Learn how to apply creative financing techniques to your real estate deals through mentorship in my Apprentice Program. Apply here: www.freedommentor.com/apprentice
If you watch enough of my videos and understand them fully, you’ll be among the sharpest investors in your area and will be extremely wealthy. Many of my Apprentices are now the leaders in their respective markets. I have no idea what other real estate “gurus” are saying out there because I don’t watch or listen to anyone. I’m too busy doing deals. So I can’t speak with authority about who is good and who is not. But what I can say is that if you listen to me, you’ll be very glad you did.
@@freedom_mentor I Love The Information U Have Phil Ive Been a Big Fan Of Your Channel on TH-cam Since 2015-2016, It Took Me 3 Months Up to 6 Months to Mostly Understand Wholesaling Real Estate Contracts Virtually & The Problems But Most of My Time That Ive Spent Studying Was Wasted on Delayed Thinking & Delayed Information Via Poor Means of Obtaining Content Which is Why Ive Pursued Studying Cognition Studies & Big Data Processing Algo Engineering
@@freedom_mentor Amen, All TH-cam Real Estate"Gurus" don't even explain 1/4 of what you just covered... They only talk about what people want to hear and lifestyle to be able to sell their 10k Courses, sad but true. Thanks PHIL!!!!🙏🏼🙌🏼
Great video. I watched it before but I have since then put a property under contract using seller pfinancing. Now everything in the video makes more sense to me. I especially appreciate the insight as to why seller finance and subject to favors buyers while lease options and to a lesser extent contract for deed favors sellers.
Subject To and the combination of Owner Financing and Subject To has been a game changer for me, specially in my market on where house pricing is HIGH and the traditional 65% offers on $500k houses will not work.
In my state of Colorado, there is a little known law that requires installment land contracts (contract for deed) to escrow the property taxes with the public trustee of the county in which the property is situated. There are severe penalties for violation.
Hi Phil, good to see you again... You have been my menthor since starting my property career here in the UK... We work in a different environment , and in the UK, We have to remortgaging every 5 years... Subject to, doesn't work... What a shame... Cheers
Good video. One of my favorite strategies is buy, and re-sale as-is with owner financing. I can keep the note for cash flow or once seasoned sell the note to realize my profits.
How much are your seasoned notes selling for? Kindly, I would request you being very specific with the Note Buyer's actual final payment to you. I can't stand hearing "It depends". In our extensive experience on this matter, we have struggled to find legitimate note buyers willing to pay a decent amount. They usually want to pay 70-80% of the mortgage balance, even after years of seasoning.
@@freedom_mentor We get 81%-90% on average. If we have them properly underwritten and with a servicer we can actually flip them for 90% but our buyers must put 10% down minimum
In our experiences, the vast majority of owner occupants that can put 20% down can get a loan from a non-QM lender at the time of purchase and don't need owner financing. Once you drop down to only needing 10% down, that's when the issues begin with 80-90% of loan amount note buyers, even after seasoning; which is a gigantic hit. I still think the Rent to Own model is better financially. I've come at the originate-a-first-mortgage-and-then-sell-to-a-note-buyer my whole career and have never been able to make the math work out nearly as well as selling on a Rent to Own, or selling immediately after remodeling/acquiring. But more power to you if you have made that model profit more.
@@freedom_mentor The rent to own model is a great model, love it and it works for sure. We have done well with the owner financing but we have done them on lower cost homes. The $125,000 and over models I prefer to keep as rentals or fix and flip. I do love the lease option though so keep it up
So inspiring! Phil, please contact George Gammon and get on the roster for the rebel capitalist live event in Miami this June. Your presentation would be so welcomed!
I think this happened to me when a tenant burned my house and was growing pot. Chase bank sent me a letter stating they were foreclosing on the property due to it being no longer insurable. Payments were always paid ahead and I was still waiting for the insurance to pay. Not sure if this is anything close to your opening statement.
Loved this one. What would you say about wraps and where does buying on a Wrap or selling on a wrap fit into your spectrum of better for buying or selling? I have heard people say buying on a mirror wrap is best for long term subto deals. That way they have a note to show debt is being paid if they want to get another home.
I have not found any value whatsoever in using wraps under any circumstances. If the original borrower wants to get a loan (and you have taken over their mortgage Subject To); we provide the lease. That solves the problem better than the Wrap. BUT, keep in mind, almost all Subject To deals are very short term (less than two years). In fact, more than 95% of our Subject To deals are less than 120 days. Long term Subject To deals don't work out well UNLESS the borrower had passed. If the borrower has passed, then you can hold onto that Subject To long term. Also, most investment properties are refinanced every 5 years or less anyways.
Hey Phil, regarding the Land Sale, if the lessee defaults, he may lose his position - its in the law. I'm licensed and its part of the exam. It's a very risky proposition.
You can take title personally or in a legal entity. Obviously, it makes more sense to always do business in a legal entity rather than your personal name, not only for the tax benefits, but for liability protection.
I had seller call the bank a year after I owner financed the house and wrapped his mortgage. He asked them to take him off the loan since he had sold the house to a guy and that guy sold it to someone living in it. They called the loan and I called the bank to ask why I'd received the letter requesting the intirety of the loan in 60 days. After a conversation I figured out that the seller had called and emailed them asking to be taken off the loan. The loan was current. I wound up bringing in a private lender and had to unwind the deal to refinance, then sell it back to the owner occupant. Still have that note today. Since you haven't seen this before with the years of your experience I feel lucky to have had to work through it and I'm glad I'll never experience it again. (Knock on wood)
Fascinating! Thank you for sharing and sorry to hear you had to go through this. You are the first authentic example. A few questions. (1) Who was the lender that called the loan due? (2) Was the title held in the name of the new Buyer you sold it to? (3) If so, how did you get a loan on a property that you no longer owned?
Make sure you include enough of a down payment to pay the agent and then the rest is the same. If the agent is getting their full commission at closing, it's not difficult.
So what do you do on a contract for deed working on Fha loan no they ask about 2 loans against the property and till there paid you can't get your loan
Great question! I should have mentioned Wraps on this video. A wrap is when you as the Seller offer owner financing (or a Contract for Deed) to a Buyer but you don't own your property free and clear. Since I don't sell properties on Owner Financing or a Contract for Deed (nor do I recommend you do it), I have never had a use for Wraps as a Seller. And as a Buyer, it would be reckless for me to agree to a Wrap because the Seller could pocket my payments and never make their underlying payments. If Wraps was on my white board, I would have put it in the Middle as something that is neither good for the Goose or the Gander.
i thought on a contract for deed you did not get titled to the property until you paid the contract off. in other words,,,, 5 years in making payments and then you stop, the seller could take it back and bank all those payments like a lease to purchase.
Give it a try and see what happens. Even offer to allow an exception to the title policy for the Subject To lien. About 1 in 20 title companies agree to do it. It used to be about 1 in 2.
Pace morby has had two or three banks exercise there do on sale Claus. He's almost primarily entirely buying houses via subject to. I don't know how many he has bought in total probably 1,000 or more
And probably that 0.1% of situations involved a loan that was past due and a local lender wanting to foreclose. It proves my point that it happens so seldom that it's basically a non-issue.
But it does happen. Pace is proof of that. I agree with you 100% that it is rare. Out of the 1,000's of homes he was obtained via seller financing the banks have only called the loan do 2 or 3 times, but it does happen. If the buying does not have that special insurance or is not in a situation to handle that, it could be a real bad day for them
That's a very good question. Interestingly enough, while I can't explain why, in our experiences, the borrowers that attempt to file for bankruptcy are unable to do so because we are on title? So, in other words, for whatever reason, we have seen where the borrower can't file bankruptcy because of our Subject To deal?
We've done more, collectively as a group, than anyone else in America and I can say that as long as you know that it's not typically going to last for the life of the loan, it's smooth sailing. We usually are in and out in less than 2 years.
If you take over a property subject to and want a hard money loan to do the renovation - wouldn't the lender see that second mortgage show up and call it due?
Almost all legitimate hard money lenders would not lend money in the second position. They would need to be in the first position so when you originate the hard money loan, the first mortgage you took over subject to would be paid off. In other words, you can't do a Subject To deal and also get a hard money loan.
@@freedom_mentor thanks. I am trying to learn ways to do small scale fix and flips to build up Capitol so I can eventually get a few rentals to hold long term.
CFD is the way to go in Illinois. Judges here in Decatur, IL side with the landlord every time. Purchase a property for $40,000 sell for $50,000 (EASILY) 10% down, 10% interest over 10 years. Illinoisans get their tax refunds they throw the 10% down and their charged 10% for 10 years and the seller wins. If the buyer faults you literally evict because you have a contract just as of it was a rental agreement. You keep the down payment, all mortgage payments and if they fault you just repeat the process
I saw this place. Real cheap. Price $29k. 4 room, 2 bedroom, 1 bath ranch style house featuring 840 feet of living space. Enclosed porch on the front as well as the side. Large deck at the rear. Large storage shed. Property is listed in the DEA National Clandestine Laboratory Registry. No Entry Allowed. A deal?
It would be great to get some details on those. What lenders? How did he take title? Why does he think they called it due? etc. When I get a good look under the hood, I have found that it wasn't a clear cut Due on Sale escalation. And we've done thousands in our organization over the past 20 years. So for 1 investor to have 4 examples, there MUST be more to that story.
"Just Because You Can Make a Livelihood Via Money Doesnt Mean You Should" Because of the Meaning Behind Choosing The List of Tradeoffs There Are Other Ways of Being Employed & Acquiring Livelihood
Who is their title insurer? After Googling "Indiana Title Network", it looks like a small title operation with one location in Crown Point, IN. I doubt they have their own title insurance company in house that issues title policies.
Watch this video: th-cam.com/video/XBKMzkLl5Ls/w-d-xo.html It's a slightly older video so while the message applies but these days, I suggest you use PropStream (th-cam.com/video/7puMt3GUoHE/w-d-xo.html)
Why? Does turning your cash into cryptocurrency provide you with depreciation, appreciation, cash flow, the ability to purchase with leverage and a hedge for inflation? I'm intrigued by how transforming US dollars into a digital currency is a better investment than real estate.
Then what? So even if, on paper, your Digital Currency value increases 4 fold, then what? It just looks good on paper, right? How do you extract any benefit from your on-paper victory? Sell it? Then you have sold your golden goose! So you have to hold onto it. How long do you hold onto it? Forever? How does that benefit you? What's great about real estate is that you get the benefit of appreciation (increase in value) and then you can still benefit from cash flow, tax deductions and in some cases, doing a cash out refinance, along the way; all while keeping your golden goose.
Learn how to apply creative financing techniques to your real estate deals through mentorship in my Apprentice Program. Apply here: www.freedommentor.com/apprentice
Once again Phil--- FABULOUS information. I buy houses and sell them on lease options. Everyone wins if they do what they agree to do.
Phil, the more gurus I watch, the more I realize you're one of the few out there giving top notch info. Thank you!
If you watch enough of my videos and understand them fully, you’ll be among the sharpest investors in your area and will be extremely wealthy. Many of my Apprentices are now the leaders in their respective markets. I have no idea what other real estate “gurus” are saying out there because I don’t watch or listen to anyone. I’m too busy doing deals. So I can’t speak with authority about who is good and who is not. But what I can say is that if you listen to me, you’ll be very glad you did.
@@freedom_mentor I Love The Information U Have Phil Ive Been a Big Fan Of Your Channel on TH-cam Since 2015-2016, It Took Me 3 Months Up to 6 Months to Mostly Understand Wholesaling Real Estate Contracts Virtually & The Problems But Most of My Time That Ive Spent Studying Was Wasted on Delayed Thinking & Delayed Information Via Poor Means of Obtaining Content Which is Why Ive Pursued Studying Cognition Studies & Big Data Processing Algo Engineering
@@freedom_mentor Amen, All TH-cam Real Estate"Gurus" don't even explain 1/4 of what you just covered... They only talk about what people want to hear and lifestyle to be able to sell their 10k Courses, sad but true. Thanks PHIL!!!!🙏🏼🙌🏼
Great video. I watched it before but I have since then put a property under contract using seller pfinancing. Now everything in the video makes more sense to me. I especially appreciate the insight as to why seller finance and subject to favors buyers while lease options and to a lesser extent contract for deed favors sellers.
Subject To and the combination of Owner Financing and Subject To has been a game changer for me, specially in my market on where house pricing is HIGH and the traditional 65% offers on $500k houses will not work.
In my state of Colorado, there is a little known law that requires installment land contracts (contract for deed) to escrow the property taxes with the public trustee of the county in which the property is situated. There are severe penalties for violation.
Just found this channel. Best expert ever
Hi Phil, good to see you again...
You have been my menthor since starting my property career here in the UK...
We work in a different environment , and in the UK, We have to remortgaging every 5 years...
Subject to, doesn't work...
What a shame...
Cheers
Good video. One of my favorite strategies is buy, and re-sale as-is with owner financing. I can keep the note for cash flow or once seasoned sell the note to realize my profits.
How much are your seasoned notes selling for? Kindly, I would request you being very specific with the Note Buyer's actual final payment to you. I can't stand hearing "It depends". In our extensive experience on this matter, we have struggled to find legitimate note buyers willing to pay a decent amount. They usually want to pay 70-80% of the mortgage balance, even after years of seasoning.
@@freedom_mentor Just sold 4 notes around 91-96% of the mortgage balance. They were all low LTVs (buyer's put down large down payments).
@@freedom_mentor We get 81%-90% on average. If we have them properly underwritten and with a servicer we can actually flip them for 90% but our buyers must put 10% down minimum
In our experiences, the vast majority of owner occupants that can put 20% down can get a loan from a non-QM lender at the time of purchase and don't need owner financing. Once you drop down to only needing 10% down, that's when the issues begin with 80-90% of loan amount note buyers, even after seasoning; which is a gigantic hit. I still think the Rent to Own model is better financially. I've come at the originate-a-first-mortgage-and-then-sell-to-a-note-buyer my whole career and have never been able to make the math work out nearly as well as selling on a Rent to Own, or selling immediately after remodeling/acquiring. But more power to you if you have made that model profit more.
@@freedom_mentor The rent to own model is a great model, love it and it works for sure. We have done well with the owner financing but we have done them on lower cost homes. The $125,000 and over models I prefer to keep as rentals or fix and flip. I do love the lease option though so keep it up
So inspiring! Phil, please contact George Gammon and get on the roster for the rebel capitalist live event in Miami this June. Your presentation would be so welcomed!
Phil we need you... stay consistent!!! bro, i be waiting for you to drop videos.
I am dealing with title insurance right now. Hope you do a title insurance info. Wondering what all title insurance covers.
I think this happened to me when a tenant burned my house and was growing pot. Chase bank sent me a letter stating they were foreclosing on the property due to it being no longer insurable. Payments were always paid ahead and I was still waiting for the insurance to pay. Not sure if this is anything close to your opening statement.
What’s the best way to pitch the owner financing ? Just ask ?
Loved this one.
What would you say about wraps and where does buying on a Wrap or selling on a wrap fit into your spectrum of better for buying or selling?
I have heard people say buying on a mirror wrap is best for long term subto deals. That way they have a note to show debt is being paid if they want to get another home.
I have not found any value whatsoever in using wraps under any circumstances. If the original borrower wants to get a loan (and you have taken over their mortgage Subject To); we provide the lease. That solves the problem better than the Wrap. BUT, keep in mind, almost all Subject To deals are very short term (less than two years). In fact, more than 95% of our Subject To deals are less than 120 days. Long term Subject To deals don't work out well UNLESS the borrower had passed. If the borrower has passed, then you can hold onto that Subject To long term. Also, most investment properties are refinanced every 5 years or less anyways.
Great job Phil
Good as always phil- you know i roll cash only- but still love all your video's Your awesome and the best
Looks like im first. I missed out on a 5mil deal because i didnt know any creative financing. Never again!
Hey Phil, regarding the Land Sale, if the lessee defaults, he may lose his position - its in the law. I'm licensed and its part of the exam. It's a very risky proposition.
Should you only do Sub2 as an LLC, or can you do it as John Doe as well?
You can take title personally or in a legal entity. Obviously, it makes more sense to always do business in a legal entity rather than your personal name, not only for the tax benefits, but for liability protection.
Is there a way to structure lease option legally in Texas? Do you know of any title company/attorneys that can do this?
Less than 6 months has been used by investors to keep it legal. But it's a tough sell to some Tenant Buyers to only get 6 months.
@@freedom_mentor does that mean 6 months lease option term is the maximum to keep it legal?
I'm not giving you legal advice but that's the way the Texas law is written; less than 6 months.
I had seller call the bank a year after I owner financed the house and wrapped his mortgage. He asked them to take him off the loan since he had sold the house to a guy and that guy sold it to someone living in it. They called the loan and I called the bank to ask why I'd received the letter requesting the intirety of the loan in 60 days. After a conversation I figured out that the seller had called and emailed them asking to be taken off the loan. The loan was current. I wound up bringing in a private lender and had to unwind the deal to refinance, then sell it back to the owner occupant. Still have that note today. Since you haven't seen this before with the years of your experience I feel lucky to have had to work through it and I'm glad I'll never experience it again. (Knock on wood)
Fascinating! Thank you for sharing and sorry to hear you had to go through this. You are the first authentic example. A few questions. (1) Who was the lender that called the loan due? (2) Was the title held in the name of the new Buyer you sold it to? (3) If so, how did you get a loan on a property that you no longer owned?
Hi Phil,
How do we deal with owner financing if there are agents involved?
Make sure you include enough of a down payment to pay the agent and then the rest is the same. If the agent is getting their full commission at closing, it's not difficult.
So what do you do on a contract for deed working on Fha loan no they ask about 2 loans against the property and till there paid you can't get your loan
Can you provide more details? In order to help answer your question, I would need a whole lot more information.
Can someone explain how to work around the insurance issue?
Didn’t he say leave the existing insurance untouched and get another? That as the easiest way at least, which is more costly of course.
I wish Phil would do a special in living color on ADU's in ski towns of the west.
Great info as usual Phil. Is a mortgage wrap and subject to the same animal?
Great question! I should have mentioned Wraps on this video. A wrap is when you as the Seller offer owner financing (or a Contract for Deed) to a Buyer but you don't own your property free and clear. Since I don't sell properties on Owner Financing or a Contract for Deed (nor do I recommend you do it), I have never had a use for Wraps as a Seller. And as a Buyer, it would be reckless for me to agree to a Wrap because the Seller could pocket my payments and never make their underlying payments. If Wraps was on my white board, I would have put it in the Middle as something that is neither good for the Goose or the Gander.
Can I use Lease Option in Texas to sell a house?
Yes. But keep it to less than 6 months
i thought on a contract for deed you did not get titled to the property until you paid the contract off. in other words,,,, 5 years in making payments and then you stop, the seller could take it back and bank all those payments like a lease to purchase.
Why cant you get title insurance on Subject To? Couldn't a title company just order title insurance like in a typical transaction?
Give it a try and see what happens. Even offer to allow an exception to the title policy for the Subject To lien. About 1 in 20 title companies agree to do it. It used to be about 1 in 2.
@@freedom_mentor Thanks from Tennessee
Pace morby has had two or three banks exercise there do on sale Claus. He's almost primarily entirely buying houses via subject to. I don't know how many he has bought in total probably 1,000 or more
And probably that 0.1% of situations involved a loan that was past due and a local lender wanting to foreclose. It proves my point that it happens so seldom that it's basically a non-issue.
But it does happen. Pace is proof of that. I agree with you 100% that it is rare. Out of the 1,000's of homes he was obtained via seller financing the banks have only called the loan do 2 or 3 times, but it does happen. If the buying does not have that special insurance or is not in a situation to handle that, it could be a real bad day for them
What happens if a seller filed bankruptcy after you bought their house via a “subject to”? Can you protect the house you just purchased?
That's a very good question. Interestingly enough, while I can't explain why, in our experiences, the borrowers that attempt to file for bankruptcy are unable to do so because we are on title? So, in other words, for whatever reason, we have seen where the borrower can't file bankruptcy because of our Subject To deal?
@@freedom_mentor thanks! Just trying to hash out the few final pitfalls before giving the “subject to” a shot. It intrigues me the most.
We've done more, collectively as a group, than anyone else in America and I can say that as long as you know that it's not typically going to last for the life of the loan, it's smooth sailing. We usually are in and out in less than 2 years.
If you take over a property subject to and want a hard money loan to do the renovation - wouldn't the lender see that second mortgage show up and call it due?
Almost all legitimate hard money lenders would not lend money in the second position. They would need to be in the first position so when you originate the hard money loan, the first mortgage you took over subject to would be paid off.
In other words, you can't do a Subject To deal and also get a hard money loan.
@@freedom_mentor thanks. I am trying to learn ways to do small scale fix and flips to build up Capitol so I can eventually get a few rentals to hold long term.
@@AberrantArt You don't need to do fix AND flips. Just do flips first. This video explains: th-cam.com/video/jMASRFE8XTk/w-d-xo.html
CFD is the way to go in Illinois. Judges here in Decatur, IL side with the landlord every time. Purchase a property for $40,000 sell for $50,000 (EASILY) 10% down, 10% interest over 10 years. Illinoisans get their tax refunds they throw the 10% down and their charged 10% for 10 years and the seller wins. If the buyer faults you literally evict because you have a contract just as of it was a rental agreement. You keep the down payment, all mortgage payments and if they fault you just repeat the process
Great stuff!
God Bless Phil 🌴🇺🇸🌴❤✝️❤🌴🇺🇸🌴
I saw this place. Real cheap. Price $29k. 4 room, 2 bedroom, 1 bath ranch style house featuring 840 feet of living space. Enclosed porch on the front as well as the side. Large deck at the rear. Large storage shed. Property is listed in the DEA National Clandestine Laboratory Registry. No Entry Allowed.
A deal?
Great video,,, i
What is the best way to buy a house
There are a lot of different options that can make sense. All depends on the deal.
whats a llc
Limited Liability Company
Pace Morby said he's had 4 due on sale clauses called on him on subject 2 deals
It would be great to get some details on those. What lenders? How did he take title? Why does he think they called it due? etc. When I get a good look under the hood, I have found that it wasn't a clear cut Due on Sale escalation. And we've done thousands in our organization over the past 20 years. So for 1 investor to have 4 examples, there MUST be more to that story.
My friend David had one called due. Said because he paid with a paper check. I can put you in contact for the details.
Please do. There is probably more to the story than just the paper check.
❤❤❤
Phil yo ass wild af
Jajajajaja! Thanks Phil, you are the Best!
😀😀😀😀😀
"Just Because You Can Make a Livelihood Via Money Doesnt Mean You Should" Because of the Meaning Behind Choosing The List of Tradeoffs There Are Other Ways of Being Employed & Acquiring Livelihood
I did my first sub2 last year. And I got title insurance and warranty deed
Really? Who was your title insurer? That is EXTREMELY rare in 2021.
@@freedom_mentor Indiana title network
Who is their title insurer? After Googling "Indiana Title Network", it looks like a small title operation with one location in Crown Point, IN. I doubt they have their own title insurance company in house that issues title policies.
@@freedom_mentor I will get back to you on this... I’ll look when I get home.
@@nojokeauto did you find out who the insurer was?
👇🏻👀
I'm a first time home buyer. I need a property. Let's connect.
Watch this video: th-cam.com/video/XBKMzkLl5Ls/w-d-xo.html It's a slightly older video so while the message applies but these days, I suggest you use PropStream (th-cam.com/video/7puMt3GUoHE/w-d-xo.html)
I’d rather buy bitcoin than real estate at this point
Why? Does turning your cash into cryptocurrency provide you with depreciation, appreciation, cash flow, the ability to purchase with leverage and a hedge for inflation? I'm intrigued by how transforming US dollars into a digital currency is a better investment than real estate.
@@freedom_mentor some people prefer gambling over smart investing. I'm in the real estate investing camp 😀
Because I’d rather spend 50k to make 200k than spend 200k to make 50k.
@@se6586 of course but you can lose it all. props are slower but relatively low risk if you know your numbers
Then what? So even if, on paper, your Digital Currency value increases 4 fold, then what? It just looks good on paper, right? How do you extract any benefit from your on-paper victory? Sell it? Then you have sold your golden goose! So you have to hold onto it. How long do you hold onto it? Forever? How does that benefit you? What's great about real estate is that you get the benefit of appreciation (increase in value) and then you can still benefit from cash flow, tax deductions and in some cases, doing a cash out refinance, along the way; all while keeping your golden goose.
How about don't get marry someone who is bankrupt!
Phill you are so attractive and beautiful
I love you