Zachary Beach walks through buying properties where sellers are behind on payments. Pay the arrears, take title subject to the existing mortgage, and aim for a 2-to-3-times return on your cash outlay. Beginners can use a lease-purchase agreement contingent on finding a third-party buyer first.
Chapters
Hey everybody, this is Zachary Beach, smartrealestatecoach.com. Welcome to another Thursday Q&A. That is such a powerful question right now because there's so much opportunity right now because of this exact scenario. So how are we purchasing, or how are we handling properties where sellers are in default. We're able to, at this point in time, due to all the situation that's happening right now with COVID we are able to help out so many sellers right now that are in default, that may lose all of their equity that they've built up for so many years. Because of this current situation. So how are we handling it exactly? When we come across a property or are working directly with a seller that's in default, we are looking at the current amount of that default. And if there is a deal, meaning that we can construct a solution that both the seller can benefit from and that we can benefit from, Then we're catching up that default, we're catching up those arrears, and then we're taking over that property. Now, a majority of the time, I would suggest that if you are going to be coming out of pocket in order to get a deal, because we are breaking one of our, you know, golden rules here with no money down, I would suggest that you take title on the property, meaning If the seller has a mortgage on the property, which they currently do because they're in arrears or in default, I would be looking to close on that property after I made those payments and taking title and purchasing the property subject to the existing loan. Now, that does not mean that you can't have owner financing on this deal, meaning it doesn't mean that seller can't hold a second position for their equity. And you still take title, you can certainly do that on these sub-to deals. So if you're just getting started, this is how I'd handle it though. If you're just getting started, I would go ahead and purchase the property on a lease purchase or purchase it with a purchase and sale agreement for subject to, but I would make that agreement contingent upon you finding that third party. And then once you have that third-party buyer, I would then take their deposit Pay the arrears, then close on the property, or pay the arrears and then start the agreement. Of course, you do have to make sure that you are getting a benefit of additional equity on the back end. We always look for 2 to 3 times off the back end what we're putting down. So for example, if the arrears were $10,000, well, I would be looking to Add $30,000 to our payday three for catching up those arrears. Just know that you have the ability to help out so many sellers that are going through a just a bad situation due to the current you know environment. So know that by utilizing our creative financing techniques, you're going to be able to help out so many people. And then of course, because you help out others. You're gonna be able to help your business and your family as well.
