Find All The Subject-To Deals You Can Handle!
All right, maybe not all that you could possibly handle but a darn good selection to choose from! However, this cutting-edge technique is up to you and quite possibly if worked correctly then “yes” more then more deals then some of you out there can handle right now.
How you ask? That is of course the question isn’t it but before you skip down getting to the meat of this I want to play devil’s advocate here and maybe put in a word of caution with you as an investor dealing with Subject-To deals. The Subject-To deal is obviously one of the hottest techniques for immediate and long-term wealth in real estate but I will put in the “IF” section here.
I see both sides of the coin with investors trying to do deals Subject-To the existing financing as well as the motivated sellers trying to accommodate. It all boils down to someone has to make that house payment and if you the investor are not prepared to cover payment on unoccupied properties, then my friend you better have contingencies for your legal protection or just don’t do the deal. That’s my speech on Ethics and at this point in the game of real estate your morals are probably already set but just put yourself in the other person’s shoes before defaulting without recourse on a Subject-To deal.
Mooooving on! Give it to us with the no-holds barred technique to find these deals, right? You’ve got it because what I’m going to instruct you on with the highlights of this technique can set your feet on the profitable and “consistent” path for wealth accumulation and it all has to do with stealing a technique from our mortgage/lending buddies----Properties Recently Financed!
Let me be up front and state that this technique might not work for you depending upon the state on “disclosure” or “non-disclosure” property sales information available. In addition you need to be a reputable property records company that can service the records needed for this technique in your area. What you’re going to be doing is keying into properties that have been financed within the last 1-4 year period.
Before going on let me ask you this question and it will shed some light into the technique I’ll soon show you: If someone paid retail value for their property, what are the chances on the average within a 1-4 year period an owner can sell their house paying for all expenses? The chances are marginal and of course some areas appreciate more than others but what I’m getting at is when you take out the traditional Realtor’s fee of 6-7% plus closing costs and most probably discounting the price from retail for most buyers, then you’re left with not much or really ANY equity for the owner to sell their house under the traditional Realtor approach and that is where you the investor step in.
Now perk you ears up, sit on the edge of your chair and LISTEN because here we go. You need to be direct mailing to individuals that have financed their house in the last 1-4 years from your unique selling position of benefits being:
· No commission or fees
· Closing to commence on their time schedule
· Payment covered so they can literally move on with their lives
See, mortgage companies will buy lists of individuals that have financed on a property within a certain period of time. They then will direct mail to them for better interest rates, combination loans, or second mortgages. These are the same type of customers you are seeking because if they have either financed, re-financed, or taken a 2nd mortgage out on their property then they most likely don’t have enough equity to sell under the “traditional” approach and thus you enter the scene to save the day so they can move on.
Your Subject-To negotiation skills will come into play here but the fact of the matter is these are extremely strong candidates that will entertain your “can’t lose” offer and you’ll find enough deals to make it worth your while. How do you get that kind of lists and to start TOMORROW this approach so you can find your deals? Few scenarios and I’ll only recommend one source since it’s the one I personally use: Dataquick.com
Now, I have absolutely no paid endorsement here recommending Dataquick.com but their reputation speaks for itself. They will provide for you quality information of financed properties in your area within a 1-4 year period if it’s one of the counties listed in their national database of tax records. The great thing about this information is that you can get REAL specific on the type of financed information you want like properties financed under a certain $$$$ amount and within specific zip codes. Now, that’s called zeroing in on your market and the quicker you get your letters in front of that group of potential seller, the quicker you can start realizing some substantial wealth in real estate.
I need a couple of things cleared up:
1. Why would it be likely that those properties recently financed to be going on the market?
2. Is your plan to flip these properties wholesale?
3. Even if the recently financed properties have little equity, why does that make it less likely that they'll sell in a traditional fashion?
4. To make it worth your while, I assume these properties must be purchased by you at 20% below market
Thank you.
To shed some light on "TrinityProp's" questions:
1. People who have recently financed are just as likely to sell as anyone else. Life changing events can happen to anyone at any time.
2. The plan would not be to flip these properties wholesale if there is no equity in the property. The most common reason for a subject to deal is to take control of a house without qualifying or officialy assuming the mortgage.
3. If the properties do not have any equity, then the sellers will not have the money to cover the cost of the sale. After Realtor's commissions and closing costs, most sellers end up with 10-15% less than full market value. Therefore, if the property is 85-100% financed then the seller would have to come to the closing table with cash to pay for the sale. Not many sellers like to walk away from a closing leaving money behind.
4. These properties can be purchased at full market value and still be profitable to the savvy investor. If you take over payments of a 100% financed property with no cash out of pocket, then you can raise the price between 5 and 10% and sell it on terms to a buyer that cannot qualify for a bank's mortgage. You can sell that property on a lease option or with owner-financing and because you create the opportunity for someone to own a house that otherwise couldn't, you have the right to raise the price 5-10%. All this is assuming that the existing monthly payment is not too high for the area.