Subject To's in California? - Posted by EJ

Posted by JohnBoy on July 04, 2002 at 17:05:03:

I use to live in Orange County. I lived there for 11 years from 1981 - 1992. I lived in Fountain Valley and worked in Irvine.

My brother lives between Lake Elsinore and Temecula.

My other brother lives in Oakland.

I have an Aunt and Uncle that live in Mission Viejo.

Another Aunt in Fremont. And some cousins scatter around the state. And of course some friends from there that lived in Riverside, Corona, Orange, Irvine and a bunch of other areas.

Subject To’s in California? - Posted by EJ

Posted by EJ on July 02, 2002 at 16:16:52:

Hi All,

I was just wondering if its worth my time and money to educate myself on Subject To’s. I know the education is probably good, but my investing activites will be mainly in No. and Central California. With the California market as it is, are there really any opportunities to acquire propety Subject To?


Re: Subject To’s in California? - Posted by JohnBoy

Posted by JohnBoy on July 04, 2002 at 12:54:37:

Are there any people in CA. that lose jobs, get divorced, move out of state, get job transfers, facing foreclosures, buying a new house and getting stuck with two mortgage payments because their old house hasn’t sold yet, facing BK, over loaded with to much debt, getting down sized from their jobs having to take less pay, getting divorced, etc, etc, etc.???

Bet on it! THOSE are the types of sellers you need to be focussing on! THOSE are people that are having a PROBLEM! THOSE are people that NEED debt relief! THOSE are people that become DESPERATE! MOTIVATED! THAT NEED TO SELL NOW!

Focus on those people in those situations and you will find the deals! Don’t waste time looking for properties! Spend your time looking for PEOPLE THAT HAVE A PROBLEM! Find those people and they will have the property they need to unload FAST! NOW! TODAY!

Every state, every city, every town, every area, no matter where you live, no matter what part of the country, they ALL have people living there that have PROBLEMS! There is no such place that I know of where everyone that lives there, where there isn’t SOMEONE that is having a PROBLEM because of one reason or another where they HAVE TO SELL!

But if you ever find such a place where there is no crime, no one ever loses a job, no one ever gets down sized from their job, no one ever gets transferred with their job, no one ever gets divorced, no one ever gets to deep into debt, no one ever buys a new house where they have not sold their old house first and get stuck with two mortgage payments, where no landlords ever get bad tenants where they get fed up and just want to dump their property, where everyone just lives in a perfect little world around them, PLEASE be sure to let me know about this place! Because I will want to live there!!! The only place I ever heard of that such a place exists was described to me to be known as heaven that good people go to when they die! But here on earth I don’t know of any such place! So no matter where you are, there are LOTS of people living around you that have PROBLEMS! Serious enough problems that causes them to become MOTIVATED to sell their property just to get out from under the payments for whatever number of different reasons! All you have to do is find those people and you will find the deals! Better yet, make it EASY for all those people to be able to find YOU! Then you won’t have to look for them because they will all be calling YOU instead! MARKETING! Set yourself up with a good marketing plan and market yourself to where everyone can easily find you! Then the deals will fall into your lap! All you’ll have to do is know how to solve the seller’s problem and structure the deal to get them what they NEED!

I doubt it - Posted by randyOH

Posted by randyOH on July 03, 2002 at 21:17:13:

I have not tried it, so I cannot back up my opinion with any data or any experience. But I don’t see how it could work here in Orange County. Prices have gone up about 30% in the last 24 months and houses are selling for asking price and sometimes even more than asking. If you have owned your house even one year, you have enough equity to sell through a realtor and still walk away with a lot of money in your pocket. Why would you do a sub2 deal? Of course I know someone is going to say there are always motivated sellers out there, but I would challenge anyone to find a good sub2 deal out here. I have seen only one “we buy houses” sign in about six months of looking. Last Sunday there were only four “we buy houses” ads in the Orange County Register. And this is in a metro area of about 3 mil population. Think that might be telling us something? Of course, it could be that there are no creative RE investors in OC (don’t fall off your chair laughing).

Well… - Posted by Mike K.

Posted by Mike K. on July 03, 2002 at 01:53:24:

I’m curious about that myself…

I live in Los Angeles and am interested in subject-2 deals, but from what I hear you can get more from renting than you can from buying. So basically, even if I did do a subject-2 deal, I’d probably have a negative cash-flow… Any experts have any thoughts on this??

Re: I doubt it - Posted by JohnBoy

Posted by JohnBoy on July 04, 2002 at 12:32:11:

Try looking in other areas like Riverside, Corona, Pomona, Lake Elsinore, Temecula, Rancho CA., Victorville, etc.

If you can’t find deals in OC where the market is HOT then go where the market isn’t as hot like the areas above.

Sometimes ya just gotta go a little farther away from where you are to get the type of deals you are looking for! If you don’t want to drive that far consider moving!

BTW, ads in papers saying “I Buy Houses” don’t work as effectively as most other advertising methods will work. I ran an ad like that everyday for a solid year and only got ONE deal from that ad! So just running I Buy Houses ads in a paper isn’t going to get you very far any time soon!

Try using bandit signs! Those seem to work the best!

BTW, if you don’t think you can do this in CA., then talk to Bill Gatten! He and many of his students are buying lots of property all over in CA. All no down, no credit, no nothing! Just sellers motivated to sell and turning their properties over to them. Only Gatten uses his PACTrust methods to buy property. But if he is doing it with his PACTrust method then anyone can do it using any other methods also! It’s not the type of method that gets a seller motivated. The seller is already motivated when you enter into the picture! It’s all about solving their problem! So no matter what creative method you use, if it solves the seller’s problem, it’s a done deal!

Re: Well… - Posted by JohnBoy

Posted by JohnBoy on July 04, 2002 at 12:19:04:

Don’t RENT the property out! If you buy it subject to then you OWN the property. So instead of just RENTING the property out you SELL the property on TERMS! You SELL the property by selling on a lease option or land contract. By selling on a L/O or contract you can get a lot more for the property than if you were just to RENT it out! A L/O will bring in a premium rent that exceeds what market rents are going for because of giving the tenant an OPTION to buy the property. By selling on land contract you could easily get 10% - 11% interest on the amount you finance the buyer! In most cases the property you purchase subject to will have a loan that has a much lower interest rate. So if you purchase subject to taking over a loan that has a 7% interest rate with a balance owed of $300k…then you financed a buyer for the same $300k amount at 10% interest…that 3% spread on the interest rate alone would generate a positive cash flow! And THAT’S financing your buyer for the SAME amount you have on the loan you took over subject to! But you will in all likelihood sell for a lot more than you purchased the property for where the amount you finance your buyer for will be a lot more than the amount on the loan you took over subject to…creating even more positive cash flow!

See my article about this in the money making ideas section on this site.

You can find it at this link:

Thanks for your thoughts. nt. - Posted by randyOH

Posted by randyOH on July 04, 2002 at 18:57:47:


Re: I doubt it - Posted by Mike K.

Posted by Mike K. on July 04, 2002 at 16:50:58:

Thanks for the info. JohnBoy, you definately know “whats up”. Still, aren’t you from Chicago? How do you know about areas like Riverside, Corona… Do you invest here too?