How to Structure a PROFITABLE Subject-To Deal

What's the 3 things they said they need help on this week? If you got none there, then something's missing. You're banging the phones, you have questions. Tally those up each week and bring them to your call. That's all.

So this was an expired listing that my VA called, and she followed up with an email, and he seemed interested about subject to. So—

You see that, guys?

Sorry, Mallory.

Can you see that?

Yeah.

Okay, uh, go ahead, Sua. Sorry.

So source was expired.

Okay.

And my VA contacted him initially, and then I followed up.

First call?

First call was— he was like ready to go.

Really? What's the motivation? How come?

So he Doesn't live here anymore. He's already moved, so he's carrying 2 costs. So he moved to California, is paying a high rent there, and paying for this property. Was listed with an agent, wasn't able to sell. It fell— the deal, a couple deals fell through. Okay.

How much?

This is— you got a lot of cool things here. How much was it on for?

It was on for $400,000.

$400,000 and 2 buyers fell through? And was it financing?

Um, yes, financing with the inspection. So I think they must have been like FHA or some sort of, um, very specific type of financing.

Beautiful. Okay, go ahead.

So he was very motivated. His PITI is $1,782. So he basically was like, look, I just don't like having to put out almost $2,000 a month for a place I'm not even living.

Yeah. How much is owed? Sorry.

He owes around $305,000.

So before you tell us what you tied it up for, did you ask what he thought it'd net or do that percentage calculation? How did you— what did you do with him?

Yeah. So first off, I asked like, okay, so if you do go out and list again, like, what are you going to list it at? And he was like, I'm going to go back at $400,000. And I was like, okay. So what happens if this still doesn't fall through and you have an agent, they're going to negotiate and they're going to lowball you. What are you ultimately hoping to net? And he told me that, so he's only owned this for 2 years. He was just hoping to get back the initial equity he had put into it. And so he made a 20% down payment. He was hoping to get his $80K back.

Okay. So he wouldn't though.

Correct.

Okay.

So I came back with— I said, well, we could probably do $370,000. And he was initially like very standoffish. If that's the case, no, I'm just going to list it and see what happens. And then I came back and I said, well, we're going to take over that payment. We're not— you're not going to have that payment anymore. But what number do you need to get to in order for this to Work for you? And he said $385,000.

Okay, he would have got around $364,000 before transfer tax. Um, are you, are you paying transfer tax? Did you get that far yet?

We didn't get that far, so I would just assume that it would be split.

Yeah, because you guys do split normally, right, in PA? Yeah, okay. Yeah, my only obvious comment is I would have went with the 97% or 98% of the $400,000 and then the commission. But even bare commission at 6% is $24,000, and he's not getting the $385,000. That's all I would have went with. Did you guys have any of that discussion or no?

Yeah, he said that his agent was agreeable to 5%. And so I kind of went into, okay, at 5%, this is what you're going to net. But I said, I won't be paying you any equity upfront. So no down payment. This would be all kind of a seller finance backend deal.

Okay. So $80,000, do no payments, no interest till when?

36 months.

Okay. Me going to sleep at night, I would've liked to see $48,000 or more, but as long as you're good with it. You have 2 or 3 other deals, so you can juggle in 3 years. It just comes pretty quick. 36 months, no interest, no payments. Okay. And you can renegotiate that obviously down the road. So, okay. Anything else we need to know or should we take some questions? We have a few minutes.

I mean, I already have kind of like the rent comps and what I would probably go out because I ran all of the comp sales too. So if you want those, I can put those out. Yeah.

What are the comps and the rent? What do you think you're going to go on for?

So rent comps, I could get $2,300 a month. And the insurance or the tax cost is $277 a month. So that brings us to $2,577 a month.

Yeah. Yeah. Nice. And what about the price?

Purchase, I think we could go out for $429,000.

Sounds like you're in Nick's camp, but you guys can brainstorm it. Yeah, before you go live.

Okay.

Yeah.

Anyone have any questions for Mallory? Because I'll, I'll be quiet because I'd rather have you ask her questions. And yes, that does say expired. Jessica.

Or Jessica.

Um, did you Was subject to spoken of in the initial conversation or what made you do sub? How did they agree to sub to versus lease purchase or what did that process look like?

Yeah, no, sub to was my VA. She brought it up and basically was talking that up for him, just knowing that he's only owned it for 2 years.

And gone.

Yeah, that was her bringing it up, and then I just basically carried the conversation.

Jessica, with someone out of country, like Josh sent me a lead the other day, the guy's in France, Josh Levis. He's not here today. I didn't even— I just right away said, you don't want to deal with this, so I just buy it and the mortgage will stay in your name because they're gone. They're going to deal with it. I would have went that way too. Jessica, does that make sense?

Well, yes and no. How do you—

I guess, like, how do you— what's— how is the script different and why would they go with that? Why would they want you to just go ahead and buy it versus—

I don't know.

I guess my brain is just so used to at least purchase that it just doesn't really make sense of how that— how you would script it in the first conversation. And why they would rather have that.

So the fact that it's not in the state is a big one. Like, he's in California and I'm in Pennsylvania, and that's where the property is. And so if we did a lease purchase, he's still on the hook for repairs, maintenance, anything that goes wrong. So he basically, he was like, I just want to be out of this house. And so this was his way of being out by still being able to at least get his equity back and not having to make that mortgage payment every month. Because he did say, well, if this doesn't work, I could probably also rent it. And I said yes, but then you're gonna have to hire a property management company. And what happens if things go wrong? You know, something breaks, you know, all the repair costs that you're gonna have, and you still have to pay the taxes and the insurance.

Jessica, what you could do too is, um, I'm not sure if I posted Josh's conversation that I did, but if I get any sub 2, I'll tag you in it. Um, to get you sort of just used to it, because it's probably just a muscle you just got to practice a little bit.

Yeah, because, I mean, even in a lease purchase, like, you're—

he's not responsible for maintenance repairs or taxes.

It's on title though.

You what?

He's on title though still, you know.

So I think what Mallory was talking about is like an AO.

AO, definitely.

Yeah, for everything.

Yeah.

Okay, thanks.

You bet. Um, Robert, and then we'll do some final things here.

So on these people that are already moved, like this one to California, do you ever bring up the cost of just keeping the utilities on to keep the house going? And that's costing them an extra $500 a month plus their mortgage.

Well, Mallory, I'm sure he even said to you, right, that he does— he can't handle the payment anymore. Like it's getting too much.

Yeah.

Yeah. And Robert, of course, they know that because it's painful for them.

Yeah.

Yep. So did you do a definitive date, Mallory?

45 days contingent on finding a buyer.

You did buyer still?

Okay.

So great. You always push to 45 as long as you did buyer instead of— remember, it's either you do what Mallory did, tight, sounds good, contingent upon a buyer, or you push it way out like I did and don't do buyer. That's safer, what she did.

Good for you, Mallory. That's awesome.

But Mallory, it sounds like you'll sell— like, that's a saleable— that's, that's a nice price range, I think.

And that's a nice house. Like, it's completely updated, it's ready to go. I don't think that it's going to be hard to move. It's actually like in the town right next to where I grew up, so I have a large network of people that I don't even know that I need to do much more than post it on Facebook.

Awesome, awesome. Well, keep us posted.

And just to save a call, I would I would start at that $23,000 like you, like you said, but then I think $19,500 might be the magic number to pop it and then add the taxes back in, of course.

No, it looks— those numbers look solid. Uh, one more question we'll do, and then if we didn't get to anyone, please, uh, message on the channel.

Dan?

Yeah, uh, Matt, I'm glad you mentioned that on the Facebook Marketplace. I just went out there and worked my way through it last weekend based on encouragement from you and from Zach and so on. After I have done that, What should I do on a regular basis to keep visibility? Or what would you recommend about how to manage the Facebook Marketplace posts?

Mallory, you did it for 2 houses, so you might as well answer.

Yeah. So they'll ask you, do you want to renew your listing? So I think it's every 2 weeks or something where you'll get an automatic notice. And so you'll just say yes. And so that'll basically just refresh it and bring it back to the top. And I also, you know, I actively share that with people and I ask other people to share it. So I know, Dan, you're not necessarily huge on social media, but, you know, just maybe if you have other people who could share it for you, then they can just be posting it to their actual page too.

Okay.

Yeah, guys, don't bum out if you're not, because I'm not on social media and I never will be. But Zach was in yesterday, said, hey, if you get that Florida property, tell me and I'll get it out. So You can always have someone help you.

Okay, great. Thank you.

The Luster of the Eagles. A couple things real quick. We'll do final thoughts. Mike, I read to you yesterday the reports I had gotten. Did that match with the ones you got?

Exactly.

It did.

It did. All right. Well, hey, guys, there's not everybody here. There's 27 of you. 3, 6. We got 9 reports. So someone's slacking. Instead of me reading the names and calling you out, you know you are. You gotta send in the weekly reports. We just— the coaches spent time and said they're too cumbersome, make them easier. So we made them easier. They're short, they're exactly what we need in there. You've got to send the weekly reports in. Um, let's just say hypothetically we have— it's not hypothetically— we have 10 months left, right? In workdays, that's about 200 days. That's not much, right? Am I getting that right? 20 days a month. Yeah.

Mm-hmm.

That's not a lot of days. So you've only got 200 days left to get a tracking so that in October you can predictably set up your '25. I know it sounds crazy, but that's what we're dealing with here. So you're not gonna have a predictable '25. You're gonna be winging it in '25 if you don't send reports in and track your own numbers. Now, if you're tracking your own numbers and just not doing report, okay, you're a little better, but we can't help you as much.

Right.

My eyes go in those reports, uh, the coaches and I go, what's the metrics? And then what's the 3 things they said they need help on this week? If you got none there, then I— something's missing. Because if you're, you're banging the phones, you have questions evident what we did today, right? A lot of really good questions. So tally those up each week and bring 'em to your, to your call. That's all.