Epic Real Estate Investing - “Subject To” Real Estate Investing - Step by Step Transaction | 1187

Episode Date: March 22, 2022

In today’s episode, Matt is joined with Rashell Jarvis, the CEO of Constant Close, a consultant agency specialized in real estate transactions coordination. Our guest shares step by step approach in dealing with Subject To transactions. Particularly, you will learn what you need to do once you locked up a deal with a seller who agreed to sell the property subject to the existing financing.  BUT BEFORE THAT, Mr. Theriault reveals 7 strategies to creative financing down payments for real estate deals. Tune in and find out how to set yourself financially free! Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Creative financing down payments can be the difference between you owning a few income properties and setting yourself financially free with a cash flowing beast of a portfolio. And if financial freedom is important to you, you'll want to hang tight until the very end as I've got seven creative strategies to find down payments for your real estate deals. You ready? Let's go. Welcome to the all-new, epic real estate investing show. The longest running real estate investing podcast on the interwebs,

your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel, EpicR-E-I.TV. If you want to make money in real estate, sit tight and stay tuned. If you want to go far, share this with a friend. And if you want to go fast, go to reiase.com. Here's Matt.

Before joining my private REI-ACE client group, coming up with that next down payment was often the greatest barrier for these aspiring real estate investors to scooping up that next investment property. I mean, they thought they were plagued with money problems. But when in reality, all they had was just a simple idea problem. I'm going to give you seven of the many ideas

that I've shared with and talked to them so that finding the down payment for your next deal will be significantly easier. And by the way, if you're still looking to get that first deal under your belt, I put together a free training just for you to help you get that first deal done and then earn $5,000 a month flipping contracts and flipping properties, working as little as one hour a day, and you can access it at matsfreetraining.com. A down payment is an initial payment made when something is bought on credit. and in most cases, required when borrowing money to buy real estate.

So how much of a down payment do you need? Like the answer to most real estate questions, it depends. I mean, it can depend on the type of financing you're using to what you negotiate, to your credit history, to your real estate experience, to the profitability of your overall deal. As directly as I can put it, it's going to be about 10 to 30%. The amount doesn't matter much, however, in my experience, because there are plenty of options to come up with the cash for a

down payment. Sometimes you don't need any money at all. Let's start. Creative financing down payment strategy number one. And that is seller financing. And this is one of my favorites. I mean, you likely just negotiated a good price, right? So why not negotiate the terms, too, by asking the seller to fund your down payment? And don't stop negotiating there. The terms of seller-held mortgages are 100% negotiable for the length of the loan, the interest rate, The fees, moratoriums, escalations, amortization, performance, prepayment penalties to prepayment rewards to balloon payments. I mean, anything goes.

Everything is negotiable. Next, cross-collateralization, sometimes referred to as a blanket mortgage. If you own another property or properties, you can ask your lender to use those as collateral to fund your down payment. Let's say you apply for a loan to buy a new income property, and they require a 20% down payment. But there's a problem. You don't have 20% down, but you do have another property. Could be your home or another investment property that has, say, $100,000 of equity in it.

So you share that information with your lender, and they agree to use that additional property as collateral for your down payment, and then they just waive the down payment requirement entirely. In the event, you're unable to make your loan payments, the lender is secured by two properties. And they could foreclose on both to recoup their funds if they wanted to, should you, default. Next, credit cards. And this seems like it should be obvious, but it's really not. I mean, rarely does someone think of buying a house with a credit card, but it's done all the time. Now, it can be expensive doing it this way, but if the deal supports it, hey, go for it. Additionally, using credit cards allows you to move quickly and flexibly pay the money back as slow or as fast as

you'd like. A service like Epicfastfunding.com can hook you up with up to $150,000 of credit so you can essentially become your own down payment lender. Keep in mind, however, that credit cards are not a viable option if you're getting a conventional mortgage, since it involves borrowing money to cover that down payment. But you can still use the credit cards for funding your rehab work or launching your next motivated seller marketing campaign. Next, you could sell some stuff. I mean, do you have a boat or a dirt bike or a kegerator that you no longer use? Or something you don't use very often, maybe. Could you sell the jet ski and then rent one for a week when you visit the lake in the summer. Not only can your old stuff be a source of a down payment,

but it can be liberating to clean up the clutter and free up some space. Next, friends and family. I know, I know. Nobody wants to approach their parents, siblings, aunts, uncles, friends, and grandparents and beg for a loan. And I'm not suggesting that you do that. What I'm suggesting is that you bring them an opportunity, where their money can work harder for them by giving it to you

rather than leaving it in their zero interest-bearing savings account at, say, Wells Fargo. Don't borrow money from them. Give them an opportunity. They're not doing you a favor. You're doing them one. And they're not likely to rake you over the coals on interest or fees either. Just as with seller financing, everything here is negotiable. Consider it.

I mean, the debt won't appear on your credit report, and the lender may not include it when calculating your debt to income ratio either, if they bother calculating it at all. Next one, your 401K or I. IRA. I mean, it can get tricky quickly when you borrow money from your retirement accounts to buy investment properties. I mean, there are rules to follow to protect your tax benefits. So, consult with your administrator to see if this is going to be a viable option for you. Or maybe just cash it out altogether. Now, I know, I get a lot of pushback on the suggestion, but hear me out.

You see, you're saving this money for retirement, say around the age of 60 years old or so. But is tomorrow promised? I mean, how much will it actually amount to at the age of 60. Will it be enough to retire? I mean, you've got to do the math. Do the math and make sure that you're on track to hit your goal and you're not just doing something because you heard that you should. Because it's this idea of taxes and penalties that cause people to leave their money in these types of retirement accounts, but they have no guarantees that they'll make it to retirement or if it will be enough if they do. So just for fun, do the math. I mean, if you were to withdraw all of the funds from your retirement account, subtract the

taxes, subtract the penalties, and then look at what you got left. What else could you do with that money? If you were to put that money to work for you right now, how long would it take for you to recoup those taxes and penalties? If you could recoup them before your 60th birthday, wouldn't it make sense to consider it? I mean, you could be benefiting from those funds right now and when you retire. If you find the right properties at the right prices and terms, I mean, is there a reason to wait until you're 60 years old to enjoy the fruits of your labor? Cashflow Savvy has properties like this right now, already fixed up with property management in place and tenants already paying rent.

So if you'd like to know more about that, download a free investors package at cashflowsavvy.com. Next, home equity line of credit or a helock. Do you have some equity in your home? Do you have some equity in other investment properties? One of the most effective ways to borrow money for a down payment on an investment property is to take out a home equity line of credit against property that you already own, even if it's your primary residence. I mean, it's relatively affordable, it's flexible, and if you've got a lot of equity, you can make a significant dent in your journey to financial freedom that way. He locks can be

fixed interest or variable based on the prime rate, and they typically have a 10 to 15 year draw period during which borrowers can use the line of credit like a secured credit card. During this time, that the borrower often only pays interest on the credit balance and does not have to pay any money toward principal each month. A lot of my students, not to mention it's a standard practice for real estate investors to use a HELOC to cover the initial down payment or the renovation cost when they buy a new property. After renovating, they then refinanced to pull some cash back out and pay off their ELOC. When it comes to down payments for your investments, you've got options. So don't let the down payment get in your way from taking on that next deal. I've put together a free

training just for you. Go to maxfreetraining.com, and I'm going to show you how you can make $5,000 a month in as little as one hour a day. Take care. I'll see you next time. Please stand by. We've got overhead to pay. We'll be right back.

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Back to the show. Today, we're going to talk about the subject to transaction. Very popular subject these days. And specifically what there is to do once you have locked up a deal with a seller that has agreed to sell you their house subject to the existing financing, what happens next? Like literally like step by step documents, moves, and everything you've got to do there to pull it all together and pull it off and create a nice little deal for yourself. So by the way, if you like to look into working together one on one for your real estate investing business and you can go over to REI. A's A's.com.

There's a few questions that you can answer about your goals and about what you want to and about your current situation, where you'd like to go and what we can do to help you get to the next level. And if you like what you see over there, then you'll have the opportunity to pick a time for us to hop on the phone or just brainstorm some ideas about what it's going to take to get you to that next level. All right? That's over at R-E-I-A-A-A-S dot com.

All right, let's dive into the show. It's Dan, that's very special guest joining us that I would say, you know, she's in the The thick of things when it comes to creative financing transactions and putting these types of transactions together, just overall real estate transaction coordination. And so please help me welcome to the show over from constant close, Ms. Rochelle Jarvis. Rochelle, welcome to the show. Hey, hey, hey, thanks for having me here. I'm excited. Let's get into, like you said, the weeds of all the different documentation, but happy to be here with you.

Right. Perfect. Thank you for doing this. You know, I've done a number of subject to deals over the years. And I know there's a specific way that I do it. But the more I do it and the more interaction I have with other real estate investors, I come to learn that there's more than one way to scan this cat. So I wanted to have to come on and just since you're doing this every day on a day-day basis,

and you're doing it right now. Mm-hmm. It gives us the lay of the land and how it's all working as far as 702 to go in this environment. But first, tell me a little bit about yourself and your company, constant close and what you guys do for real estate investors. Michelle Jarvis. I've been around in the game for a long time, about 15, 16 years. Started off on the retail side.

My background is finance and mutual funds. And I wanted to buy back my time with real estate and create some wealth. I do own a company named Constant Close. We are a national transacting consulting company. We are in all 50 states. But I'm also an investor. The way that this company came into fruition was being in as an investor on the acquisition. disposition and the whole ride of knowing that we've needed a different type of breed of TCs.

So the TCs that I have right now, all the sales background. And the reason why they do is because they do a little bit more than just push people around. Although you can hire us to do that so that you can go close more deals, my TCs will get on the phone with a seller that's agreed to turns and kind of push it over the finish line. So different things that they do is, you know, being able to articulate what's in the contract that some investors aren't really equipped. So we're able to do that in all these states where you come and you work with us. We have our title and attorney partners.

We can pretty much self-perform anything. So we're the connector piece for everybody. So we're here to help close deals nationally. Super. Such a great service. And I can't believe you guys are like from my perspective. The first ones need to think of this to help people out with these creative financial transactions.

So it's fantastic. So let's focus today. There's a lot of different creative strategies that we could focus on. But let's focus on the subject too. And first, just really quick that I just wanted to find what a subject to is for anyone that's, you know, tuning in. Is a subject to transaction when you're purchasing a piece of real estate subject to the existing financing on that piece of real estate. So you were essentially buying the property and you're going to take over the payments on that mortgage that's attached to the property. So you, the buyer, will appear on title, but that mortgage, that debt that's attached to the property, that financing is going to stay in the previous.

seller's name, the previous owner's name. And when a lot of people hear that, they go, wow, how do I get more of those, right? Sign me up. I mean, I'm buying a house and it comes with the financing already attached to it. So it's a really small deal under the right conditions when the situation fits properly. And so that's what it is. And I don't want to talk about like how to find them, how to negotiate them and all this type of stuff. We've talked about that ad nauseum over of the years. Well, let's talk about once we get a seller to actually agree to the concept of subject to Michelle. So you kind of said something there when I wasn't totally clear that you actually did this too. So when a real estate investor comes to you, they can come to you in two different

places, like when they almost have the deal done or when they actually have the deal done, right? Right. Exactly. Which is super, super exciting. If you don't mind me just typing in and taking it from here. But that's what I was talking about. It's a different breed of TC. We do know that transaction quarters are an implement part of a team when you're trying to grow a business and it's offloading paperwork. But creative finance might not be you to me and you, Matt, but it might be new to a lot of people. I know it's huge and really brand new on the East Coast. And our job is to help them learn the process. So let's talk about that. So if you have a contract and you send it over to me, I don't know if I'll be the only one to say this,

but that doesn't mean it's a deal. Not mean it's a deal. It's a creative deal, especially a subject to now. Why is that? The most important part, when you're handing that over, what does that process look like? Is handing over as much information as you've gotten from your acquisition team or as the acquisition individual? Now, what does that mean? Setting and being able to set your T-Cit for success is transferring all of the communications of all the different parties that are involved, any documentation.

Well, let's talk about a real-life scenario of the acquisition type of personality is not paperwork. Their personality is to go and to get the deal and to hopefully write it on a contract. When you transfer it over to the TC, our process is going to be to gather all of that documentation. So gathering that documentation would be the first process as you're handing it over. And that's us taking a look at your contract and saying, okay, you used a traditional purchase sale. There's different disclosures and things to that sort that Matt, I'm sure, has shared you on his channel in regards to set up the proper way to do subject to use. But it's gathering all of that information in the beginning to make sure that it is the deal.

So we are going to transfer all of that information that we have. And while we're gathering information to title or attorney, depending upon what state you're in. So we will open up escrow. I would think a lot of people know what escrow is, but I get the question from all the time. So the investor comes with the contract. And they've got the price in there and the terms it says subject to the existing financing. And they're going to give you that what other information besides the contracts would be

helpful for their estate investor who would give to you. at the minimum, at least all the parties transsep. Everybody, all the people in the transaction, all of their contact information, because the TC's job is going to gather anything in addition that we need. Okay. So we need the contract and everybody's contact information. That would be obviously the buyer, of course, the seller stuff, of course. And do you need the bank's information as well?

The bank's information would be very, very helpful. I think it should be verified on the acquisition side to make sure that you have a deal. But we gather that. If you have a mortgage statement, if you have a mortgage statement, If you have anything that has to do with the numbers, would it be errors or probate. Whatever your deal has, yes, transferring that over with the TC, it would be such a big help.

Perfect. You said this a couple times, and it means one thing to me, but I'm starting to gather. It might not be the same thing to you when you say, to see if you actually have a deal. What do you mean? Like, to me, when I say,

I don't even know if you have a deal or not, meaning did you get it at the right price? Is it going to cash, if you decide to hold on to it. That's what I'm getting. But I'm gathering you're saying something a little bit different. Yeah. So having a deal is, you know, locking contracts is an amazing thing and it's great.

But with these creative deals, especially with those, we're helping dress sellers. There's so many different elements that you guys. And I know that part of the acquisition personality to you is not to really verify and gather all that information. I mean, it is what it is. I know we have some amazing acquisition people out there and teams that do that very well. But generally, my experience working with is that they really gather all the correct numbers. And the bottom line is a lot of times, we're in competition.

This is the way the market is, right? We're wanting to execute that as quick as we count the seller so we can do our due diligence. So it is part of the process. So that due diligence is me verifying, is that their approximate mortgage? Are they behind? Is there being statement really that amount? Now, I know that once the seller is behind or if there's any distress, when I get that from a limited title part, which we can go into in a little bit, I'm looking for other things.

For me, having a deal is verifying all your numbers, making sure that it's actually. actually is what it is, and then moving it from, beginning process with your TCE, whether you're working with us or somebody else, needs to be done very, very well to make sure that you are devoting your time and effort into an actual deal. Got it. So the actual deal is making sure that you've got really all the numbers correct, right? With the loan balance is, if they are delinquent or past due, we want to know what that's going to be. We need to know what the actual amount is going to be required to bring a current, right? And, and, you know, and, you know, and put it back in good standing if it was delinquent.

Okay, good. So all of that, one thing that I always have people do on this side is get a notice or release authorization from seller. So you can talk directly to the bank so you can actually get those numbers. So that's a good piece of information to have because someone's going to need that at some point to talk to the bank on the seller's behalf, right? Yeah. Okay, cool.

So you got the contract, you've done your preliminary evaluation to determine whether or not they do have a deal. And then what? what happens next. At that point, and part of that, I touched on it just a second, is the preliminary title report, right? Very, very important. So many other aspects, as you know, Matt, is looking on there to see, obviously, if we have the right seller, all the different things, other judgments, liens, memorandums at that point in time. While we're doing that process in the beginning, you guys, we need to submit earnest money, right? We need to submit all the things to make sure we have

a properly open escrow with the attorney or the title company. I know there's a lot. of wholesalers or investors that try to get around that. And I do understand if you have like a relationship with your title or your attorney, but it is right thing to deposit earnest. So we will also handle that process of getting all of that in, making sure the beginning part of the escrow preliminary title court and then obviously deposit for money as part of the process too. So once we're complete with that, we're going to head on to how are you going to position this property as far as a DC. As you guys know, so many things you can do with the subject to, which we won't get it to. But our job is also to do that verification of what you're doing

with that deal. So that will be once again gathering that documentation, able to set it up the right way, whether you're assigning it, wrapping it, whatever it might be, making sure that we can gather that exposition paperwork, get that done, deposit that earnest money on that side of that transaction, get everything in line, everybody locked in to make sure that we can close on the property on time. If you are not doing any type of disposition strategy and you want to close on this free on your own, then we would skip that step. And once we have a clear marketable title, all the numbers, then we will move that on close of escrow, which would be our next step would be looking at that settlement statement, that HUD statement, making sure that

they got the numbers right. Everybody's getting paid out what they need to be, all the payoffs, and then we can move on to the closed of escrow. So one thing that I think is one of more valuable aspects of your service is the relationships that you have in place. So you're not having to go to a coaching agent and do a bunch of education and explaining this is what we're going to do, that all that, those relationships are intact, right?

So that's a huge barrier for a lot of people's because they might not understand a completion. I'll explain to someone else who probably doesn't understand it either. So blind leading the blind, so to speak. But when you go do it, though, you don't have to go to that process. And you're just going to say it's just a buy and pull. That's all we're just going to buy this property. Hold on to turn into rental.

So what kind of communication goes on or if any, because this is like the big elephant in the room for most people is what about the bank? What is the bank going to say? So how is that interaction? What goes on that free? Well, the thing about leveraging, as you'll hear, with a lot of leveraging experts, is that we know how to handle that communication because we've closed thousands of these transactions. So what Matt said in the beginning is actually very true. We get an authorization signed in the beginning.

And the way that we approach the lender is we're always helping the seller in some way. We never say we're a title company or things of that sort. And we're very brief with our conversation. So all of us know some of the concerns that people might have. But the most important thing I think you guys, when we're talking about this, is controlling that conversation is very, very important and making sure that your seller is aware of what can they not do or be educated in the process. One thing that I don't hear a lot of people talk about is the risk that sellers play in these type of deals. And that would be me being transparent and say, absolutely. So excited when we get that executed contract.

We just want to move it forward to close the escrow, but it's getting all of that information, getting educating yourself and be able to control those conversations with the last. lender and represent yourself as someone that's helping the seller right the lender is not going to be aware that they're selling the deal because just what matt had said is we're taking over the in-place lien that with let's say walspargo and the dearest transferring so we position ourselves as either a property manager or helping the seller whether that be reinstatement we're helping the seller gather all these figures so they can reinstate their home um so our position is always um you know on the side of the seller and helping them get that. that information. But knowing how to articulate that can be a point for everybody where they're like,

oh, Rochelle, I don't have to do on cell clause. Oh, Rochelle. So we kind of control that. But that would be the best thing if you're doing your own deals. Get the authorization. I always pitch it to the cell service fees. You know what, Mr. Sellar, we're going to make this very simple and efficient for you. We've got the contract signed. You week the dates. You don't have to talk to the lender. You don't have to do things like that. When you position it that way to the dollar, they're like, okay, thank goodness. I don't have much to you, but sign the closing documents. That's how we position it, control the conversation with a lender representing ourselves as a property manager or helping a seller gather figure. Okay. So that's how you position yourself during that conversation and gathering the information and making sure everything's accurate in that regard.

Then we just go ahead and we go ahead and we fund the seller or whatever. They're going to get out of this deal with anything. And then the new owner of the buyer is going to start taking over those payments. Now, I guess the second big elephant in the room is once the lender is notified that title has transferred. The lender being notified that title had transferred, they're not aware that title has transferred because, I mean, could there be a, are we talking about a scenario if they are aware of it? Is that what we're talking about? Well, I guess when they're notified when they are the insurance, I guess is what really notifies them, right? Right.

So, but that's a good point if you don't mind me jumping in. And so doing the transaction with these subject twos is the checklist, right? Documentation, escrow, dispo, HUD, and closing. Now, what about afterwards? And this is the part where I feel like a lot of our value comes in. It's to the question that Matt's saying, you know, if the lender is aware, what if insurance does call them? We have something called post-closed documents.

And the reason why we created them, as I said before, I'm an investor, so I know the pain points. It's like, okay, my transaction's done. but how do I handle insurance? What do I do about servicing? What if the payment is doing a week, but I haven't had servicing, you know, already ready to go because I don't have my recorded documents.

So post-closed documents, whether you're working with us, what I hope you do or not, is to be able to set up the transaction the right way. You want to be done with deals, add them to your portfolio, and move on to closing more deals, not having headaches year after year. And I've seen that in many business year after year because it wasn't done right way.

So post those documents include adding yourself as additionally insured to the current insurance policy. Now, I do prefer to be able to switch it out, but I don't feel like that's the most common occurrence that I've seen happen that goes. I like to recommend processes. I know they're going to work versus like switch it out. I've seen a lot of people unless switching out is the best way to do with insurance, but you have to have an amazing insurance agent that can handle those conversations. If you have one, we're working with you, we'll talk with them. I think that's the best way to do it.

But what we do with the post-closed documents is you add yourself as additionally insured current in-place policy. You get a limited power of attorney signed at close of escrow with the seller's clothing docs that you will send with that closed document for insurance. It will add you as additionally insured and upload your limited power of attorney to the insurance company. Now, what does that do? One, it adds you to the policy. Two, you have a limited power of attorney with the insurance company.

to call, you need to get any information. Offulations are great, but the private attorneys hold a little bit more weight. And that process is also repeated with the lenders. They have post-closed documents for the lender that says, hey, Mr. Lender, this is my new property manager, Michelle Jarvis, even though I'm the buyer. I can show the communication again because the number gets changed. The address gets changed.

So if the lender needs anything, are they going to be calling their seller? Because what happens in here when you call a seller and you say, hey, your insurance are going to say, oh, I've sold me. home to Rochelle, they're not going to say subject to. They're not going to remember the nature. That's our job to do that, right? So alleviating that risk is controlling that conversation and being able to navigate that with the lender. So that post-closing document will go to the lender. Then we have two more. One is online information. We gather that information because we know sometimes payments need to be made right away. And so you can access the online account. And the second thing

is we have something called a post-closed claims insurance lawyer. And this is for me being in the weeds and seeing something happened, the insurance company sent the check in between closing and getting those post-closed documents. And it's only like maybe seven to 15 days. So it happens, right? It's the nature of our business we're thinking that this happens. So they mail the check to the seller. And what does the seller do?

They keep the check, right? I have the check, and now it's a game to hunt for the seller, to get that written over to the buyer. So we came up with this post post a claims check where the seller will sign it and get it notarized at close of escrow as another form of documentation. My job for you guys is to play devil's advocate and to say, what is it like if you get in front of a judge and I can make sure you have disclosure and documentation that proves, not only do they know the transaction that they were not. involved in, but they also said, hey, if I get a check, I will remit it to this address in 48 hours. If I don't, I can be fined this $50,000. So this is from being in the weed. So that postal documents is the way to set up the investor for success on being able to close the deal,

move forward and go capture new deal. Yeah. Awesome. All of these years, I've been using a land trust to do out of my subject to. and I'm gathering you don't do that at all. I do it with VA loans. They're very, very common to do with VA loans, and they kind of have to be done that way.

But I do feel like there's a lot of, when I am dispositioning my subdues into a rap or a seller finance, I will definitely use a trust. Part of the reason why I will use some type of trust is because I've had people that have died, the process and when you have a trust, a trustee in all the different things, you know, to be able to manage that deal going forward. But land trip is common in VA loans.

Part of that is a lot of us use the word as consumable. We really need to know what that means. But the VA loans, the deed is not going to transfer into the buyers. Why would I do that, Rochelle? Well, you're going to get ownership rights. You're going to have the rights to do what you want with that VA loan in all 50 states, whether it's a land trust, contract or whatever type of

D you use to close it in, we definitely use those and are very more popular with the other popular with being owned. But not with all of our deals. No, I don't. Okay. Well, good to know. Good to know. In the event, you do get a call from the bank asking, you know, what's going on? What is the typical response that keeps them at bay?

I have one, but I want to know what you're going. What I'm addressing and, you know, I was talking about these elephants in the room, do you want stale flaws? This is what everyone has always concerned. with this, you know, from so many different angles, so many different times. But it continues to come up. And so I wanted to create a really good documentation right here.

So I can just say, go watch this video, right? So the Duan Sail Clause is if the bank catches when that title has transferred, some of the Dwan Settle Clause is written in such detail that even if they detect that the seller has the intent to transfer without paying off, it could technically trigger the Duan Sala clause. it gets really, really meticulous. And so what they could do is they could call the whole loan due to where you actually have to pay the whole thing off, right?

So we want to obviously avoid that. That's what we're really talking about. So in the event, and it sounds like, you know, we've got all this stuff. We've kind of changed our positioning of how we talk to the bank, right? We've got our pre-closed documents. We have our post-closed documents and we're covered as typically as the insurance that will notify the bank or how they'll catch wind that. title was transferred. So we always want to make sure that the insurance is straight. So that's why I was

addressing that. But in the event, now we'll come back for him. So in the event that the bank does, hey, Mr. Alton owner, new owner of this, what's up with this? So I'm going to tell you live experiences of what I've experienced. Okay. So all depending upon the bank, I've had some banks that have one, let's be very clear. It doesn't happen that often, right? I do see a lot of people talking about trends of inflation and all these different things. That's very interesting. But that's another topic. But when it does happen, it's usually two different scenarios with two different types of banks. So we have Wells Fargo and then we have our local bank, right? Normally our local bank, our bank that's, you know, per town like a desert school, like a credit union or something

like that, they are more apt to work with you. That's my experience. They are more apt to work with you to say, okay, you're assuming this loan. And that has been my experience. I'm of working with them to be able to either make the loan right, to be okay, yeah, that obviously the title has transferred, or we want to reinstate it, and we want to continue paying. So they're more apt when it comes to a small or chase or things of that or the bigger base, very, very unlikely that they do that. But if they do that, I find that the quickest response to that, what a lot of people do is they will actually refy the house out at that point in time. And this could lead us, Matt, into a conversation that maybe we'll have another time because my background is investments in

mutual funds. So I'm all about risk tolerance and things of that. So I won't go on a tangent. Those have been my real life experiences dealing with big banks and then smaller banks and kind of what was a solution. It was either refinancing out of the big banks or it was working with the smaller banks and making it right and then moving the deal forward. Perfect. Okay. So, well, the smaller banks, they tend to be more workable. The bigger banks will probably have to refi out, right? Yeah. So to play devil's advocate, this strategy of 702 is really appealing to newer investors that don't have the money or can't qualify for a bank loan. And that's where the real appeal comes from. So in their event, where they might not be able to qualify for a refy, what's the next? next step. If they can qualify for a refi, they need to raise some capital to be able to do that. I know a lot of people talk about equity assurance, and I'm sure you've heard that before.

I don't know about your experience, Matt, but I haven't had any positive experiences with it. So that's never my go-to. I don't preach it because I haven't had anyone successfully by the product. So at that point in time, it's doing what you can to pull from what you have in your investments. This is why I mentioned risk tolerance and things of that sort. If you're in the beginning of the game and you're 18 and 19, you take into consideration the investments that you're involved with. That's just my personal opinion. But I do feel like if you're in the game and you're doing this

and you're adding to your portfolio, that you should have a network to be able to lose those funds and to be able to refinance it out. Because it's such a rare process, it wouldn't be something that I would be fearful of, but would be mindful of and be able to do that. that, but that would be kind of the process that I would think they would take next. What do you think?

No, I think you're right. I think just the nature, the description of what a subject to is, it is so appealing, like, oh, how can I get more of those, right? Let me go stand in that line because that's all I want. But you're right, it's not a risk-free strategy. There are some potential, you know, things that you might have to manage down the road, and you should be prepared to manage those. Right?

If this is your very, very first deal, and this is going to be a long-term buy-in hold for you is what your strategy is. Then you should have an idea as if worst-case scenario, you know, what am I going to do? Who am I going to turn to? Yep. But if you got a portfolio, then, you know, it's easier to manage the finances on a whole portfolio than it is to go out and find new deals or deal with just one property all by itself.

Absolutely. No, I agree with that. I agree with that completely. Actually, when we have time at some point in time, there's some different strategies that we've been going over in regards to alleviating that subject that I'm sure you're well aware of but you know nothing to be fearful of very very uncommon practice but when you're investing you're doing anything just be mindful of different strategies what would I with my plan be um I guess it's just live that way in life do we live that way in life anyway it's like we're going to take this job but if this job doesn't work out or

we're going to you know not put our night dive and just jump into real estate when we have four kids that we have to be just like always having being mindful of your scenario having a plan be and being aware of that as you're, you know, stepping into its real estate realm. But it is one of my favorite strategies. I've done it successful times. And the thing about it is invest in your business, you guys. When you hire someone like myself or a mentor like Matt,

that's an expert in the industry, we've come up with all of these processes to protect you. That's the whole value that we're bringing to you is let's do it the right way and really eliminate that as much as we can. It would never be zero, but that's not any investment. But let us help you do that and teach you the process. And then you can do it over and over and over again and not have to have that any type of worry you're concerned in that way.

For sure. And to put the worries even more at Bay, I guess, would be, you know, this is, I've been one of my 15th year of investing. And I've never been called on a subject to ever. And I've been teaching for probably nine to 10 years now, coaching and I've only had one stooped out of thousands ever get called. And it was a simple phone call and the bank was like, oh, okay, well, just make sure you keep making the payments.

And that was over. That's literally out-ended, right? But it is something that you should be prepared for because it can happen. And so something you have just mentioned and maybe you have your answer for this, maybe if you're thinking about this or not, I don't know. But when we talk about the trends, right, the market trends, the economic trends, The reason it hasn't been an issue for so long is because since 1970, when kind of people started doing the subject to because the interest rates were so high. They've been on a steady decline ever since.

So financially, it doesn't make sense for the bank to call the loan due to write a new loan at a lower interest rate. That would be ridiculous. But now, you know, the last couple years, we've hit our all-time lows. The Fed just met yesterday. and as their first raise in the interest rates in the last three or four years, I think is what the number was. And so there could be an environment, and they're kind of signaling that they're going to continue to raise those interest rates. So there could be an environment where it might start making, you know, economic sense for banks to all these due or the due on sale clause due to reestablish a new loan at a higher rate. That's why they want to do it.

I mean, I'm sure you've thought about it because you kind of mentioned it briefly. What are your thoughts on that? I don't think there's an immediate danger. Well, you know, inflation. Was the Fed always two ways they do it, right? They raise interest rates and taxes. That's what they're known for doing. I mean, the all-time low, I don't even know how long.

I mean, that's like really the all-time low guys, but in years upon years, on years. So we know that they're going to go up. We just know that it's going to. And it might feel like this just a little bit, but I feel like it's going to continue to go up. And I do feel that it does mimic that time in the 1970s where they were really, really high. Because when interest rates get really high, let's talk about two things. One, are you going to a bank to get another loan at Chicago Rocket Mortgage? You're not, right?

And then, one, you're not going to get a loan. So that is that due to the bank. That alleviates them from getting that money, moving that circular thing that they do so well, you know, around it around. And then we have sellers are at risk. And that's why when I get some transactions and they say, well, the seller doesn't know. I'm like, hold up. Just wait a second. You know, as an advocate for you, let's educate them on that because it's not the nature of the business for the seller to remember subject to you in a year or two years from now.

They're just not going to right. Well, that's because we're any day to day. So the seller, I'm always thinking, okay, what if they sell their home that's at 3.5%? and let's say the interest rate goes up or say that their scenario changes where they have some distress later on in the years, do you think that they are going to want that mortgage back? And I think they will. So I do feel like there's a couple of things that we could, you know, be aware of, like I said, mindful of. And this is any type of investment. This is one thing that I learned getting my licenses. It's like, my job is to to consult you and to say that it is and then to help you to do it the right way.

It's not, nobody can ever predict. No one can never say this is what's going to happen. But a good investor is also a, in my opinion, a financial type of investor where they're aware of their portfolios. I would just, like I said before, keep these things in mind. But that would be my opinion on a different type of risk. It is mimicking that time in the 19th, 70s, 80s where the interest rates went up to 55.

And so that would be my thought process of the bank. You know, that is what they do. They want to loan out. mean money all the time. That's a fact, you know. And sellers can be a risk and interest rates are going to go up. I mean, that's how I control it, you know, so it kind of is what it is. Yeah. Perfect. Perfect. So I've got some questions. Go through the questions. But if you'd like to work with Rochelle and constant close on her next, on your next deal, it could be her next deal as well. You can go to creative closers.net. And that's the little webpage that she set up for me specifically.

And so go there. It's powered 100% by constant clothes, but it'll let her know that you came here from the epic show, and that'll be really helpful for her. And so you go to creative closers.net. And if you have some questions, Rochelle, you want to stick around and answer some questions? We love it.

Love it, love it. I'm going to scroll here through the chat, see what we got here. It was a really good one, and this comes up in our term cute business all the time. Rochelle, do you cover New York City or New York State? Absolutely, we do. Yeah, we're in all 50 states. We have a great attorney out there that's done tons of creative deals with us. So New York is, we've done hundreds of transactions there. So we're definitely there. Perfect. No problem. I love that because that's the people ask me all the time. Well, gosh, you know, she should go through the phone book. Because New York, I don't know why New York is so difficult. They can really be complicated sometimes.

The thing about it, too, is some attorney states, you guys, I love attorneys. Okay. I have to. some attorneys in my family, it's saying anything bad, but when it's a brand new thing, sometimes it's just they're used to kind of living by the letter of the law, you know, of what they're doing and for them to branch out to something like this is can be really, really hard for them to do in a lot of those attorney states. But, I mean, this is subject to how long has been around since like the 40s and 50s? This is nothing brand new. It's working with the partners that are willing to help you close your deals.

Correct. Correct. Perfect. Okay, so here comes from two rock stars here in the epic community, Christopher and Letitia. What if a seller pulls a helock? I guess they can't do that after they've sold it, though, right? They can't do that after they sold it. So I hope that's what you're talking about. So if there is a helock that's involved, you will take that as what we call exception to title. He locks are a little bit different, and you would put something in your contract.

So if you were working with me, Christopher and Tisha, I would say, let's write something done in our contract to make sure that they cannot pull from it. I didn't have people negotiate it because they thought been free and clear that they could, you know, take from that heat lock up into a certain amount. But with he locks, you have your payback period and then you have the period where the interest rate is locked down and they can't pull from it. So if you have a subject to deal or any creative deal that has a he lock on it, see where it's out in that period, whether it's in the payback period or whether they're there. they can pull from it. That way you know what you need to have in your contract to make sure that you explicitly write down what they can and they can't do, agree upon it. Once again, playing deal with advocate, making sure that you have that and saying this is what we've agreed upon. So they could, after close of escrow, definitely could not pull from it unless it's negotiated

before a close of escrow. They could, yeah. Perfect. Yeah. Here's one of these little things that we always take for granted, but I'll feed this question to you. Is transactional coordinator the same as the title company doing the paperwork or is T.C. synonymous to this position. But that's all over the place. So there's three different things addressed there. Right. Yeah. It's like talking to the TC role. I even have people say like, why would I hire you if the title or the attorney are going to be doing the paperwork? Well, we're talking about everybody wants to scale, right? We want our businesses to grow. One thing that I've learned from being a business owner of a couple of businesses need to have the right players in place. I need to be able to delegate. And I know that can be hard for all of us.

entrepreneurs, but delegating that process, once you start doing three, four, five, six deals, the earnest money, the title company, the preliminary title report, the post-closed documents, following up at the cellar, scheduling, closing, all of that stuff just pulls at your time. So even though I will add, we can support the attorney in the title company. I write a lot of notes in deed of trust all the time because the attorney or the title company can't do that, which we support our clients in doing, we are there to help you buy back your time so you can go out and close more deals. So we will help with the acquisitions, the dispositions process, contracts, and all of the millions of things in the escrow process. Right. Yeah. So transactional

coordinator, not the same as title company. Nope. Right? The transaction coordinator is the one that's going to coordinate your transaction. So kind of your intermediate area on your team between you and your title company, your closing agent. And disposition, I mean, just how are you going to sell it? What's your exit strategy? Are you going to hold on to it and use it as a rental? You've got to flip it and sign it work for the main. So that's what's the disposition means? What was one other thing you're saying there that as far as why would you hire a transaction coordinator?

Well, I was a real estate agent for four years before I became an investor. And I never once did my own paperwork because just the idea of doing the paperwork gave me a headache. And there was so much that the broker was holding me accountable for that I just didn't want to miss anything. I just want to make sure someone else did it. And I would just come in and get out probably two times during that transaction. And my TC would have a bunch of steps just sign here, sign here, sign here, sign here. And I got all done and everything was fine. And then it all got all in a nice little binder and handed it to me a nice little package when it closed.

So I got really used to that as a real estate agent. And when I became a real estate investor, I went up, found a transaction party to the exact same thing for me. And, you know, here we are. Gosh, like I said, almost 15 years, I was an investor. And I've got a pod that I paid probably 300 bucks a month for. that's just loaded with boxes and boxes and boxes of files of all of my transactions. Because you might need to recall on those someday if you ever find yourself in a situation having to answer some tough questions.

And so you want to make sure it's all done correctly. Yeah. And so I think that's probably the maybe the more important thing. I'm just a little bit of adverse with paperwork, but I'm more adverse to, you know, legal ramifications if I should mess something up at some point. Right. And you go big enough that something that we all kind of have to deal with, right? If we're painting a picture, like, I did it. Yeah.

So that's cool. So I want it done right for sure, right? Okay, so it looks like we're wrapping up the question. I'll go through one more here real quick. Is your service for all strategies and creative financing like lease option sandwich and these options in Texas, stuff like that? Yep. Yes.

Yep. We can do all of those. Servicing, strategies, all creative finance. We do wholesale too. I think we've just got more popular creation creative finance of knowing all the different different strategies and things like that, but definitely to help out with that in Texas or any of the other states. Perfect. One thing that I actually write at the very beginning, I just want to confirm and for everyone's benefits, you know, when you're doing an assignment, that's really

easier. You're assigning the contract to another investor. But if you were going to do a double close, do you have, do all of your context, do you have the ability to use like the C buyer's money to pay for the A to B transaction first, or are they going to need transaction funding more these days. Right. I tell it's all going to be the depending upon the honest answer for what's going on right now. So it's very common in the West Coast state, Arizona, Texas, California, things of that sort. You can definitely use the C buyer's funds to fund the A to B. No problem. But you're going to get into Chicago. If you're going to get into New York, things of that sort, you're going to be double closing. So in the closing process and what they can do is not based upon necessary state. It's the

comfortability of the attorney or the title partner. I have different attorney and title partners in the same state that will do different things. So it's doing that due diligence in the beginning and think, hey, I want to doze this or I don't, but that they can handle the process. And you can make sure that it's taken care of and talked about in the very beginning. Very good. I have someone a little annoyed that we skipped their question. And the reason I skipped your question, Ambition Streetware is not because I wanted to skip it, but because I was trying to stay on subject in your question really have anything to do with today's subject, but I'll go for it really quickly before we head out of it. Okay? How can I get into flipping houses and how much do I need to

start? Well, I'm glad you asked because I have a free training that I've put together for people just like you that I haven't done their first deal yet. You go to Matt's Free Training.com and there's about 30 minutes later to walk you through those beginning steps. And how much do you need to start? You need absolutely nothing. When I got started investing in real estate, I didn't have two that also rub together. Anyone is qualified by the teacher. I do this with no money, including the marketing. I would raise me. I would raise me. my hand and put myself up against anybody doing that because that's exactly how I started. So but just keep in mind, whatever you lack in money, you have to make up in sweat, right?

And whatever you lack in experience, you have to make up in volume. So if you don't have the funds and you don't have the experience, be prepared to get you on. All right. Absolutely. Cool. So lastly, or I guess we're all done. Thank you. Rochelle, I really appreciate you being here.

If you want to go and look more into Rochelle's services over at cost. I suppose go to creative closers.net, creative closers.net. And then we'll do this again. We'll talk about something else. Love it. Right? We'll talk about another career strategy next time. Sound good.

Amazing. Sounds great. Thanks for having me. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button.

when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us. We got the cash flow.

Okay, only 10 more presents to wrap. You're almost at the finish line. But first, there, the last one. Enjoy a Coca-Cola for a pause that refreshes. This podcast is a part of the last. of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.