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Sub2 With William Tingle

Episode 390: Sub2 With William Tingle

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REIS 390 | Sub2 Deals

 

Not many people may know this, but you can buy real estate without actually purchasing it. This is called a “Subject To” deal or “Sub2.” Joining Mitch Stephen on today’s show is William Tingle, the host of The Sub2Deals Show, a program that focuses on real estate transactions that require little cash or credit. William is a nationally-known real estate investor, investing coach, author, and public speaker who has been buying and selling houses for over twenty years. William shares his real estate background and how he stumbled upon Sub2 deals. Want to start stacking up positive cashflow? Check out this episode and see if Sub2 is the right avenue for you.

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We’re doing great here, Mitch. How about you?

I understand that you are in love in Colorado Springs and she moved you from Belize. What a woman she must be. Congratulations. I’m curious about Belize. Why’d you go there and what was it like when you were there? All of us investors have this fantasy that we’re going to go offshore somewhere and never pay taxes again and live in paradise for a couple of hundred dollars a month. What happened?

It’s not like that. The reason I decided to leave is I needed to change. I was almost 50 years old. I got a divorce after a twenty-year marriage. It’s a cliché, but it was a rough divorce. I lost almost everything that I had and I needed something different. We vacation a lot. We’d been investing at that time for over ten years and had done well and had traveled a lot of places. When we travel, we didn’t go for a week at a time. We went for a month or two months. We’d spent six weeks in Belize before and I liked it. I said, “I’m almost broke. I can live on not a whole lot there. I like it. I love the beach and I needed a change.” That’s the reason that I decided to go.

Did they treat you good down there?

I chose Belize for a lot of reasons. It’s a beautiful country. English is the first language. It’s a relatively low cost to live. You can live very nicely right close to the beach. Lobster dinner is for $20, all fresh stuff. They’re great. They’re friendly. If you travel much, you can go a lot of places and Americans these days aren’t the most welcome, but they want you there. They have a program that caters to ex-pats. They want you to come down. They want you to live there. They want you to bring your money to Belize, so it works out well.

We’re going to be talking about sub-to here, but tell us a little bit about that program. You said an acronym. Tell us what that is.

The QRP program, it’s Qualified Retired Persons Program. They have a minimum age requirement. You have to be 40 years old and it’s a couple of thousand dollars to get into the program. You can bring all of your stuff in. If you’re a minimalist, you got furniture, you’re broke, you’re okay. If you’ve got planes, boats, big toys, all of those things get to come in duty-free. You get permanent residency there and you don’t have to worry about going into the capital city and renewing paperwork and doing stuff like that. You get to live there. You don’t have to pay any taxes if you don’t do business in the country. It’s a great program. All you have to provide for them is a doctor statement that you’re relatively healthy and a police background report that they’ll let you bring in yourself. They don’t even run in on you themselves. It’s simple. They want you to live there. They want you to move there. That’s the program. You can google ‘Belize QRP Program’ and learn all about it.

Tell us a little bit about your real estate background and how you found real estate.

Mitch, I didn’t know a thing about real estate. At the time I got started investing, I had owned two homes and bought those pretty much like anybody else does. I went to the attorney’s office, signed a bunch of papers, and had a house in the mortgage. I was in the restaurant business. My background on me, I left home when I was fifteen. I quit school in the ninth grade and worked hard. I had to survive. I’ve been in the restaurant industry for over twenty years and I found myself closing in on my late 30s and worked 70 hours a week made a pretty good income, but I never saw my family. I was married, had two kids and most of the time I would leave the house in the morning before they would get out of bed.

Try to create a great situation for your buyer. Don't mark the house up tremendously. Click To Tweet

I wouldn’t get home until after they were in bed at night. I was pretty much disgusted with my life because I didn’t have much of one. Like a lot of people, I was up at 2:00 in the morning watching TV and frustrated and the old Carleton Sheets infomercial came on. I picked up the phone and ordered it. The rest is history. At the time, the internet was getting started. It wasn’t as big. I’d been transferred. I was in Georgia at the time. I wasn’t surrounded by family. All that stuff won’t work. I opened the book, read it, which is what 95% of the people that already don’t do. I did what he said. A month later, I bought two houses and I said, “This isn’t too tough.”

I want to point out, I’m an advocate for those who aren’t traditional school-educated material and I was not either. You obviously weren’t. You don’t have to have a formal school to be a success. In fact, if you read books like Think and Grow Rich, a lot of the world’s biggest millionaires and some of the most successful people never made it through school. Certainly, not through college. Some of them didn’t even get to high school. They didn’t make it very far through high school, and it may be their greatest blessing because you’re thrown out to the street to figure out how to survive. One thing that’s cool is this thing called the human body. It likes to eat and it’s going to figure out a way. You back this set of organs into the corner somewhere and it’s going to fight. As long as it gets enough water and enough protein and as long as you can keep your senses, this body’s going to figure out what to do to get what it needs if you’ll apply yourself. The other thing I wanted to point out is, and I’m sure you’ll agree, your education didn’t stop because you didn’t go to formal school, did it?

Absolutely not. It has to continue. When you live out on the streets, you have to have to learn and have to adapt, for sure.

My dad was a Marine. They’re never not a Marine after they’re a Marine. Adapt and overcome. That’s what we do. I do the same thing. I ordered the Carleton Sheets program too. It’s one of the starts to my life. A big impact. All those things do work, but you got to work them. They don’t work because you’re ordered them. They work because you read them and you did something about it. That’s what we’re here to talk about. You specialize in sub-to. I’m sure you didn’t start with sub-to because none of us ever start with what we ended up doing.

That was the quote from Ken D’ Angelo, who started HomeVestors. We were at a Christmas meeting one time and he lived here in San Antonio. We would always find our way in the back parlor there by the fireplace with a glass of cognac or something, talking about real estate from 9:00 AM when the party started until 3:00 in the morning. One of the things he said to me is, “An entrepreneur rarely ends up with the business he decided to start. It always morphs in more in adapts and changes until you find the least path of resistance to the most money. It’s hardly ever what you started.”

When I got started, I got online and of course, I have the Carlton Sheets course. You’ve used it too, so you know he covers pretty much every way of investing. It’s a lot of information. I looked at all of it. Do you want to be a landlord? Where do you want to do this or that? I ordered all the courses too. Once I discovered real estate and there were a million. You’re talking about the very late ‘90s, early 2000s, and there were a ton of gurus and courses. I ordered them all. Lease options, wholesaling, rehabbing, the whole bit, trying to find what it was that I wanted to do. What I narrowed things down to was that I didn’t want to be a typical landlord.

I want to cashflow. I didn’t want to wholesale. I didn’t want to have to keep working. The wholesaling seemed like a job to me. I wanted the combination of those things. My business over the years turned into a system of buying houses and then selling them with seller financing and creating the upfront money, the chunk of money like you would get from a wholesale deal. The monthly cashflow that you would get from a rental or a lease option or something along those lines, the backend secondary chunk of cash you’ll get when they refinance them, that’s how I got from A to B.

Sometimes I know us as a group, the AAA educator/doers, you may or may not have time to research who you’re talking to. This is what I’m about to tell you in $7 that will get you a cup of coffee at Starbucks. I bought a house about every 4 to 5 days in or about San Antonio for over two and a half decades. My MO is to buy them with other people’s money. That money allows me to wrap the mortgage so I can sell it on payments and not have to pay off my debtor. I buy about 100 houses a year consistently for over twenty years. I sell my houses on 30-year fixed notes and how I came to the conclusion is exactly what you’re saying.

You’re picking up in the down payment and I’m picking up in the down payment about what a wholesaler makes. This is what’s going to make wholesalers sick to their stomachs. The wholesaler’s done at that point. They picked up $4,000, $8,000, $10,000, $12,000, and it’s over. William Tingle and I are still owed $180,000 of positive cashflow over the next 30 years or 25 years, anywhere from $150,000 to $250,000. That’s what every wholesaler in the planet is leaving on the table because they haven’t figured out a system where they can buy as many houses as they want and live off down payments and start stacking up the positive cashflow. Don’t look at this like I’m trying to impress anybody or trying to impress upon you that every time I do a deal, my net worth goes up $180,000.

I’m owed $180,000. You do five deals like that, that’s another $1 million in your net worth category. When someone says they’re a multi-millionaire, it’s not that hard if you pick the right strategies. Every time you make a deal, you’re picking up enough to live on, hopefully, or do 1 or 2 and that’s enough to live on. You don’t have to spend the cashflow because it’s all extra. It doesn’t take long to build up a big financial. I bought with private people’s money, but there’s another way to do it. It’s going around and picking up mortgages that people can’t afford or don’t want anymore. Talk to us about a basic sub-to deal.

That was going back to how I got started, what made me pick up on sub-to was when I got started, I didn’t have any money. I made a decent income, but I had a wife and two kids. We got a new car every couple of years, we had a decent house and we did the things day-to-day that most people do. You make your money, you spend it. I had good credit. I was able to walk in a couple of local banks and get little lines of credit and let them finance the first couple of houses for me that I did. What I discovered after that 4th, 5th, 6th house was there something that banks refer to as exposure. When they start talking to you about that and they say, “We’ve got a lot of exposure with you. We’re probably not going to be able to continue lending to you,” what I realized was if I made cashflow that’s going to pay me enough money to have the lifestyle that I want, the banks probably aren’t going to be able to do it for me.

REIS 390 | Sub2 Deals

Sub2 Deals: Dodd-Frank has a bunch of limitations. A term on a mortgage is not one of them.

 

I’ve got to find another way. I went through the sandwich lease option thing and I didn’t like that. It seems like a vulnerable position to be between a seller and the end buyer, I did a few of those. I discovered sub-to. I said, “If I can take over payments on loans that are already existing, already fixed, full-terms, I can buy as many as I want.” That’s what we started doing. We would look for people in situations and most of them are going to be in some distress, whether that’s a divorce or a pending foreclosure, or a move that they have to make suddenly. Probably 25% of the houses we buy aren’t typically distressed people. They have a motivation to sell the house, but they’re not under the gun, so to speak. That’s what we started doing. We started taking over payments on existing financing.

Give us a case study of a lucrative sub-to deal that you’ve done.

We had one deal that we did. This person called us on a bandit sign. This lady, her husband had died in a car accident and they lived away from her family. Her family lived in South Dakota and this house was in Iowa and she wanted to move herself and her children back to South Dakota. They had refinanced the house when her husband had started a business and she saw her bandit sign and she gave us a call and she said, “I’m moving. I don’t want to deal with agents. I don’t want people walking through the house. I’ve been through this with my husband. We want to sell the house. The number is on that.” If I remember those correctly, this was probably a $250,000 house. They had probably to $220,000 to $230,000. There wasn’t a tremendous amount of equity. After she’d sold with an agent, there wouldn’t be anything for her to get.

The interest rate was probably in a 3% to 3.5% range. She signed the house over to us. We were able to coordinate a move date with her that worked for when she wanted to go. That’s one of the great things about what we do. There’s no pressure to close a loan and get things done. She told us the day she wanted to move. We came in and took over payments on her current loan. Our payments were probably in the $1,200 range. We turned around and sold that house that was worth $250,000 to probably $259,000. A lot of people I see and teach mark the house up to whatever price. People won’t care and it’s owner financing. We try to keep that thing close to market value. We’re not trying to rip off our end buyers. We want to sell them a good house at a fair price. We sold that house at probably the 6% range where we collect about a $500 a month cashflow.

Over the life of that, our average buyer will cash us out at around three years. We work with our buyers to improve their credit to the point where they can get new financing. We’ll make it a 10% down payment on a $250,000 house at $25,000 down. We’ll collect $500 a month in cashflow for three years which will work out to about $18,000. By the end of that time, we’ll probably have another $15,000 or so on the back end. We’re looking at probably $50,000 on a house with no equity. You can buy as many of those as you want because people have no equity. Some people call them skinny deals, but that’s probably the typical deal that we’ll do with $50,000 to $60,000 in profit over three years.

Ron McMahon calls it the pretty house deal. They don’t have a lot of equity. Let’s talk about the objectives. We talked about the upside, you’ve got $25,000 down, you collected about $18,000 in positive cashflow within 2 or 3 years when they’re supposed to refinance you out. They refinance you out and you get another lump sum, another $15,000. That’s over $50,000 in profit on a house that doesn’t seem to have any real equity in it, which is great. One of the keys here, I saw you picked up this loan, it was at 3%, that’s a killer loan. It doesn’t matter how many years it had left on it. In your case, you’re asking or demanding that people refi you out with a certain amount of time. Is there a time limit? Do you always give a time limit or is it how it works out?

We don’t give a time limit to our buyers. We try to create a great situation for our buyers. We don’t mark the house up tremendously. Typically, a markup for us is going to be 5% or less. We’re not some of those investors that’ll say markup at 20%, the market will take care of it. You can’t count on that. We want these guys to be able to refi. There are people that will debate whether or not you can do it, whether you have to be Dodd-Frank compliant or not. There are 1,000 arguments that could do 100 podcasts where you probably on Dodd-Frank. We don’t put a balloon in because honestly, we don’t care if they refinanced. That’s our goal. We set our notes up on a 40-year amortization and it makes the payment a little bit lower, but it also increases the back end for us as far as profit is.

Let’s talk about that. I do 30-year fixed notes. You’re doing 40-year fixed notes. Is there a maximum by law? Maybe there is. Is 40 years about as long as you can go?

I’ve got an argument with people about this too. Going back to Dodd-Frank, in some ways it may have limitations. A term on a mortgage is not one of them. I haven’t found anything that says there’s a limit on how long you can amortize a mortgage. I haven’t found it and that may exist.

It may be a state by state thing too. Always make sure you study your state statutes and everything when you’re doing this stuff to make sure. We have the disclaimer in here for both of us, neither one of us are attorneys and we’re not giving legal advice. We’re saying what we do and how we’ve done for many years in many deals for better or for worse. Seek your own legal counsel on these things. There’s no way to spend the time. It would take to tell you every single facet, upside, and downside of these deals, but we’ll give you a good overview. The big fear is that the notes that you’re taking over, you’re taking them sub-to on an existing loan. The days of assumable notes are probably long gone. I don’t know if there’s any that even existing more. You’re taking them knowing that a bank has the right to call the note due probably or not. What’s your take on this?

If you present yourself in a professional manner, you're confident, and know what you're doing, you can close a sale any way that you want. Click To Tweet

The due-on-sale clause exists and of course, it’s in virtually every mortgage that’s out there now. That’s a big question. Interestingly enough, the question is mostly with investors. You’ll hear it occasionally from a seller about can we do this and is it against the law? It’s not against the law. Is there a due-on-sale clause? Yes. What the due-on-sale clause says if you read one, it’s pretty telling. It says the bank has the ride at their option, and that’s in the due-on-sale clause. It doesn’t say they definitely will if they find that there’s been a transfer, it doesn’t say anything other than at their option, they can do it. I’ve been doing this since 1999. I’ve taken loans from small banks, big banks, Bank of America, Wells Fargo, you name it. I have never, ever had one single bank mention a due-on-sale. Does that mean it won’t happen? Absolutely not.

I know that in my group on Facebook, I put out a call and said, “Investors, if you’ve ever had a loan call due, if you know of anyone who’s ever had a loan call due, please send me an email, contact me. I want to talk to you about it.” I had a couple of people message me saying that they knew a cousin or a friend of a friend of who had one happen. In the context that I got, I only had a couple that may have even come close to sounding reputable. Only one person came forward with an actual story where it happened to them. I know hundreds of investors across the country, most of them very experienced, who say the same thing. Can it happen? Absolutely. It is a risk and you need to be aware of it. How often does it happen? I can’t find very many cases of it. My experience tells me that most banks want their money. If you’ll call them up and say, “I’m here talking to Joe and I’m going to help him get his finances together. We’re going to start making sure this payment comes in each and every month. Is that okay with you?” They go send us the money.

They have enough people that aren’t paying them that they need to deal with and charge off and all that. They don’t want another one. I know there’s a saying down here in Texas. “Don’t kick a sleeping dog.” He’s asleep. Walk by him. He can’t bite you while he’s asleep. Leave him asleep. The other thing is you don’t make your payments. No one wants to mess with the income stream that’s fine. When it’s going along, who wants to mess with that? It’s a perfectly good loan. They don’t want to kick a sleeping dog either. They got payments coming in. They’re going to come over here and mess with you. Now they’re going to have another house maybe on their upside-down list.

I believe that wholeheartedly. I have found though, the other problem that worries me a little bit. There’s no doubt you can deal with it, but you need to be ready to deal with it. Don’t let it surprise you. Have you had this happen to you? I have had this happen to me. The person who I have saved their butt because I got them caught up and I got their thing. They’re all fine for a couple of years. They find a new wife and a new life, and then they want their VA loan back because they can only get one of them. They want their FHA homestead loan back because they can only get one of them. They’re the ones that have caused me the problems, not the bank. The person says, “I don’t want you to pay this off and I’m going to give you trouble if you don’t pay it off,” and then they start calling my bank. In my defense, tell me if I did this right or if there are other ways to approach it. I got with an attorney that I made it ironclad and got these people to sign it. You’ll be tortuously interfering with my contract if you ever talk to anybody about what we’re doing.

We have had a couple of instances over the years where the sellers have come back saying, “When is this thing going to get paid off?” It’s only happened a couple of times. We have so many disclosures that they signed like what you said, “We’re taking over payments on this financing. You’re not to contact the bank about it. We’ll say care of those things. If they understand repeatedly that there’s no guarantee on when it’ll be paid off, we do guarantee to make on-time payments each and every month until the loan is either refinanced or fully amortized.” When they come back, we reminded them of those things and it’s always worked out. I’ve heard of other cases where people have gone to the extreme and contacted the bank and done those things. Even in those cases, I’ve never heard of a home call due. The bank generally says, “They’re making the payments. We’re okay with that.”

Our commitment here on the show is to tell you the upsides and the downsides, not just the upside. That’s one of the reasons I wrote my first book, My Life & 1,000 Houses: Failing Forward to Financial Freedom. I went to those seminars and they showed me these big checks and they told me all this wonderful stuff. When I got in the business, they didn’t tell you about some other crap. I’m like, “Why didn’t you tell me about this crap? At least if I’d have known, I could have been prepared or I would’ve done things differently, but you never told me about this.” We’re here to tell you. While we’re on the subject, I had a very intelligent attorney that had specialized in sub- to contracts.

He did something that was clever, which I used throughout all my different strategies. You can write a contract that’s 9, 10 or 15 pages long, and you can cover all the aspects and they sign at the bottom. This guy did it a little bit different and I liked it. When you have super poignant points, he would put that paragraph on a piece of paper by itself and they sign that one paragraph by itself and even have like ten of those, especially in the sub-to thing. Ten major things. You do understand this land alone could be called by the bank. If it ever got to like a trial by jury or a trial out in front of a judge, you hand this big contract and say, “My client was unsophisticated and was ill-equipped mentally to handle the size and the girth of this legalese.”

The way this attorney did it was, he said, “You didn’t understand this paragraph? Let’s read it. There’s your signature.” It’s 5, 6, 7, 8, 9, 10 sentences in plain English. “You didn’t understand that? You’re not equipped to understand this? This sentence right here, you didn’t understand this paragraph? You signed it and it’s only four sentences. What is it you didn’t understand?” He was preparing to go to court so that it was hard for someone to say, “I didn’t know,” or “They put it in the fine print,” or “They didn’t explain it to me.” I have used that in my other contracts and my other strategies too when there were extremely poignant points that I wanted to make sure that no one could be misconstrued that they weren’t told. I would put that paragraph, that sentence, or that couple of paragraphs on a separate page by itself and included in the contract. That’s the tidbit for anyone out there if you think that’s a good idea.

That’s a great idea. We have them sign so many disclosures that I’ll say the same thing. It’s worded a little bit different. For the points you’re talking about, what’s that quote, “If you want peace, prepare for war.” That attorney’s exactly right.

Was that The Art of War?

It is.

REIS 390 | Sub2 Deals

Sub2 Deals: Once you add a set of documents that have been blessed by a local attorney for the state as far as what their requirements are, you can use those documents over and over.

 

If you haven’t read that book, read it. A lot of it was over my head at the time I read it. One of the main things I learned from the book, The Art of War, is knowledge is power. You don’t exactly go around telling everything you know. For example, if a spy comes into your camp and you pick him off as a spy, you don’t run around town with the guy, “Let’s hang him, he’s a spy.” You know he’s a spy. Don’t tell him you know he’s a spy. Send him home with very bad information so you can win the war. Play your cards a little closer to your chest sometimes.

You don’t have to tell people everything you know.

I knew contractors that were getting to me. I paid them and I didn’t let them know. I was able to turn this all the way around to my advantage because they never knew that I knew exactly what they were doing. I was able to turn it into a very big plus. They still don’t know to this day, unless they read my book. They might’ve figured out who they are. Cons don’t read books, so we don’t have to worry about that. How do you find sub-to deals? Nothing happens without a deal. How are you mining these?

That’s the question you get a lot. How do you find sub-to deals? The truth is what we do is we market for sellers and their situation and their financing turns a potential deal into a sub-to deal. There are some suspects that are more likely to be sub-tos. For example, I was talking to a student, we were talking about the dream list of potential sub-tos, which what we determined would be VA loans on vacant properties that were 30, 60 or 90 days late. Typically for us, my favorites have always been pre-foreclosures and that thing. I told you I moved to Colorado Springs, which appears in addition to being a super-hot market where much properties stay on the market for a couple of weeks, a good market for VA. We’re going to start looking at that thing here too. Pre-foreclosures, people that have some problem and they need to sell. Houses for sale that have relatively low equity that are in very good condition, those are our favorites.

People think that they have to get a lawyer all the time to do all these things. When you do your stuff, you get a lawyer to look over your paperwork one time get it all set. You have them go over it with a fine-toothed comb in the beginning. After that, your documents are pretty much rinse and repeat.

If you’re going into a new market or maybe you’re a new investor and you bought a course, and this is something I tell people all the time. If you buy a course, make sure you take those documents to the local attorney there, somebody that you’re working with already, or somebody that’s been recommended from your REIA. Have them go through all of those. Different states are going to require different things. Different states like Colorado, for example. California, they require specific disclosures when you’re dealing with people in foreclosure. Always have those done. Once you add a set of documents that have been blessed by a local attorney for the state and as far as what their requirements are, then you can use those documents over and over. We very rarely close a sub-to buy with an attorney. It’s not necessary. A notary can take care of notarizing your deeds, your limited power of attorney, and any other documents that you want to have notarized. It’s as simple as taking your deed to the courthouse and getting it recorded.

In some cases, it’s more important than others, but there are people that say they want to close it in an attorney’s office because it gives it more of an official closing. You can close it in your own office, which would go a long way if that office looks professional and it has the oak cabinets or whatever and looks the part. There are people that close on the hood of their car or close at the local coffee shop. I’ve done it always. I close deals on the hood of my car forever, but I came to the conclusion that it gives people some peace of mind or maybe avoids some anxiety for people if you’ll close in a professional atmosphere. Whether it be your office or an attorney’s office, how do you close?

Typically, we’re going to close with a mobile notary. When I leave out of the country, that’s the way it was done 95%, 99% of the time. We would send a mobile notary out to take care of all of those things to their house generally. When I worked locally, we did almost all of our closings on the hood of a car or at a McDonald’s. I used to have a lot of fun doing this. I had a banker. It was with BB&T, which was a regional bank. I used to tweak him a lot about he used to joke with me about stealing houses. I would take a lot of my sellers to his office. He was a notary. He was one of the bank officers. He’d given me a pretty substantial line of credit by the, but I would take people in there and had to have him do the closing for me so I could rub it in his face. “We bought this house. Will you sell another house?” Literally, we’d leave there, a lot of times his mouth would be hanging out and it was amazing. You can close any way that you want to. You can get a feel from the seller generally if they’re going to be more comfortable in an attorney’s office or something like that, but that’s pretty rare. Most of the people I deal with want to get it taken care of. If you present yourself in a professional manner like you’re confident, you know what you’re doing, you’re handling everything for them, most of them don’t care.

What you said is important. Going there with the documents and put it all right in their face. The good parts, whatever the clauses are that you feel tentative that might people are like, “If I show him this as a chance, they’re going to blow the deal.” If it blows the deal, go find a different buyer because you’re looking for trouble. Get it out on the table, plain and simple. Go straight to it. I had a guy one time taught me this lesson about showing houses. He says, “You take the ugliest part of the house. If the double garage doors are caved in and there are broken windows, take them right to that first and say, ‘These doors here are not looking very good. I’ve got the prices. You can fix them. You can pick any door you want. You can get fancy doors, you can do the windows. Maybe you don’t even want windows in it. Now’s your chance to get these garage doors the way you want them.’” Sell over the hardest part first and get it out of the way and then move on to the rest of the pretty parts of the house. I’ve used that in my life. Anything I was afraid of, I’ve learned to go right to it, get it right on the table address it, get nose to nose with it. If you got a deal at the end of that, then the chances of having problems are very few because you were straightforward and told everyone. It’s what you would want to know if you were on the other side of the table.

I’ve been telling my students for years, “Don’t be afraid of the hard questions.” Part of what we do with our sellers, we’re taking over their financing. That’s a big deal. Establishing some rapport upfront as quickly as you can is important. When your sellers ask you a tough question, be honest. Don’t try to dance around it and try ways to candy coat it. When a seller asks me, “What’s going to happen if you don’t make these payments?” I tell them, “If I don’t make these payments, your credit is fried.” We don’t make money until the completion of this transaction. We’re going to carry it all the way through.

I’ve told that to people too. One of those one pieces of paper, one of those one-offs. This is not the exact wording. A seller here recognizes that he is facing imminent foreclosure without me or someone like me taking over these payments, getting it caught up, and trying to solve the situation. I’m very well aware that these payments may get made forever and the note resolved the way it was supposed to, or it may go to foreclosure on another day. Either way, I’m postponing that day starting whenever these documents are signed, but it may not go. You may end up with a foreclosure on your process on your deal. I have them sign that. I’m going to do the best I can for you, but right now you’re headed to foreclosure. I have a question for you. If someone gets foreclosed on a VA loan, can they ever get a VA loan again?

Investigate real estate and determine exactly what niche you want to get involved in. Don't just jump in and get started. Click To Tweet

I don’t know honestly if they can never get one again or if it would be difficult for them. I do know that if they’re currently in the military and they have a VA foreclosure, it doesn’t do a lot for their career. That’s one of the motivating factors for them.

Sometimes, the higher-ups will get on a person in the military if they’re not performing as per their word or their signature. I didn’t ask you before. I hate to put you on the spot. Do you have anything we can give away for our audience?

They can go to your website at 1000Houses.com/Sub2. That will take them to a couple of free products they can get. We have a free real estate investor’s business plan. It’s in Word format. It’s easy to customize it for your business. It’s the business plan that I used to get a couple of hours of credits when I got started. We also have a course for them on negotiation, how to negotiate effectively with real estate sellers. That’ll give them some tips on how to build rapport quickly and how to turn some leads into deeds. They can get both of those that at your website.

I didn’t ask you that either. Are you teaching this to people? Do you have a course? Do you have a boot camp or anything that you want to talk about?

I haven’t done boot camps in years. Things have changed so much. We used to do those, but we do have a couple of Facebook groups. We have a Facebook coaching group that is a paid group. We have a free coaching group on Facebook as well. They can get links to those at the 1000Houses.com/Sub2. Yes, we do offer a couple of products. We have an ultimate sub-to course that’s available and marketing as well. We have a couple of different products.

All the strategies apply but I’m going to say this, especially in sub-to, don’t do this without a pro behind you. If it’s not William Tingle, get someone else, but you don’t go into this arena not knowing what you’re doing. You’d be very ill-advised. You need to know what you’re doing in this subject. It’s a great business plan. It’s a strategy, but like any great strategy, you’ve got to dot your i’s and cross your t’s and make sure that you’re not setting yourself up for problems. They’re not that big a deal to deal with, but you need to know. Learning by mistakes in this venue is not the way to go. You can learn in some venues by making mistakes and they’re not going to hurt you so bad.

Some of those lessons could put you out of business permanently. You don’t want to do that. This is one of those topics. Here’s another misnomer. Let’s clear this up. I say all the time, “There is no real zero down or no money deal. There are deals and strategies where it’s so tiny that it’s not worth arguing about, but there’s always some cash-out.” People will go, “You don’t need any money to do sub-tos.” Right off the bat, I say, “If you find that one sub-to that’s in perfect condition that someone wants to hand you the deed that’s in current, you’re right.”

Most of them are behind. It might need a little work. Even sub-tos, more likely than not are going to require a little bit of a cash. That’s when you need to study things like go to 1000Houses.com/grow or 1000Houses.com/fund and figure out how you’re going to find this little bit of amounts of money so that you can take a sub-to but you still may need $10,000 to do what you need to do. Catch up the payments or fix some broken windows or do something. Check out our sponsors here. I’m going to advise that we go to 1000Houses.com/grow and find one way to come up with those little bits of money that you’ll need to consummate of these deals. Even though you’re shooting for nothing down deal or no money out of your pocket deals, sometimes sub-tos require some money.

Sometimes, depending on the deal, they can require a substantial outlay of cash. It’s pretty rare to find one where you absolutely need no money. It does happen. Even on the nice houses that we take over, if the payments are current and the house doesn’t need any work, a lot of times you’re going to need someone to come in and mop the floors, vacuum and do some clean up before your new buyer gets it.

You can pull the carpet, mow the lawn, put in some landscaping. Let’s make it ready. Let’s make it to where it’s not going to be in the market forever. Nothing good happens to a vacant house. I’ve never showed up and someone mowed the lawn and painted it. I have showed up where they painted it, but they painted it speedily.

That’s what I like to have our students do. Break down what it costs them per day for a house to sit empty. If you’ve got a nice house in a decent market, you got a $250,000 home that’s got a $1,200 or $1,400 a month house payment, it’s going to cost you some money every single day that that house sits empty. Whether it’s $50, $70 or $80 a month or a day, there’s a cost involved to vacancy. You need to be aware of that.

REIS 390 | Sub2 Deals

Sub2 Deals: Establishing rapport up front as quickly as you can is important, but when your sellers ask you a tough question, be honest and don’t try to dance around it.

 

Taxes, insurance, a portion of the payment coming up, association dues, if there are any or depending on condos or townhouses or whatever. It’s been nice talking to you. I appreciate that you took the time. I want everyone to go to 1000Houses.com/Sub2 and get your free copy of a real estate investor business plan. Also, get a free booklet on how to negotiate your leads to deeds. How can you argue with that? You’re going to get some information for absolutely free over there. You’ll be able to learn more about William Tingle and what he has to offer. You can learn about the free Facebook community that he’s built. You can also learn about the paid subscription Facebook community that he has. Believe me, these are things worth spending your money on if this is what you want to do.

If this is a strategy you’re thinking about, get a pro behind you, shortcut the learning curve. I said it over and over again. I know you maybe get tired of it, but you’re either going to pay the street or you’re going to pay for some solid information from some people that have done it before to help you avoid some problems. Either way, you’re going to write a check and it’s a lot less anxiety to going with someone holding your hand and explaining to you and giving you the benefit of their years and deals worth of experience. You pick up some of their network and some of their paperwork. You’re going to have to go out and vent all this stuff from zero if you don’t find someone to help you. That person deserves to get paid for what they do, a fair fee. William Tingle falls right in that category. You should check it out if you want to do sub-tos. Let’s say we’re talking to some people that want to quit that crappy job. They’re a little bit afraid. They don’t know exactly what to do. What’s your advice?

Mitch, my advice would be real estate as a way to do it. Obviously, you don’t need a tremendous amount of education. You’ve read my story. Investigate real estate and determine exactly what niche you want to get involved in. Whether it’s flipping, whether it’s rehabbing, whether you like to rebuild houses or you want cashflow, whatever it is, don’t jump in and get started. I see so many people that are like, “I’ve got an appointment. I’m trying to close this deal. I need paperwork. I need contracts. What can I do?” Make sure that you learn from somebody reputable. Make sure that the paperwork that you’ve got conforms to your state laws and know the technique. Know how it works, what you can do, what you can’t do. I’ve always tended to be the person that would rather ask for forgiveness than permission, but no one that’s appropriate. Make sure your paperwork is right. You don’t want to get into a problem later on. Learn the technique and then don’t be afraid to do it. Don’t be afraid to pick up the phone call a seller.

If you ever go sign up to play football, you wouldn’t walk on the field and like, “Here you are, they’re going to be kicking this ball down the field. You’re supposed to catch it and run down.” There are going to be hours of practice and getting ready for this one moment to get your first game. Real estate is no different. No one walks on the field. You’re going to get your bones broken. You don’t want to go into any game without being prepared if you plan on winning. I’d like to thank my sponsor, please go check out the 37 little video vignettes at TaxFreeFuture.com. One of the great things about it is it has a flat annual fee of around $175. One of the reasons that people get into some of the tax-deferred vehicles that they’re in is because they’re free to get into. What they fail to realize is how much it’s going to cost every year and what they get charged every year and all the fees.

Tax-free Future is not free to get into, but it will save you a fortune in the long run. It’s not that expensive to get into to have that peace of mind going forward. Please go there and learn about self-directed IRAs, 401(k)s, steps, whatever. They’ve got a brilliant lawyer behind it. Tim Berry specializes in retirement tax-free and tax-deferred programs. The man is a wealth of knowledge. He’s about figuring out what we can do, not just telling you what you can’t do. Please go to the website. Thank you very much, Mr. Tingle.

Thank you for having me, Mitch.

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About William Tingle

REIS 390 | Sub2 Deals

William Tingle, Host of Sub2Deals.com is a nationally-known real estate investor, investing coach, author and public speaker. He has been buying and selling houses for over 20 years.

 

 

 

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