agreement i have with the seller land lord because i use a lease option agreement on one form for myself i sublease with to seperate documents though
[21:54:47] johnlocke> ok i just record the grant bargain and sale deed, sounds to simple, but it works for me
[21:55:03] sly> is a performance mort the same as a wrap?
[21:55:29] johnlocke> mm explain for sly
[21:55:57] MM> no sly a profromance mortgage is designed to make them preform in selling the home when i decide to exersize my option to buy
[21:56:28] sly1> John, do you include all the forms in your course?
[21:56:57] johnlocke> yes all the forms are there just have them reviewed at a title company
[21:57:12] sly1> this is Kirsty, I'll figure out how to change name after the chat.
[21:57:21] sly> mm when you sell... do you do a wrap?
[21:57:46] johnlocke> kristy is your makeup on
[21:58:10] sly1> Nope! forgot it today!
[21:58:54] sly1> Here's a question. I've been told by several REaltors, that Wraps are illegal in Arizona!
[21:58:56] MM> sly i normamly buy get lease option terms from the seller (rent to own) then i sublease with the option to buy to a tenant buyer (sell to them on rent to own terms) it's like a wrap in a way only i don't own the home i just control it
[21:59:28] sly> ok
[21:59:37] johnlocke> bull to the arizona realtors, they just want the deals themselves
[21:59:38] sly1> MM how do you handle homes that need fix up?
[22:00:28] sly1> I like to keep things simple when talking with sellers. Wraps do sound complicated.
[22:00:40] sly1> Sub-2 sounds much better.
[22:01:00] MM> i may sell it to a tenant buyer and credit repairs they do to the home to there buy price ( somthing like a down payment ) or i may fix it myself then sublease it
[22:01:06] johnlocke> mm what happens if the house if the seller goes bk or puts an equity loan on the property
[22:01:59] MM> john i escrow all the payments to the sellers lender so i've never had it happen
[22:02:29] sly1> I do alot of rehabs, I think I would like to have the deed before I did any repairs. Although i have considered L/O
[22:03:07] johnlocke> if you do not own the house and it is still in sellers name whatever happens to seller will happen to house irs, etc.
[22:03:20] MM> basicly set it up as an auto pay account where the mortgage payment comes off the top goes to the lender then the remander if any goes to the seller landlord
[22:04:34] johnlocke> mm has the right idea about the payments
[22:04:35] MM> i see your point but my proformance mortgage would be a cloud of title so this would present my insterst in the home in the even of a bk
[22:04:47] sly1> Seems that most of the sellers I have talked with have had 0 equity, wanted to do L/O but needed lots of repairs! I couldn't see myself fixing it up, then having the seller decide not to sell when I excersized my option.
[22:05:14] sly1> They want their PRETTY house back!
[22:05:23] johnlocke> what about an IRS lein, or they pull a 2nd or a mechanics lean where is the protection
[22:05:59] sly1> But John, can't that happen when you bnuy the house Sub-2?? IRS, 2nd mort etc?
[22:06:17] johnlocke> this is why i recored the deed in sub 2 it cannot happen i own the house
[22:06:58] sly1> That's right, I forgot, the deed does get recorded! I inhaled too many paint fumes today!
[22:07:03] MM> well i have title search done for all leins prorate and escrow taxes the second mortage would be somthing i need to check into though
[22:07:25] johnlocke> i check with the recorders for clouds on title if it is clear and i record thats it for anyone else putting liens on title
[22:07:49] johnlocke> of any kind
[22:08:56] MM> i also like to get power of attorny on the home it makes the close better so i'm not sure but i think this would prevent them from getting a second
[22:09:07] johnlocke> i am protected from the seller from getting an more loan
[22:09:29] sly1> Even if the 1st stays in the sellers name?
[22:10:01] MM> i've only been in this a year and a half so i'm still learning every day
[22:10:12] johnlocke> the name on the loan does not change
[22:10:51] MM> sly he gets the deed once he has this deed the owner no longer ownes the home once recorded
[22:11:13] johnlocke> if you ever get caught up in a lein situation with a lease option you will wish your recorded the loan in your name
[22:11:22] sly1> What if the seller goes thru the same mort. company to try and get a line of credit or 2nd. When the banks sees your name on title, can't they call the loan due?
[22:11:26] johnlocke> or company name
[22:12:22] johnlocke> they can try to call the loan due, but they would not go to the same bank for a second probably
[22:12:55] johnlocke> 500 properties no loans called it is in my manual
[22:13:20] MM> only if they have a due on sale clause of if there in breach of occupance terms of there mortgage i belive sly it all comes back to the current mortgage rates they wouldn't gain by calling due on sale right now
[22:13:56] johnlocke> hud, mrsmooth sly, emily are you learning any thing
[22:14:10] sly> very much
[22:14:14] sly1> It's a big What if thou! I went thru my same mort company to get a line of credit a few years ago. Figured they knew my history and would grant me the credit. They did!
[22:15:01] mrsmooth> Sure. Keep it coming
[22:15:15] johnlocke> kristy you are dealing with a person who wants out they gave you a loan cuz your cute
[22:15:27] sly1> HAHAHAH
[22:15:32] MM> sly if a due on sale ever did pop up i would imagin you could refinance and with the rates likely lower you would probably save money
[22:15:39] sly1> now how did you know that?
[22:15:45] Hud> David here, I'm a rehaber from the Boston area, just trying to find some new ideas on accuiring properties
[22:16:03] Hud> learning a lot!
[22:16:03] johnlocke> did you get any tonite
[22:16:07] mrsmooth> Wecome HUD
[22:16:28] Hud> sick of the hard money lenders!!!!
[22:16:42] mrsmooth> I hear ya
[22:17:14] mrsmooth> John, what kind of lending are we going to need to for these kind of properties??
[22:17:30] sly1> Hard money lenders are tough, but they are great when you need the money!
[22:17:42] johnlocke> well gang it is dinner time for me, thank you all for being here see you on the boards, thank you joel, Subject To "that's what i do"