Re: Finally! someone who understands! - Posted by Ashian
Posted by Ashian on March 23, 2004 at 05:49:51:
“No one is saying subject to deals are bad”
pls refer to you first statment.
Lets not forget, I was an undercapitalized newbie too and I came out just fine.
Re: subject to question? - Posted by Ashian
Posted by Ashian on March 23, 2004 at 05:52:55:
I DID NOT say that I would not help.
I did say it could be done.
I did offer to help personally.
Re: It is STRICTLY a sub2 thing. - Posted by Larry T.
Posted by Larry T. on March 23, 2004 at 24:19:21:
Ashian, you and ericthewunderwurm rock on with you’re bad selves with you’re with your “methods are new”, and “It’s a matter of being detail-oriented and staying focused, triple-checking everything.
Have you ever done a closing yourself?”. But you must forgive me in my glee and sense of irony when you mispell the word “thing”. in your post. I mean what with your “new methods” and “triple-checking” and all. I guess I’m careless and old style and all, but I gonna use a title company for my first closing and spell check whenever I can. But, then again that’ just me.
I believe that that’s checkmate boys. See ya on the next post.
Re: Are you really reading? - Posted by michael
Posted by michael on March 22, 2004 at 14:57:40:
I’m not venting, strong opposing opinions don’t mean anger. Yes, I’m really reading, and yes, I still think you’re advice is bad and crazy for a new investor like the poster.
You are giving out the sales pitch of the “get the deed” folks, about no equity deals. Just because you can get the house cheap, doesn’t make it a good deal. One can also take down a deal at 80% FMV with similar costs.
You are correct in believing that newer mortgages as a whole have less title problems that older ones, but you are incorrect in believing that newbie investors should be doing their own title searches on ANY deals.
"Thats the goooood thing about sub2 investing there is little to no ummm… whats that word? …Risk.
I have spent as little as $25.00 out of pocket for a house that was built in 98. that is including advertising, gas, and the $10.00."
If this is how you measure risk in a subject to deal, then, with all due respect, you do not fully grasp the nature of the beast you have by the tail.
I don’t recognize your name, but have you been reading this board the last few weeks? There have been two people, as I recall, get into trouble with these no equity deals. No equity, so they can’t dump the deal quickly if necessary, and no reserves to pay the mortgage. If an investor doesn’t have the money for reserves, the he shouldn’t not be holding any property long term. For subject to deals, he should also have the ability to get a new mortgage if the old one is called due.
So your comment " If you do not have the funds to close true a title co. then this way is cheaper" is equally suspect, because if one doesn’t have the little bit of money for a title search and policy, then one surely doesn’t haved the necessary funds for reserves.
Without reserves an investor can’t protect the seller, oneself, or the TBer. In short, you can’t live up to your word. Over the last few years people have made money investing in no equity deals with no reserves. But it is a high risk play that new folks should not make because it can end your career. Just because this method has worked for some folks in this market of a lifetime, doesn’t make it a good idea. There is an old saying in the stock market, “don’t mistake a bull market for genius”.
can’t wait until your course comes out then nt - Posted by Tom(MI)
Posted by Tom(MI) on March 23, 2004 at 08:29:16:
nt
Re: Finally! someone who understands! - Posted by michael
Posted by michael on March 23, 2004 at 06:20:32:
Please quote me where I said all subject to deals are bad.
“Lets not forget, I was an undercapitalized newbie too and I came out just fine”
Don’t confuse a bull market with genius.
P.S. Scroll down to Joe Kaiser’s recent post on "not
exactly hiding anything here. He points out his
title company recently paid out 225k because of
a mistake. So that’s two recent posts on EXPERIENCED professionals screwing up and paying out
hundred of thousands of dollars. And you advise
newbies to do their own title searches. That is
irresponsible and a joke.
Re: It is STRICTLY a sub2 thing. - Posted by Ashian
Posted by Ashian on March 23, 2004 at 05:56:39:
I sorry…THANG.
It is a news group not a courthouse.
but thanks for your concern.
Re: Are you really reading? - Posted by Ashian
Posted by Ashian on March 22, 2004 at 18:44:33:
This is not the stock market. ypu have to use common sence in sub2. If the house is new and the house is “ugly” meaning the house is tore up, then sure it is a bad deal, but if the house is in good condition and in a nice hood w/ the "right ad will get the house off the market.
In closing, I would not have bought lots of houses this way if I did not think I could move the house.
This is a simple buisness not an easy one. Don’t complicate things.
It is only a “Beast” if you don’t know what you are doing.
can’t wait until your course comes out then nt - Posted by Ashian
Posted by Ashian on March 23, 2004 at 12:45:17:
Call me old-fashioned, but I’m not quite sure what you mean by nt.
Re: Are you really reading? - Posted by michael
Posted by michael on March 22, 2004 at 19:24:47:
"but if the house is in good condition and in a nice hood w/ the “right ad will get the house off the market.”
If only it will always be that easy.
“In closing, I would not have bought lots of houses this way if I did not think I could move the house”
It doesn’t matter what you think, the market will dictate what moves.
“carburetors are old and my methods are new”
There is absolutely nothing new about subject to investing. It’s been around longer than you or I.
“This is a simple buisness not an easy one. Don’t complicate things”
Your dismissiveness of the unrealized risks and your above comments give away your inexperience in understanding the nature of markets. If that newbie poster follows your route, then has a downturn in his market, he will be just one more disaster story on this board, because he has no equity and no reserves. And there have been many such stories here over the years.
Re: Are you really reading? - Posted by Ashian
Posted by Ashian on March 23, 2004 at 06:04:31:
Tell ya what. I’m not here to say that I am the best at subto, but I am here to say that I have done this alot and if you buy and sale houses alot then you should know a thing or two and be willing to share it with others and sometimes it MAY not be the best rout to go and I have been doing it this way and this is the way I know. (get the first house, use funds from first house to get second house)
It seems to me that as a newbie with - Posted by Tillman (DE)
Posted by Tillman (DE) on March 22, 2004 at 20:03:37:
limited capital reserves, the only SMART way to get started is getting in & out of a deal (not getting stuck in the middle where you’re exposed to risk you don’t have the capital reserves to mitigate).
It doesn’t matter whether it’s lease/options, sub2s, or just buying and holding with conventional lending - the first time your buyer fails to deliver, how are YOU supposed to deliver (aka - meet your obligations) if you don’t have capital reserves to see you through.
I’m getting in & out until I accumlate sufficient reserves, and I’m getting as out-of-the-middle as I can get while still making a profit.
If you’re a RE Investor with insufficient capital reserves doing risky deals (sub2s, LOs, etc), you may well become VERY motivated sellers when the inevitable bump in the road comes along, and when that happens, please call me, I will have accumulated enough capital reserves by then and I might be able to get in the middle and solve your problem.
You may be Newbie, but you are wise. - Posted by Sean
Posted by Sean on March 23, 2004 at 23:16:25:
You may be a new inverstor, but you have learned quicker than most the truth about L/O and Sub2 investing.
Yes they are valid methods to make money, but they are one of the last ways a starting investor with little to no cash should be playing. You are exposed to liability and risk in these deals.
THe last thing someone with no experience should be doing is locking up fully leveraged or overlevereged properties thinking they will slink in a buyer and make a quick buck.
The truth is, ACQUISITION IS THE EASY PART… (I know, some of the newer investors who have been trying and trying without a success will argue with me on that, but its absolutely true.) Finding a property to get control of in one way or another is the EASY part of the business… its the management (if you are holding) and the salesmanship of you are flipping, that are the harder parts of the business.
I do not argue that L/O and SUb2 etc are great techniques, I’ve used em… I know others that have as well, but locking up a property, I don’t care what property or how you lock it up, with little to no equity and obligating yourself to a payment possibly in one way or another when you have absolutely zero cash is not wise.
If you watch the players that come and go the fastest in REI, never failes its the L/O and Sub2 centric guys that seem to disappear the quickest. Many of them have no equity… sure they got some cash from buyers down payments… but 5-10k doesn’t last long if you are obligated to a 1500-2000 a month payment should something go wrong.
I am not knocking them as viable ways to make money, they do work, and when applied correctly can work very well… however a business plan that consistes of “LOCK A PROPERTY AT OR ABOVE ITS WORTH… SELL IT FOR MORE THAN THAT AND GET MORE DOWN THAN YOU PUT DOWN… REPEAT” and nothing else Eventually puts you in a very very bad place, more often than not.
Look at what you are doing, you are as a business model relying on the greater fool theory… You pay at or more than a property is worth, in hopes to sell it to someone else who will pay more than its worth. This approach when used in and of itself, winds up ugly far more often than good.
Again I have nothing against these concepts, they are solid concepts, and will work and can be used, and I personally have used them from time to time… but EQUITY is the key. EQUITY = OPTIONS… OPTIONS = PAYDAY… the more you restrict your options, the greater the chance you will lose.
Re: It seems to me that as a newbie with - Posted by Ashian
Posted by Ashian on March 23, 2004 at 06:07:09:
just your first house, not yor second, third, fourth, get it?
Re: It seems to me that as a newbie with - Posted by michael
Posted by michael on March 22, 2004 at 20:27:51:
Tillman,
I don’t know how long you’ve been on the board, but it doesn’t seem like a long time to me anyway, but from reading your posts I do know you are smarter than the average bear.
Most importantly, you’ve gone out there and done your first deal, congrats. I expect you to do very well in this biz, you’ve got what it takes to survive.
Re: It seems to me that as a newbie with - Posted by Tillman (DE)
Posted by Tillman (DE) on March 23, 2004 at 07:35:39:
get it?
Not really. Does the fact that I have only done one deal since getting started 1.5 months ago invalidate the following fact?
Incurring debt (any kind of debt - S2, Owner Financing, interest only variable rate mortgages, credit card loans, car loans, what ever) without sufficient reserves to carry you through a rough bit is a BAD IDEA.
It’s a bankruptcy ready to happen.
You MIGHT get lucky and cruise along until you’ve accumulated enough cash reserves to handle those rough spots, but I doubt it. The ‘ACCUMULATE REAL ESTATE AS QUICKLY AS POSSIBLE’ philosophy that motivates some people to buy sub2 or LO or what every before they have the necessary reserves will most likely consume the profits you do make in new deals as quickly as you make them.
And yes, I’ve only done one house - by the end of my 3rd month investing I will have done 3.
With minimal risk, and if the market does take a major bump, that’s OK… I’ve already got my profit and I have no further obligations on that profit.
(Actually on my way to building those reserves)
Re: It seems to me that as a newbie with - Posted by Ashian
Posted by Ashian on March 23, 2004 at 06:10:51:
Name calling is not apart of this news group.
Don’t bother explianing youself.
Re: It seems to me that as a newbie with - Posted by Tillman (DE)
Posted by Tillman (DE) on March 22, 2004 at 21:02:58:
Thanks for the compliments. I’ve been on this board since 2000 or 2001, spent a lot of time just reading and following and studying.
Just started posting recently and just started investing recently as well.
Did one deal so far, and I’m working on two others right now. Both of them will be in & out retails.
The next one I should close on my buyer actually found the home and seller for me. I’m just putting myself in the middle for 12 hours because they can’t get financing any other way. On this one I should make about $4,000 at closing and carry a 2nd for another $11,000 which will give me $133.46/month for 10 years.
This deal cost me nothing to obtain (well, $22.00 in marketing but that covers my 1st deal, this deal, and the other deal I’m working on, so I guess my cost in this deal is less than $7.50)