Q. What is Subject-to?
Ans. Subject-to is a buying strategy where you are taking ownership of the home, while keeping the seller's existing financing in place until a new buyer obtains new financing and the title is transferred.
Q.
Is Subject-to a "get rich quick" scheme?
Ans. This is not a "get rich quick" scheme. It is a proven technique that many people have made a fortune doing through aquisition of property. But, there is a lot of work involved and you have to invest enough time to make it work. In fact, there are many commitments such as; Become a student, practice, set goals, start making offers now, and schedule your day.
Q. How do I attract motivated sellers?
Ans. The best and quickest ways to attract motivated sellers is; roadside signs, classified advertising, letters, post cards, internet marketing, driving neighborhoods, business cards, and vehicle signs. If you goal is to make more than one offer a week - measure it! If you can't measure it, you can't manage it. What gets measured gets done!
Q. Should I pre-screen sellers to figure out which ones need to sell?
Ans. Pre-screening sellers is a method of seperating sellers that want to sell from the sellers that need to sell. To get the best results you should focus on the sellers that need to sell. Here are a few suggestion on how to find the sellers that need to sell;
1. Drive all your prospects through a free 24-hour recorded system
2. Use a seller's website
3. Direct local phone line to your personal phone or cell
4. Gather seller information with a Seller Information Form
5. Schedule a face-to-face meeting
6. Drive the neighborhood & compare the value of similiar properties in the neighborhood
Q. What are the steps in the process of Due Diligence?
Ans. There are approximately five steps in the process of Due Diligence;
1. Fax your Authorization to Release Information form to your lender ASAP!
2. Call your lender's 800 number to verify the loan information. While on the phone, complete your Lender Information Sheet.
3. Confirm your comparables to make sure you are dealing with real-world figures. Do your research by driving the neighborhood and getting flyers and call real estate agents who have properties in the area. Tell them you are an investor and you'd like to know the price of properties that are comparible to the one you are buying. Get at least three comps sold within the last six months.
4. Get an estimate for repairs such as; cleaning, painting, installing new carpet, landscaping, roof, mowing, etc.
5. Devise your Exit Strategies; wholesale, lease option, owner financing, retailing, etc. After you have figured out your Exit Strategy you should calculate the selling price, monthly payments, and estimate your profit.
Q. What are the steps involved in a closing?
Ans.
1. Complete the Sales and/or Purchase Agreement and have it signed by the seller.
2. Set a firm date for closing on the property. Most closing occur within 5-7 business days.
3. Contact your closing attorney or title company. Request use of their conference room and notary services in exchange for giving the opportunity to write the title insurance on the property.
You will need the following documents;
Closing documents; General Warranty of Deed, Limited power of Attorney, Letter of Appointment, Insurance Appointment, Notice of HOA, Notice to Utilities, Move out Addendum.
Trust documents; Affidavit of Land Trust, Land Trust, Appointment of Trustee.
Private Investor documents; (Only if you are using Private Investor money to buy or fund a property) Deed of Trust, Promissory Note, Assignment of Beneficial Interests.
Q. What are the steps to selling Subject-to houses?
Ans.
1. Getting houses ready for sale - Make sure the property is ready for sale with curb appeal!
2. Marketing - Flyers, setup buyers website, setup 24-hour recorded information line on your voicemail, post yard signs "FSBO, No Banks Needed, Owner Will Finance", create an in-house display with flyers and Tutorials.
3. Pre-screening buyers - Figure out if the buyer has money or credit, their price range, how much of a P&I payment can afford, amount of down payment, buyer's needs and purchase options.
4. Meeting with buyers - You have two things you need when you meet with the buyers. (1) collect the Short Form Application and (2) a down payment. Complete a Deposit to Hold and send the Short Form Application to a lender along with a Lender cover letter.
5. Closing buyers - Make sure you have prepared all of the necessary closing documents;
Lease Option Buyers Forms; Lease with option to purchase agreement, and Option to purchase agreement
Owner Financing documents; Warranty Deed, Deed of trust, and Real estate lien note
Retail Buyer documents; One to four family residential contract (resale), and Seller's Disclosure of Property Condition
Learn the role of your Lenders;
- Understand their role in the process.
- Understand your role in relation to the lender and the buyer.
- Get their loan processing timelines.
- It will take 4 weeks or less to finance a new loan with lenders.
Q. When offering lease option or owner financing, what should I focus on?
Ans. If you are offering a lease option or owner financing, there are several management areas you should master;
1. Fax or mail closing documents to the original lender, insurance company, utility companies, and HOA.
2. After finding a new buyer, you will need to send to the insurance agent and HOA.
Q. What information should be included on my business card?
Ans. You should include; Company Name, Your Name, Title, Phone number, Fax number, Email address, and Website address.
Q. What is a "Presentation Folder" and what should I include in it?
Ans. A Presentation Folder is prepared in two sections. Section 1, address who you are and what you do. Section 2 should include the following documents; Letter of Intent, Authorization to release information, Purchase and sale agreement, Sellers disclosure of property condition, and Lender information sheet & buying checklist.
