Subject To Deal Breakdown | Real Estate Investor Network | Alex Barnett And Joe Homs

Sub-2 seems to be a little bit popular right now, and it's probably going to get more popular as we go along. Um, I keep an eye on the foreclosure rate. And honestly, we're not there yet. I mean, I'm starting to see an uptick on foreclosures, but not anywhere near the level that we were in 2008. So with that, this is me. Um, grew up in Orange County, started real estate in 1975, probably before some of you were born.

I was born in '75.

Oh gosh, uh, broker, investor, mentor, regional broker for Pelago, which is a real estate company. I do have an office in Laguna Hills, but we're kind of a virtual company. So all of you brand new agents interested in learning about what we do, how we do it, and we don't charge you a lot of money at the end of the day because we're 100% commission back to you.

Uh, let me know.

Um, I founded H&M. I'm the H in H&M Realty, but my daughter and my son-in-law own the company because I didn't want to own the real estate company because I'm too old, and I let the young people do it. Um, but I still do work there. I've done over 300 flips since 1975. Um, I think I did like four or five last year, somewhere around there. Alex, you're up.

Okay, no pressure.

I told Joe I wanted to go first because my bio is a little slim compared to his, but combined we have over forty years experience in real estate. No, I'm just kidding. I grew up in Orange County, started real estate in 2020. Lauren and I were in a band before, and when everything shut down, we pivoted to real estate. And I can honestly say it's one of the best decisions I've ever made. Have a company, Trusting House. We do wholesaling, wraps, rentals, short-term, long-term, all that stuff. I've done over 40 wholesales since 2020, some in SoCal, a lot in Jacksonville, Florida. South Carolina, Georgia, Texas, a lot of virtual stuff. Um, got into creative finance pretty early because I kind of knew, um, one, we got really into mobile homes and there seems to be a lot of creative finance through mobile homes because they are— it's kind of hard to get lending on that. So, um, that in combination with just the market, I kind of dove into creative financing, started studying it a lot, and It can, uh, see how it's going to benefit us in the next couple years coming up. And yep, like I said, flipper, mobile home investor. So that's me.

Started in 2020. And by the way, all this setup here was for what they used to do. You know, Lauren sings, and so that's what all this is here. So thank you for bringing all this.

I appreciate that.

Uh, that's my information if you, uh, need to get a hold of me, and Alex's as well. Going once, going twice. Going once, going twice.

Got it.

I hired new real estate agents, by the way. Okay, what we're going to cover today: wholesaling, You can't get to sub-to without learning about wholesaling because that's where you find all your leads. So we're going to talk real quickly about that, maybe not so quickly but pretty quickly. And if you have any questions along the way, feel free to stop us and we'll try to answer those questions while we're there because if we get to the end, I may forget. Sub-to deals, deal structure itself. And then, uh, an actual deal that we just recently did. Okay, so the first thing you need to do is you need to have lead generation. Bandit signs— does everybody know? Let me ask you the opposite way: who doesn't know what bandit signs are? Okay, so bandit signs are these literally signs that you put along the freeways or inside city streets. We buy houses.

Bandit signs.

Okay, that— those are bandit signs. Okay, uh, in Orange County, if you are from Irvine south, I don't recommend putting bandit signs out because Caltrans is very aggressive and the cities are very aggressive, and they'll take them down as quick as you put them up. Okay, if you're going to do bandit signs, you're going to do it mostly in Anaheim, Orange, Santa Ana, and inside, uh, you know, you know, the major streets inside those cities. Don't put 'em on the off-ramps 'cause I'm telling you, Caltrans is gonna come by and take 'em off. In the 40 years I've been doing bandit signs, I've never gotten in trouble. I ask, if people ask me that question, do you get in trouble? I never have anybody call, but they take 'em down. So my son-in-law is 6'7 and I told him, I said, you know, we're gonna go out and put some bandit signs. You're gonna be the one that puts it up, okay? Because the higher you put it up, if one of the, you know, Caltrans workers or city workers comes by, they may not have a ladder in their truck. So then they have to go back. So maybe it stays a little bit longer, a day or two instead of like an hour. So, and then those signs are put up At one or two in the morning, okay? You don't want anybody around. So I used to hire young kids to put up my signs. Not something I recommend doing right now. Cold calling, cold calling, and you can be specific probates or NODs. Does anybody not know what an NOD is? Okay, notice of default. Okay, so when you stop making your mortgage payment to the bank, the bank sends this paper to county recorder's office and says Alex stopped making his mortgage payment and lets everybody in here know that Alex is in trouble. He hasn't paid his mortgage. This is how much he owes. Do you think those would be good leads? They're, they're excellent leads. You just have to go after them. Okay, those are what I call the low-hanging fruit.

Yes.

Okay, so first you have to find them. You can use PropertyRadar, you can use PropStream to find them. I use PropertyRadar, but whatever you want to use. And then it's a matter of skip tracing that address and the name to get a phone. So now you can either call them on the phone, or what I used to do is literally go and knock on their door. 2020, we couldn't knock on anybody's door because nobody wanted to see you in 2020. But we're, we're pretty much back to, you know, you can go knock on people's door. So it depends on how much effort you want to put into it. Okay. Direct mail. I can tell you that there's big companies. I mean, I don't want to name them, but New Western is one of them. Oh, you didn't get that joke, did you?

No.

New Western is one of them. These are huge companies that send out direct mail. They send out, you know, hundreds, thousands of pieces a month. And I'm sure you probably have gotten them, and you look at them and you go in the trash can. That's why I don't recommend direct mail. They they they're successful because they do volume, so they're sending out 50,000 you know mailers a month just to get five or six leads from it. It's something that I don't recommend because you know what are you gonna pay like? 90 cents to a dollar to send out a letter. Um, it, you know, if you're sending 50,000 a month, that's a lot of money. Okay, so yes.

You mentioned notice of defaults, but probates, do you feel like those are 2 of the hottest ones to be going after right now? I don't know if there's a specific reason you listed those 2.

Those are the easiest. Those are the low-hanging fruit. Those are the ones that if you decided you wanted to go do wholesaling Or even try to get a listing in your neighborhood, these are the ones that I would target. I mean, as a normal course of business, if it used to be old-time real estate, you have a neighborhood agent. They would literally go by and knock on everybody's door. I still have one that comes by. You know, it's like I've told her I'm a real estate agent, but she still comes by. Okay, I'm saying why waste your time doing all that? Just go knock on these doors. That are having difficulty already. Okay, door knocking. I just talked about it. Websites. So I've got two websites here. One's for buyers, fliphomesoc.com. And then once for sellers, we buy ugly OC homes. Now you can create a website, and believe me, if you create a website, that does not mean you're going to be a millionaire tomorrow, okay? Because you have to drive traffic to this website. It has to get noticed. I use a company called Carrot, and they seem to be effective. I get Um, buyer leads probably 3 or 4 times a month from just my website. I get zero from my seller side. Okay, I don't know why, but I do. I get people like yourself, investors, um, you know, signing the form, and then I follow up with a call. What are you looking for? You're just like everybody else, you're looking for a deal.

Yeah.

Okay, if we find a deal, we'll let you know. Okay, um, estimating, uh, closing costs. Does it come up?

I guess you have to be a professional to do that.

Okay.

Uh, these are the numbers that I use. We use like 3.5 to 4.5% of ARV to estimate closing costs. Um, that, that includes escrow, title, commissions, Taxes. We are licensed and sell our own properties. Your number may be different, 5 to 6%. Out of that, 1% is usually the closing cost, and then 5% goes to commissions, 2.5% on buyers, 2.5% on listing side. So for us, we don't have the 2.5% on the listing side, so we save that amount on the listing side. So for example, a sales price of $600,000, At 3.5%, we're going to pay $21,000 with all, all the closing costs and all that sort of stuff. And then you can see 4.5% and 6%. You don't want to get to 6%. How much to offer, step 1, establish what the after-repair value is. Does everybody know what after-repair value is? Yes. No hands.

Good.

You can go onto the Pelago website, www.pelago.com. That website, you put an address in and it'll run you through all these numbers, and you can change whatever numbers you want. You can change the rehab number, you can change the purchase price, and then it will tell you at the bottom whether the property that you're looking at is a good deal or not, whether you can flip it or not. Okay, um, how much money do you want to make? So in, in my case, I want to make at least 10% of the after-repair value. Your number may be different. You maybe you're starting out and you say, well, Joe, I can make, you know, 5% and be happy. I mean, I'm jumping up and down, 5%.

I'm not.

But maybe you are. Okay, so your number is different than mine. And then establish an offer amount. And what I mean by that is a maximum allowable offer. So this is what you're gonna— you can't go over this amount or you're not gonna make any money. So then you need to start way lower. Okay, but figure out what that maximum offer amount that you're gonna make, whatever it is that you wanna make. And then start low. Don't be afraid to start as low as possible, honestly, especially with notice of defaults and stuff. I mean, these people, the notice of default process is 3 months and 21 days after they file this. So literally they give them 3 months, you know, 3 strikes, and if they want to pay them what is owed, then they will reinstate that loan. After that, they go into the 21-day foreclosure period and they say, all bets are off, you need to pay us everything you owe us now. So when you're getting down to that 21-day period, if they want to save some money because they have equity in the house, then they're going to get serious about meeting your number or selling it to you at whatever price that is. Example, $675,000, rehab cost $75,000, closing costs 5%, $33,750, profit 10%, $60,000. So my offer amount on that would be $506,250. Okay, we understand the numbers? Because that's like super important, the thing that you have to understand the most. out of doing this. Uh, I'm not gonna go too much into this comping properties, um, you know, other than to say pools are worth $10,000 to $15,000. And I'm talking the description of a pool is literally a hole in the ground. Okay? And then some houses that have pools aren't even worth $10,000 or $15,000. You start to get into a bigger value, $75,000 to $100,000. If you walk in the backyard and it looks like a resort, okay, you have like a rock slide and, you know, things like that, barbecue. So the more extensive it is, the more the value of the pool. If it's literally a pool that was built in the '70s or '80s, it's not worth nothing. It's, it's maybe sometimes a negative. Um, ADU for potential rental income. I honestly, I don't account for that a lot. You know, it's like, if you don't know, building an ADU here in Orange County is going to cost you about $300 a square foot. So by the time you figure that out, and it's going to take you probably a year or more to build that ADU, and then you start doing the calculations because obviously you're going to rent it, it's going to take you probably 10 years to pay that money back. And for me, that's why I flip because I want to make my money like now. I don't want to wait 10 years. The other reason I don't hold property buy and hold in California is for the same reason. If I'm if I'm cash flowing, let's say $10,000 a year, and I make on a quick flip, I make 70 grand. I mean, how long does it take to make that back if I want to hold on to it? 7 years. I'm not willing to do that. Okay, so if you're gonna invest, you probably invest out of state. Uh, this is the Pelago website, so I just wanted to show you that this is how they do their calculations. And so when it comes down here, the rate of, uh, return here, that's the number that I'm looking for to be 10% or more.

What do they charge for the site?

Zero. It's free.

Joe, does that site only reflect California companies or nationwide?

Right now, California, Washington, Florida, and then there's some other states that they're putting in, but those, those are the 3 ones. Um, this is the, uh, the Flip website, what it looks like, and then this is the, uh, if you want to sell your house.

What it looks like.

That's that's my son-in-law. Sourcing deals, become a real estate agent off the MLS. Alex presented me with a deal a week ago that his mother found in Rancho Santa Margarita because she has a relationship with a real estate agent. And so we went out and took a look at it. I didn't want to personally invest in it, so my son-in-law is investing with Alex on that deal. And we got that— he got that deal because of that relationship. So it's good to have relationships with agents that might have properties. This was, uh, on the MLS. It was coming soon, so it hadn't been activated yet. And, uh, the The goal of a real estate agent is to do what? Make a commission. What's the second most important goal of a real estate agent? Double end the transaction. Yeah, representing a seller and a buyer. And so agents, we could have written the offer up But it wouldn't have been accepted because the listing agent is the one that has control and the ear of the seller. So that's how it was accepted. Okay, um, how to find wholesalers? They're all over there. I mean, you can go on Facebook and find them all the time. So go on Facebook and search wholesale groups and just join them. And they'll start sending you wholesale deals. They're not all deals. In fact, I'd say 95% aren't deals. Okay, but if you want to look at deals from wholesalers, then look at them. Last year they got extremely greedy because of the market. It was so hot that they were, you know, making $75,000 to $100,000 on a wholesale deal. But now I think they're back to reality and more grounded. An average wholesale deal, you're going to make 10 to 15, around there, I would say. So, um, we talked about bandit signs, meetup groups, BiggerPockets. If you're not on BiggerPockets, it's a good place to, to go. LinkedIn, off-market, direct-to-seller opportunities. And this is literally pulling lists We'll pull a list of 200,000 names, absentee owners throughout the 3 counties here— Orange, Riverside, San Bernardino— and we'll skip trace those and we'll put them into a text campaign, or we'll send them overseas to a virtual assistant who does nothing but call these people and wait for a yes, I'm interested in selling. Once they get the yes, it comes back here and our team follows up here with that yes. Okay? Because you can imagine if you've got 200,000, 300,000 calls you have to make, it's— you can't do it by yourself at all.

Where are you pulling your lists from?

PropertyRadar, PropStream. There's a bunch of them out there, but those are the 2 main ones that I use.

Do you ever go direct to the title company?

Um, you can.

Will they give it to you for free, I guess?

They, they can give it to you for free, but like anything else, you have to establish a relationship with a title officer. And remember that at the end of the day, if you get a deal put together, you're going to give them the title. Okay, so establish that relationship. Um, some will actually skip trace them for you. That's, you know, whatever they want to do is fine. But yes, you can get them for free there.

Okay.

Yep.

Uh, trustee sale, um, I haven't done that in a while. You said you were at the trustee yesterday or—

Today.

Oh, today. Oh, cool. Okay. Um, That is something that you need to have some experience before you go to a trustee sale, because it's not as easy as going to the sale and bidding on something. You need to know if it's the first trustee, second trustee, whether the homeowners association is foreclosing. So there's a lot that goes on at a trustee sale than just literally going over there. You also need to have cash. Not in your hand, but you need to have cashier's checks, okay, ready to go. Because if you're bidding, and they will check to make sure you have the, the amount that you want to bid, if you're bidding and you're the highest bidder, guess what? You hand over those checks, sign them on the back, 2 weeks later they send you out the deed for the property and it's yours, okay? Not a lot of it is going on right now. Sources of capital, really money flows to the deal. You don't really need the money first. If you have a good deal, you just present it to the community or whomever, and somebody will say, yeah, I'll partner up with you. Now, what does that mean, partnering up? That means whatever you'd like to do in the deal. Okay, if, if you think it's worth giving, you know, half away, half your profit away to somebody who brings you a good deal, that's up to you. If you want to pay them $5,000 or $10,000 as a finder's fee, that's up to you. Okay, so in real estate, pretty much everything's negotiable, so please negotiate. Okay, uh, learn how to find distressed properties. There'd always be a buyer or partner if the numbers are good. There is more money available than deals. Honestly, that's so very true. You just, you just have to find a good deal because a lot of them that you get from these wholesalers aren't, aren't that great. Okay. Off-market, where the best deals can be found if you are willing to put in the work. Again, direct mail, not something I recommend. Driving for dollars. Now, if you're not familiar with driving for dollars, and there's an app for that because there's an app for everything, it's called Deal Machine. We get a lot of leads from driving for dollars. Again, we hire 18, 19-year-olds to literally drive into neighborhoods, look at the houses, and mark down which ones look the ugliest. Okay, so those are type of leads that are not normally available to anybody unless you go driving for dollars. And you can actually do virtual driving for dollars as well. So Google Maps, you get there and you look at it. Um, how do I know it's ugly? Paint is, you know, the yard is in bad condition. If you're not in Santa Ana, you have 3 cars parked on the lawn. In Santa Ana, that's normal. Hopefully nobody lives in Santa Ana, but anyways.

Just moved there.

Oh, did you? Okay, so just get a 4th car and put it on there. So things like that. So the driving for dollar leads are literally put back into either a text campaign or a cold calling campaign, and you follow up with those. But they seem to be a little bit better. Now, I don't want you driving for dollars and knocking on a door. Okay, so here's, here's the door knock. You knock, you're knocking on the door. Hi, my name is Joe. I'm a real estate investor. I'd like to buy your house because it looks the crappiest in the neighborhood. That doesn't work.

Yeah.

Why are you here? Well, yeah, because you have a crappy house and I thought maybe you'd want to sell it. Yeah, so don't do that. No.

What do you do?

Call them or text them. Okay, cold calling. Mojo Dialer dials 3 numbers at once, so if you're into cold calling, it's dialing 3 numbers. The first number that picks up, then it stops and you can answer the phone and talk to whomever. Okay, Google Ads. Facebook ads, more sophisticated because to do Google ads or Facebook ads properly, you're probably going to be spending $70,000 to $80,000 a year to get, you know, some leads to flip some houses. It's expensive, you know, it's expensive. And it's like It's like, um, if you spend, you know, $70,000 or $80,000 for these leads, each lead may cost you $5,000, but at the end of the day, if I'm making $70,000, what do I care? You know? Yes.

Um, just out of curiosity, in today's world, what is your success rate or I guess a success rate for cold calls in today's world. I mean, because I get cold calls about, you know, selling my house and might be able to find it. But just out of curiosity, what is the success rate in today's market?

Alex, are you calling her?

I might have called you before. Um, no, I'm just kidding. Well, you're, you're probably not a motivated seller, you know what I mean? So they're pulling a list of 10,000, 20,000 people and just going through it. Um, I think the, the average is you should be getting about, you know, 3 to 5 leads per day with a cold caller, and then out of those, maybe, you know, 3 for the week or So, um, so yeah, it's pretty much like the average.

It's, it's a numbers game, you know. The more money you throw into it, the more leads that you're calling, the more deals you're going to end up with at the end of the day. But, um, if you're first starting out, it can get expensive to do it. It can. Um, I, I would, I would reach out to, uh, Alex If you want to start wholesaling, I would reach out to him and pick his brain on what he does and the tools he uses and how he does it. We're actually looking into a ChatGPT version of answering back the questions from people, like, you know, how much you want to offer, things like that, whatever. Get the ChatGPT involved in there. Okay, I think that's gonna be the future.

Okay, yes. Oh, what do I use for skip tracing?

Yeah, skip tracing is—

I mean, you could use that for any list, and it's sort of a debate between people because you can pay really you know, really you can be cheap about it and pay, you know, 1 to 2 cents per lead, and you're going to end up with a lot of wrong numbers. Or you can pay all the way up to about 12 cents a lead, which it can get expensive. So just depending on your budget, um, it, it varies. And there, there's a ton of services out there. Yeah, yeah, skip tracing, batch skip tracing is one. Um, Kind skip tracing is another, but you have to have a minimum of 10,000 leads. So, but that one you'll get for 3 cents, um, per address. So like $300 for 10,000, it's pretty good.

Yeah, don't, don't pay more than that. Yeah, some of them will charge you like 10 cents per lead. Yeah, you can get it down to 2 and 3 cents. Okay, let's get into the meat of subject-to deals, which Alex is going to take over. He's going to talk about all this stuff.

Oh boy.

Okay, now, um, yeah, so this is everything as far as, you know, the contracts and paperwork that you're going to need for sub-to deals. Um, it's, it's something that you kind of want to— when you're talking with the seller, you're going to always want to push, okay, cash offer or tell them that they're going to list it. And so, or, or push them to list it with an agent. Now, if neither of those work, that's when you can kind of broach the subject of subject-to, which is different than seller financing. Seller financing is if the home is owned free and clear. Subject-to is if they have a mortgage in place that you're going to be taking over. You're going to be purchasing the property subject to the existing mortgage. It's been around a long time. I know when the interest rates were, you know, hitting 16, 17% in the late '70s, '80s, you know, people were doing it all the time. But if you bring it up now, I've talked to brokers that have been around for 30 years that are like, oh no, this isn't a thing. That's— it's illegal. You talk to agents, especially agents, they They hated it. No, no, it's illegal. It's a scam.

It's legal in all 50 states, right?

Oh yeah, yeah. It's just, um, it's not something that people are used to, especially within the traditional space. So especially when you're talking with the seller, bringing them down that road of, hey, I'm going to be making the mortgage payments on your behalf and it's going to stay in your name, they, they need to be in a certain situation to where this works. Um, so let's start with the sub-to creative purchase contract. It's, um, oh yeah, oh yeah, Joe threw this in here. What needs to be in a contract to make it legal?

Anyone? Signature, name, date.

Perfect.

She didn't look at it.

I saw her. Give her a french fry. Um, okay, so it's, it's a purchase agreement with information about the current mortgage that you'll be taking over. Now this is really important to get the exact numbers from the seller. You'd be surprised, a lot of them don't know, you know, what their mortgage payment is. They don't know if it includes taxes and insurance. All that's going to be very important when you're doing your underwriting to see If this is even a deal or not, someone may be open to selling to you subject to, but you know you run your numbers. Even if you get a long-term renter in there, doesn't work. Midterm, short-term, none of that works. Maybe you can wrap it, but you're going to need to know the exact numbers of what they're paying each month to find out if it's a deal or not. And then it will also include any sort of seller financing. So a lot of times they'll have the mortgage plus they'll have equity. So you're going to be paying them out, you're going to be taking over the mortgage, and then you're also going to be paying them out on their equity. So it's, you know, sort of a hybrid deal. So you're going to want to figure out again based on your numbers how much you can afford to pay the seller for their equity. I've worked it out a few times. Let's say you You can only take over the mortgage. And if you were to pay the seller out on their equity, that it kills the deal. I've had people take what's called a silent second, saying basically they're going to hold a note for the second for their equity, but you're not going to— you're going to balloon them out or pay them out, you know, years down the road. So that's also an option. Um, you are not assuming the loan. So that's a big distinction. If you're talking with agents, a lot of times they'll say, are you assuming the loan? Um, especially when you're dealing with like a VA loan or something where you— I think you can assume the loan. Yeah, so it's different. That assuming the loan would mean you're qualifying for the loan and they're going to put it in your name. This is the loan stays in the seller's name. That's just a big distinction. And then also included in this contract, you're going to have you know anything related to the title of the property, disclosures, inspections, closing instructions, default remedies, anything basically in you know in a simple purchase agreement. And I believe it's even available within the car agreement. So it's right in there. It's in the California Association of Realtors. Normal purchase agreement. It's just I don't think a lot of people use it. So, okay, we also include addendum, um, with our sub-to agreements, and this basically shows you— this basically includes that, uh, they're gonna be releasing information to you regarding their loan. So they're going to give you access to all their information. Get— you're going to want to get the login, you know, if they have an online portal, you're going to want to get the login so you can see exactly how much they owe. Do they have any, you know, arrears? So we put that into the addendum. We make sure, hey, I'm gonna be getting this information for you. So if you have a problem with that, then, you know, let me know now. Buyer and seller representations and warranties, disclosures regarding the loan, and again, the release of information with the insurance. So that's, that's a big thing as well, because you're going to want the insurance to stay in their name at least till it closes. And then you can figure out if you're going to get another policy or add yourself as additionally insured. Depending on what you're going to end up doing, we also include seller acknowledgments, which is in the addendum. This is just basically another page that says, "Hey, you know what's going on. You know exactly what's going on. The loan is staying in your name." I've had to tell a seller over months and months and months where she was like, "I thought you were just gonna like take this over." No, no, this— the mortgage is going to stay in your name, and I'm going to be making those payments. And then, you know, just, just so everyone's on the same page. We also include the limited power of attorney. That's for the property mortgage and insurance. That's, that's so you can cover yourself, um, in case you need to, you know, call the insurance or the mortgage company. And you know, get access to any information, which is really important. I have a buddy; he got a sub two in Dana Point, and he didn't get the login information for the mortgage. He he got like ten ten thousand dollars down. It's a condo with an ocean view in Dana Point, and the seller ended up passing away, and so he didn't have access. to, you know, her login information so he could keep making those payments. So, uh, it became an issue. Authorization to release information. Again, insurance. You just want— basically, you just want access to everything. Limited power of attorney, insurance, mortgage, all that stuff.

Do you do it special?

Um, it's just like any other transaction. You can do inspections. Yeah, and I would, I would do inspections. It's, it's pretty much like every, every other transaction except that you're going to be, you know, making the mortgage payments on her name. Yep. Yeah. Yeah. So, um, I tell them that I can do what's called a deed in lieu of foreclosure, pre-sign it, meaning— and then, uh, meaning we can— it basically something that stipulates if I miss a payment for a certain period of time, if I don't make a payment within, let's say, 45 days then they'll get the mortgage back in there, or they'll get the deed back in their name. Yeah, so there's a few ways around it. Again, like I said, it's like they have to be in a certain situation. And then where are we on memorandum and quitclaim? So I always try to file a memorandum whenever I get the seller to enter into agreements with me. And basically what that's— what that does is that clouds the title. It says, hey, you know, I already have an agreement with this seller. So, um, if you— if for whatever reason they ghost me and they try to go around my back and get another, you know, get another deal— or sorry, get another offer. Offer, thank you. Then It clouds the title, and then that buyer needs to come to me and basically buy me out.

So do you think that, uh, sellers would not try to do that? Like, they get your call, you put a deal together, a week later they get a call from another wholesaler that says, oh, I'll pay you $10,000, $20,000 more after you have a signed contract. They, they try to do that. This would will help you at the end of the day. I've had situations where I've had to hire an attorney to sue the seller and complete the transaction. So it happens. So just trying to protect yourself here in an easier way, because once you record this, it is on the title to the property. If anybody pulls a preliminary title report, it'll show. Yes.

So the title company is doing all of this for you? You're just saying, I want all of these things, or how does that— how does that happen that it gets on there?

No, we, we do everything. So this, this memorandum and quitclaim, whatever it is, it's just a document. And then the title— we record it at the title company— not there, not there, but at the recorder's office. Title company just sees it when it's done. Yes.

Or do you have templates that you provide to like maybe somebody who's trying to get into wholesaling?

I do, yes. That's fantastic. Yes, yes.

California allow you to record that memorandum with just you, the buyer, signing, or is it required seller signing with buyer?

Um, great question.

Maybe it's just the buyer.

Yeah, I think it is. Now you have to understand, when you're working like for a— not— you're not working for a government agency, but you're dealing with a government agency. The recorder's office is there to record whatever you want. It could be a piece of toilet paper. They're going to charge you for recording that document, and that's all they care. They're not, you know, validating that document. They're not saying it's Truthful. They're not saying it's even valid in any way. It could be fraudulent. I mean, there's a lot of fraud that goes out there. They just record it and they collect the fees. So yeah, we've never had a problem with that. They record whatever we give them.

Okay. I do get the seller to sign anyway though, just in case.

Seller doesn't sign?

I think it depends on each state.

What about California?

Joe, what was the question?

Is it still valid if the seller doesn't sign the memorandum?

Yeah, you, you can, you can record it. Again, they're just gonna record it, and then, um, it clouds the title for a period of time. There's actually some documents that are recorded that you can remove from title. You know, it depends what those are. You can have them removed by tile, or they can what they call write around it. So there's some documents out there. The most that they have issues with is like if you're married and then one person, you know, says, well, I'm going to quitclaim this to myself or my sister or whatever. You've just definitely put a cloud on the title. You might not be able to sell that property because the title company is not going to insure it. They're going to come back to you and say, did you authorize this? And if you did, sign this form here, and then we'll keep going. But if you didn't, no. California is very, very stringent on that. If you're married, domestic partners, whatever, everybody needs to sign. Okay, and so, and same thing with wholesaling. If you're dealing with a husband or a wife, you need to get both of them to sign at the end of the day. You don't have a deal until everybody's signed.

Okay, even if the spouse or partner is not on the mortgage or title?

No, if they're not on there, then no, no, no. Yes. Yes, we're headed there. Amber. No, it's more Getting the seller on board with what you're wanting to do. Once you get the seller educated and they agree, and remember, this could be a 30-year loan. They've been paying for 10 years, so there's 20 years left. If they agree that you're going to take over this loan, it's going to be in their name for 20 years. It's never going to show up in your name or your investor's name. It's going to be in their name. So every time they do a credit check, or if they want to buy another house or whatever, it's going to show up there. Okay, so it's just, it's just an education process on that end, and it takes a lot of talking.

Okay, yes.

Could I officially advertise on MLS like seller willing to do subject to or something like that?

Yeah, why not? I did a deal the other day and I was offering seller financing on the whole thing. Somebody bought it and they got a loan, thank God, because I didn't really want to seller finance it, but I thought I could sell it easier if I offered seller financing. So yes, you can. I have a search on my MLS that looks for deals like that, like owner willing to carry, Those type of deals, they'll come up on an MLS search for me, and those those are the ones that I'm reaching out to. It's like how much do you want down? Five percent, ten percent. It's all negotiable. Depends how you know hard they want to sell it. Go ahead.

So what do you do if you offer seller finance and they say we want to take you? up on it, but we're going to get a first for like 50%, 60%, or whatever. And, you know, will you come in second position?

Well, it depends who you're talking to and how you're structuring the deal. Um, I know that banks don't like to see anything behind them when they give a loan to a buyer. At least it used to be like that. I don't know if it's changed, but I can't see that it's changed. The only way would, um, like kind of work is if you're doing seller financing. So let's say you get a loan for $500,000 on a million-dollar house and the seller is willing to take back $250,000 in that deal, and it may work. But again, the, the first trustee, whoever's loaning you the money, needs to know all that stuff. That, that's going to happen. And, um, it is mortgage fraud if you close a transaction and then say, I'm going to pay you $250,000 after we close, because I've seen that before too. So just be careful what you do and how you do it.

So back up earlier, Alex, we were talking about the mortgage and insurance. Um, I know that— I mean, I know this is legal in 50 states and everything, but is the bank going to get notified if the seller discontinues his mortgage insurance and it pops? I mean, isn't that— isn't the bank gonna go, no, no, no, no, wait, wait, wait? Is that an issue?

Yeah, that's why you want to leave the insurance in their name, put yourself as additionally insured, and then get another insurance So maybe this is a little too far in the weeds, but how do you deal with—

when you get accounts from those people, change the password? Should they have the passwords? How does—

Yeah, I, I would. I mean, that's, that's the first thing I'd want to change. Yeah, exactly. You didn't come back here and mess with the mortgage, call the mortgage company and be like, hey, I didn't know this was going on, or anything like that. So you're basically taking control of that.

Can you claim the depreciation off of that house, or does that still go to them?

No, you can. You're paying it.

Whoever pays it.

Whoever pays it.

It doesn't matter what the name is.

Doesn't matter. Yes, you can.

Absolutely.

Anything else?

I was just going to say regarding on-market deals, I'm seeing a lot of traction with people who are trying to list their properties right now and have no equity. So if you can pull a no equity list, expired listings, those are, those are good sellers to go after for subject to.

I'm sorry, would you say that again?

No equity, uh, no equity list. So they have no equity and they're trying to sell. When they sell, they're going to have to come out of pocket. So If you do an expired listing, no equity, you know they want to sell, that would be a good candidate for subject to. Wholesale purchase contract. Wholesale purchase contract, just use that in a standard cash sale.

Yeah.

Finder's fee agreement, that's, you know, if you're going to wholesale it or you get it from a wholesaler, you can just use that.

Okay, let's talk about deal structure itself. So I started doing this literally 40 years ago. Interest rates— I won't tell you who was the president at the time. Jimmy Carter was in office when I bought the house that I'm currently living in. I was paying 16 Wow. Mind you, it was only $160,000. I bought it brand new from the Mission Viejo Company. I had to sell my house to buy, to buy the house that I'm in now, and we did creative financing back then. So it was just like you said, the purchaser got a first, I took back a second on the property. So that's seller financing, and it was for 5 years, and then 5 years later, the market started doing this again, so he was able to refinance and pay me that off. Okay, so here we are, fast forward, uh, same thing, just obviously bigger numbers. So you can do creative financing. An all-inclusive trust deed— and you were talking about the trustee— so this is just basically, this is the, this is what's going on with this property. It's got a loan of $250,000 First, it's got another loan of $250,000. Second, it's got a HELOC on it for $200,000. Third, okay, and the people that you're buying it from, the sellers, have little or no equity, and you're telling them, I can help you out. Okay, so you're gonna do an all-inclusive trust deed. You're gonna wrap all those loans together into one And then you're going to take this trust deed and you have a decision to make. One, you can record it because remember, you get the recorder's office is going to record anything. The recording basically puts everybody on notice that now you own this property through an all-inclusive trust deed, and it literally spells on there, I'm taking over the first, the second, and the third. Okay, and that's the safest way to do it if If you can't sleep at night, you don't have to record it. And the reason why you don't record it is because most loans today— they didn't 40 years ago— most loans today have what's called a due-on-sale clause. The due-on-sale clause means that when you sell it or transfer it to somebody else like this, they want their money.

Okay.

It is just literally a clause In their contract. In the 40-year-plus that I've been doing this, I have never heard of a bank calling a loan due. As long as you're paying them, and especially nowadays with computers, they're literally checking a box. Oh, we got the payment for this property. They don't care who it came from. They just care that they that they got it.

That's it.

Okay. That doesn't mean that somebody's going to find out, um, and they may call the loan due. And I know that, um, you know, once you're involved in a transaction like this, you have to remember at the end of the day as well that the banks really don't want these properties. They want the loan because that's where they're generating their income. So then, you know, if you stop paying them, they're going to have to foreclose on you, and they don't want to do that. See, You just call them and negotiate and say, you know, hey, I'm making the mortgage payment. The people that you had this, uh, kind of walked away from this situation and I bailed it out for you, and I've been making the mortgage payment for such and such. Hopefully that's okay with you. Most of the time they're going to agree. If they don't, then hey, okay, you know, time for you to foreclose. 3 months, 21 days, you can sell the property. Before that happens, okay? So that's your kind of exit strategy if that happens. But I can tell you that 40 years, I have never heard of a bank foreclosing on somebody in this type of situation. They they they don't get the recorded documents. The only time they're gonna start to question anything is you've stopped making the mortgage payment. The insurance is lapsing. So make sure that that doesn't lapse because they need to protect their interest in the property. That's why they have insurance on there. So, um, all-inclusive trustees is what I use.

So are you saying don't record that, or are you saying do record that?

Depends on how good you want to sleep at night. Okay, if you want to be 100% protected, Then record it. If you want to roll the dice and not let anybody know that you own this property, remember, you own it on a piece of paper that has a notary signature on it, but that's it. This is a piece of paper, and you have that piece of paper, so nobody else knows it. Okay, my fear if I don't record it is the seller is going to sell it to somebody else. Okay, so I like recording them, but again, that's up to you.

Usually people don't record it because they're worried about the due-on-sale clause.

Correct. Yes.

What about, um, insurance? Isn't there some kind of insurance that you can also purchase that in case the due-on-sale clause comes into play? Yep.

Due-on-sale clause insurance. And basically, I think you pay into it and then they'll refinance you out if it gets— if it gets called. But it's, it's typically, from what I've seen, it's typically smaller banks, maybe credit unions, where they're looking at every single mortgage. And, you know, on top of it, the bigger the bank, the better off you are.

Could the buyer that's Um, buying subject to, put it in the trust or will it if he dies?

What's going to happen?

Is it going to his children or no?

So we're purchasing these properties with our LLCs. So my LLC is owned by my trust. So then my children, if something happens to me, would have control over that property. Is that what you're asking?

Yes. Okay. Are you asking about the buyer or the seller?

The buyer.

Yeah, the buyer.

Yes. So I mean, if you wanted to buy it as an individual, you can. I don't recommend it. Um, you should buy it as a trust, a family trust. And I don't like that either because what do most people name their trust? Yeah, their name. It's like, hello, you know, it's like Yeah, it's in my family trust. It's Joe and my wife's name, Homs Family Trust. So I do LLCs, or I actually do a land trust, which is totally different as well, to protect yourself and privacy. Is there any attorneys in the room?

No?

Good. Lease option is another way to take down properties. Lease option, you never give away control of the property itself. You always own it. You're just recording and having the buyer-seller sign a piece of paper that basically says you're going to buy it for this price. So lease options are always Favored to the seller. Okay, so for example, let me give you a good example. Like, if your property's worth $1 million and somebody says, I want to do a lease option, but I, I don't have the money. Okay, Joe, how much do you have? I have $100,000. Okay, we'll use that as your option money. Okay, so you give me $100,000, I will sell you the house for $1 million in 3 years, 5 years, whatever we agree to. During that time, you're making a payment to me, a lease payment to me. I still own the property. Those lease payments— and all this is negotiable— those lease payments goes towards like your down payment, or it doesn't, however you want to structure it. 5 years down the road, this million-dollar property If it's in this market, maybe it goes down to $500,000. So who does that benefit? That benefits the seller because the buyer's going to say, well, yeah, I have it under contract for a million, but why would I want to buy it for a million? It's worth $500,000. So then he bails out. There goes his $100,000 option money, and that goes in your pocket. So that's why I'm always saying is lease options is really a benefit for the seller. Now, if you time the market wrong and you're in 2008 and you get a lease option for $500,000, and then 7, 8 years later that property's worth $2 million, then yeah, you've got a good deal there. But most of the time when people start looking at lease options, it's because they don't have enough money to put down on a property and it's really inflated. So it only helps the seller, in my opinion. So you can do lease options. Grant deed is just simply how, you know, property is transferred from one person to the other. You can do a grant deed, you know, there's no problem doing it. I would recommend an all-inclusive trustee, but you can do a grant deed as well. It doesn't matter.

What's the difference?

The all-inclusive trustee is going to Basically show everything that you're doing. So you're, you know, assuming the first, second, third. A grant deed is just, you know, them giving you, um, the property without anything underneath it. Um, always pull a preliminary title report. Who does not know what that is?

One, two.

Um, so a preliminary title report is supplied by a title company. A title company is an insurance company, a product. When you buy and sell a house, the seller gets title insurance to basically tell the buyer, this is what's happening with the house. There's a first, there's a second, there's a child support lien, um, there's an IRS lien. I'm gonna pay all that, so don't worry about that. And then I'm gonna pay for the insurance to make sure that that's the only thing on the property. You close on the property the next day, you're— you feel safe as a buyer because you know there's nothing else. 2 months, a year goes by, and all of a sudden a contractor's lien appears on there, and you didn't hire a contractor. And so you go back and the contractor like said, "Well, I filed the lien." When did you file it? Was before your closing. So guess what? Now you have to call the title company, and the title company obviously made a mistake because we're all human, and they didn't find that. They are responsible for paying it. That's what the insurance part is about. Okay. So whenever you buy properties, you should always get title insurance on the property. The only time you don't is if you go to the courthouse steps. Courthouse steps, you're buying it as is, where is, as where, whatever. You're buying it and whatever pops up at the end of the day, that's your responsibility. When I go to the courthouse steps, when I used to go, I called the title company because there was a special number that they have for flippers and you call them and they literally do a title search right then and there. Because again, we're in a computer age, so everything's there. And they tell me, okay, Joe, you're bidding on a first trustee and there's nothing there. There's no tax lien, there's no contractor's lien, there's nothing else. But I can tell you that I've paid some of those before because again, you're working with numbers. And if you, if you can bid this amount And, and, uh, the bank's good with that amount. If there's an extra $10,000 or $15,000 for child support, you're paying $10,000 or $15,000 extra. If that doesn't go above what you wanted to pay, then you pay it. So I paid for tax liens, child support, things like that that show up there. But again, that's why I said when you go to the courthouse steps, you, you better educate yourself. You should know what you're doing. Before you get there. Getting control of seller's banking information online, and Alex talked about that. So the more control you can get, the better. So we took total control over that account, and I mean, I log into it and I pay the mortgage every month. He's going to talk about it, but we're in that process. There is, uh, he'll talk about it. Uh, he talked about this, additionally insured on seller's insurance. Uh, what does an actual deal look like? Your turn.

Okay, yeah, so Joe and I are, um, we took down a deal out in San Jacinto. This came from just a typical text blasting of absentee owners out in Riverside County, and it started pretty much like most texts. I texted, hey, are you looking to sell your property? She says, it's already listed, go ahead and reach out to my agent. And, um, I saw that it was in foreclosure, and so before I went to the agent, I went back to her. I said, hey, what's, you know, kind of what's going on? Can you just let me know, you know, what's going on with the property before I put an offer in. It was listed for $550,000, and she texted me back, you know, if you give me $450,000 right now through my agent, I'll accept. So I was like, hmm, okay, that's interesting. What's going on? So I was like, okay, well, yeah, I'll go through your agent. But I didn't. I kept pressing her. I was like, hey, can we just, you know, get on the phone really quick and, you know, chat about what's going on? And she kind of hinted there were some tenant problems.

Mm-hmm.

So I was like, perfect, even better. And so I called her a couple times, she didn't answer. And you're going to see that a lot with foreclosures. They're just— they're going through so much that a lot of times they'll just ghost you, but you just stay persistent. Finally, I got through to her and I just— I used the line that I always use. I was like, hey, can you just kind of catch me up to speed with what's going on? And right from there, right from the beginning, she goes, I'm just gonna be honest with you. And then just went into the whole story. Her sister had moved into the property. They were partners on a sober living house, and the mortgage was in the seller's name. But her sister was supposed to be paying the mortgage. She hadn't been for the last five years, and so it was in foreclosure. There was also a second attached to the house that had defaulted back in. 2010, I believe. It had ballooned out. It was for $76,000, and now that's actually the lender that was foreclosing on the company, or on the seller. They wanted $180,000 at this point. So I was like, huh, interesting. And she basically just said, you know what, I would give you my house right now. I'll just give it to you. I was like, all right, let me see what I can do. So I brought it to Joe And we ran the numbers, and as it as it was, it wasn't really gonna work out. But I just told her, okay, if you do exactly what I tell you, we may be able to help you. And this was about four days before it was supposed to be auctioned. She had listed it on the market. It had been on market for about fifty, sixty days, and they weren't getting any traction because the tenant, the sister that was. Living there wasn't letting anybody in. They had a buyer lined up, but she wasn't letting anybody in. So, you know, everybody pretty much backed out, and it was down for the last 4 days. And so I was like, all right, so what you need to do, you got to cancel the listing agreement. So she did that, and then we got on a 3-way call with the second, and I was able to get them down from $180,000 I wanted it at around $75,000 for it to work, and then they ended up coming back at $100,000. And so what they did is the day of the auction, they stopped it. They gave us another 30 days, and they said, all right, if you give us $100,000 on the second, then, um, you know, we'll, we'll call it even. And so we decided to take that, and we took over the first. So that was the main part. We didn't want to come out of pocket For the whole, the whole amount. So we paid off the second, and then we're taking over the first. And then basically the house, it honestly doesn't need that much work, so we're just going to put like maybe, you know, $10,000, $15,000 into it and then relist it.

So you subject to the first?

Exactly. Yeah, exactly, because that's, that's who was actually foreclosing, was the second. And then the first was beginning. It had gone to the legal department, so she had— she— I think they owed maybe like $19,000 or something.

So you said they weren't making payments for 5 years?

It was— yeah, I think, I think she had not made payments for 5 years, caught up, and then was like working it out. Exactly.

And then—

yeah, for sure. And then she was like working it out, making partial payments, did the whole thing with like loan modifications. They were trying to make it work, but it was a $5 deal. Exactly, exactly.

So had it foreclosed with the second and not have gotten anything, the first would have been out, right? Not the first. No, no, no, the second gets screwed, right?

Yeah. Did you go into the negotiation part?

Yeah, yeah, yeah. So we got them down to like $100 grand.

If it forecloses, they end up with nothing in a second?

No, there's still—

there's still equity there. Okay.

They still— they would have owed whatever was on the first, and then they could have resold it, and I guess, you know, captured whatever equity was in there.

But they were just trying to do a quick sale, get their money quickly.

Yeah, still there. Yeah, that's what I was kind of using. I was like, hey, you know, you're not going to be able to sell this for the $180,000. Like, no one's, you know, no one's going to want to take that on with the tenants. I just kept pushing that, and they finally were down to negotiate.

Were you able to then negotiate with the tenants?

Yeah, yep, yep. So I finally got a hold of the tenants, and I, I did the walkthrough, and Joe wanted me the day of to be like, hey, you guys got to be out. You guys, like, you guys have to get out. But like while I was like walking through, the guy was like begging me.

He's like, "You gotta be able to do something for me, man.

You gotta." And so I just left. I was like, "All right, I'll try to do something for you." And then Joe's like, "No, you need to go back and tell." Let me tell you this real story.

Yeah, yeah.

I sent them out there because we needed to look inside the property. So he went out there, knocked on the door. They were kind enough to let him in. Lauren was with him. So, um, let me know if I'm not telling—

I stayed in the car.

Oh, you stayed in the car.

Okay.

So, um, he gets there and he starts to take pictures inside. And I told him, I said, when you're there, take the cash for keys document with you and start negotiating these people out of this property. Uh, so he takes the pictures and stuff, and I'll show you some of the pictures. Takes the pictures and stuff. He goes out, they leave from there, and they call me and they go, Joe, yeah, this is what we did. I go, are they moving? You know, did you like offer cash for keys, or did you tell them, you know, like, here's, here's my process, I'm gonna give you $3,000, $5,000, whatever it is, to get you out right away. If not, then I'm going to hire an eviction attorney. The eviction attorney cost me about $1,200, so actually less expensive, but it takes a longer period of time, which is where we're at right now. I go, did you run through that story? I mean, maybe try to scare them out. You know, the sheriff is going to come over at the end of the day and, you know, evict them, get them out. No.

What?

It was hard to say that to his face.

So I told him to go back. Yeah, he went back, but unfortunately by the time he went back and knocked on the door, the guy was not going to answer the door. No, he didn't answer the door, you know. So again, he's been doing this since 2020, so this is a learning process for him.

I still have a heart, that's the problem.

And that's, that's, that's the learning process. No, you— I mean, you can have a heart, but this, you have to treat this as a business. And if you don't, you're going to end up losing money at the end of the day. So I mean, I won't actually tell you what I told him afterwards because I— and she was in the car, so she heard it, you know. But, um, Anyways, so are you done here? Tenants? Tenants are still there. We're in the process of evicting them as we speak.

Did you go through all that?

Numbers?

Numbers.

Um, real quick, so our eviction process, I know it was halted for a little while, gone away, and he's a little bit It's totally gone away except in Los Angeles.

That's why I don't do anything in Los Angeles.

Yeah.

Everywhere, everywhere else, it's back to the same. And if you listen to— I don't want to pick on real estate agents that are inexperienced, but if you listen to inexperienced people tell you that, um, you can't do it, you can. You know, you just have to know how to do it, hire the right people to do it. Anthony.

So if you get them to sign cash for keys, yes.

Oh, wait a second. You, you must be related to Alex because you think I'm gonna give them the money after they sign the contract.

Like they signed the contract?

Yes.

And then you're still having, you know, I mean, sheriff goes there?

They sign the contract, they agree to move out on a certain date. I tell them, awesome, I will come back on that date with your money, and it better be empty, and then I will pay you.

So when the eviction passes, how long does it take?

Again, I don't believe anybody that says anything, especially tenants. So I tell them, you've signed this, awesome, that's great. I'm still starting the eviction because I don't want to wait 30 days and then have to start the eviction 30 days later. So if you move out at the right time, I will call my attorney and I will stop the eviction.

Okay. So are you paying? Are you? You got to move out by this date, and you're paying $1,200 to start the eviction anyway? Yes. Okay.

So it's easy insurance money is what it is.

Yes. It's worth the money. Yes.

Because I you know there's been many times that oh yeah we're gonna move we're gonna move all right we'll sign here. They don't move. And what are you gonna do? They don't have any money anyway. You can't sue them. You know, yes.

Alex, are you a realtor?

No, no.

Oh, my question was if he is a realtor and he contacted seller for property that's listed, he's not allowed, right?

Correct. That's why you keep him. That's that's why I sick Alex on them. Okay, because he's not a real estate agent. Lauren is taking her test right now, right? You're studying for that.

Don't do that.

A couple of weeks. Oh wow, getting close. So no, we don't want Alex to get his license. Lauren can do all his stuff because she's correct ethically. Like, real estate agents are ethical? Like, oh my God, that's like news to me. But anyway, if you're an ethical agent, you're not supposed to contact the seller in a transaction. That's unethical. He can do whatever he wants. He doesn't have a license. Okay, another question? No, you good? Just kind of shaking your head.

I mean, are basically these tenants or squatters? You know, because they're not paying. For all intents and purposes, that's what they were, right?

Well, they, they were, they were there. They were, they actually did a rehab to the house. They rehabbed the kitchen and stuff like that. Not to my taste, but they did. Um, and so they, they had permission to be there. It's not like they found the place empty and they moved in. That, that's kind of the definition of squatter to me, is like, you know, let's go find an empty house and move into it.

So they had a lease agreement?

Well, yeah, they're not that sophisticated. They didn't have a lease agreement. No, but that's a question you need to ask all the time because if they do have a lease agreement, you have to honor it. So I always ask. Case study.

The deal is in San Jacinto, California. We got it through texting the lead. Um, the first trust deed was around $300K at 4%. The second was, I believe, originally at $78K, and then it had gone up to $180K, and then I got it down to $100K. And we paid the second and took over the first on a sub-2, and the ARV is about $550K.

Can you see the interest rate there?

4%.

I mean, if— what's that?

Is there like— are you paying her like a difference?

No, no, she, she said, here, you can have it. So there's, there's nothing we're paying her.

There's no, there's no like, uh, walkaway money that— no, just completely—

no, she, she wasn't living in the property. She was out Yes.

Uh, we basically like saved her credit from getting deported. So that's also like something you can use to bargain with the seller.

Yeah. Yes. Are you— what's your plan with this?

To—

are you gonna keep it on rent or flip it?

No. Yeah, we're gonna flip it.

You paid down the payment, right? Yes.

It just got filed, so it's probably going to be like another 60 days or something until They're fully out, I would say. Yeah, exactly. Then yeah, maybe another like 30 days, so 90 days out to list. Oh yeah, yeah, yeah, I don't go there. Yeah, I just have now I've just made connections to where I can have other people go out there.

Do you pay them to do that?

Sometimes, or I'll just find like a newbie that wants to learn, and so I'll just have them go, hey, I need you to go walk this duplex for me.

So it's like, okay, perfect.

Oh yeah, yeah, there's squatters' rights too, and it's, it's, it's a certain— I just dealt with that with the mobile home, and it was the seller's ex-husband who's— he wasn't on title or anything, didn't have a lease agreement. He just, he, he broke the window and started living in there, and so we We thought maybe if we just locked him out, we didn't have to go through the eviction process. But the way their laws are set up, we had to just go through the whole, the whole thing, the whole eviction process. And because he was able to, you know, claim possession.

You just have to go through the whole process.

Like, we thought maybe if we just locked the doors, And then put no trespassing, we'd be able to, you know, be fine with that. But it was— I realized they have squatter rights there, so it's—

Yeah, they do.

I mean, they'll go, they'll go to just, just about any supposed empty house, take out the lock. Yeah, right. And take out all these new appliances.

What can you, what can you do besides taking the small claims court? Take the front door off.

Yeah.

Serious?

No. That's why I like Jay Scott. Oh, I mean, like, okay, so if you have— let's say you own the house and somebody breaks in, is it about crime versus—

Yeah, yeah, yeah. Sure, but maybe if it's like a vacant house and you're not there all the time, and then they're just, no, we live here now. I don't know exactly what the stipulation is, but how much would you say you make on average? Uh, probably, yeah, somewhere around 10 to 15. I usually keep it around that just because That's how I'm able to send stuff to buyers and then know that I'm going to get a response. You know, if you try to inflate it by putting 25 or 50 in there, a lot of times it makes it too skinny of a deal to where the buyers are just, you know, they just get over it after a while.

Maybe this might be a question for Joe.

As time gets closer to getting them addicted, you guys Still, the eviction attorney basically calls you and says don't, don't accept any money from them and don't talk to them anymore so they can do their whole process. It's pretty much too late. But when I, when I brought up the cash for keys, they're just like no. And then they were planning on suing her sister So then they they were saying, oh well we're gonna get an attorney and then sue my sister. And so they're thinking that they're just gonna stay there, I think forever. Yeah, I know exactly. Yeah, they they were coming up with a bunch of stories.

Alex, how long does it take?

I think ninety ninety plus twenty-one days for foreclosure. Yeah, and then 21 days till the auction.

But it often goes far beyond that because the bank will give them more time or whatever.

Yeah, a lot of—

yeah, a lot of times, yeah, they'll work it out with them, you know, if they can.

Yeah.

Um, yeah, probably. I'm trying to think what we did. He— it's, it's kind of, it's all over the place depending on— so for them, they didn't have a lease agreement, so it was called, it was called like a tenant at will. And so they have to go and then serve them with, I think, like a 30-day to pay or quit. Um, and then after that, they'll serve them with the actual eviction lawsuit, and then they have 5 days to respond to that. And then if they respond, then they'll file for a court date, and then they'll go in, and then basically you get the judgment at that point. And then depending on what the judge, you know, says, like, okay, give them— if you give them 30 days, then, you know, then they'll be out. Then Or I've seen it to where they're like, hey, can you give them 60 days depending on, you know, what it is. So it's kind of all over the place. Exactly. Yeah, it's just holding costs.

Yeah, exactly.

Yeah. Yeah, totally, totally. Yeah, so that's why you know knowing the exact numbers and all that is analyzing. Yeah, the one I got in Florida was the eviction had already gone to like the last second, and so I took it over. Then they were like, oh, three days they're gonna have the tenant out. So that worked out, Marty. I don't know this answer.

Um, I don't know the answer. There's a house in my neighborhood that's under foreclosure for a while now.

Yeah. Oh wow.

Yeah, yeah, I know.

Yeah, I've seen it. I've seen it go like since '28. I've seen some that were in default since 2018.

Oh, anyone else?

I'm not exactly sure how they keep pushing it, but they can keep getting extensions, you know, from the lenders.

Yeah, yeah, they could work it out. Yeah, because you know you're not trying to work it out.

If what they're about to go to auction, you're going to want to get you know you're going to want to get an extension. That's what we said. Like hey, you can stop the auction a lot of times if you have a purchase agreement in hand and you say hey I. I'm going to purchase this property. We just need an extra 30 days to close on the property. So they'll they'll say okay, or maybe not.

Like like this, this is this would be something to let's say. This is what happens. Yeah. The bank goes to the system.

Right.

They'll say, hey, why don't we give you another 30 days to try to work this out? They keep saying. Would you be in communication with your son and say, you know, you just want to keep going? Like, you're kind of educating that person to talk to me because you're not talking to those.

No, I, I did. I got on a 3-way call with her.

Not the primary.

No, I did with the primary as well. Yeah, yeah, yeah, yeah. Basically she said, hey, Alex is going to be handling This account, so give him access to everything. And then at that point, I just found and figured out because she there was a arrears. I think it was around like what it was like nineteen grand.

And they were okay with you taking it over?

I didn't mention that part.

Oh, just give me access.

Yeah, yeah.

Just give me access. Just as like. Yeah, power of attorney or something like that.

Okay.

They honestly don't ask any questions as long as you're getting paid.

Okay. Um, so you as an alter, you're coming— usually it's a contract for 30 days, so you got 30 days.

Exactly. Yeah. So what I would— if I was going to pitch it to you as a buyer, I would, I would call it the entry fee. So let's say, hey, your entry fee is the arrears. How much is owed back? So let's say it's like nine grand. Yeah, bring it current. How much is the rehab? Let's say it's another like ten grand, and then my fee is ten grand, and then closing cost is ten grand. So your entry fee is going to be forty grand to get into this deal. That includes everything.

And then that's.

Yeah, exactly.

Exactly.

Alex, this is kind of an obscure question, but if you were to purchase a subject-to property from— there's one guy I'm working with, he's a widower, and so it's just his house. So if I set it up that I started paying the mortgage, I'm paying him, if he passes away, what happens to that situation?

Um, I would just keep paying it, um, but I'm not quite sure. I don't know if they get— if it's, uh, due-on-sale clause or anything gets, gets tripped at that point, but I don't, I don't think so.

Okay.

Joe, what do you do about that? I'm sorry, I didn't hear. Um, if the, the, the person passes away, That has the mortgage in their name.

Again, nobody's going to find out if you're making your mortgage.

That's why.

Get a death notice. The bank will get a death notice, right?

They may.

They will figure it out. Person is still paying his bill.

Yeah.

Yeah. Yeah.

Yeah.

Yeah. Elvis is still paying something.

Yeah.

Yeah, is Elvis still the owner of that estate? Doesn't matter. That estate is still paying Elvis's bill. Is this from your iPhone? Yeah, there's your problem. They gave you an iPhone high definition data.

That's what I was confused.

Wait, do you have these on your iPhone right now?

Then just can you mirror this?

Yeah, mirror your phone.

Sam, mirror the phone.

I don't. Yeah, there's probably an online order too.

Yeah, right.

Through drop-offs. Good idea. All your family secrets. Yeah.

Oh, there we go.

Oh, you got it.

Nice. Drop. Oh, that's good.

Okay, yeah, we got it. Thank you, Rami.

We got it.

Yay!

Rami always fixes things.

Okay, go ahead, start talking.

Okay, so as you can see, they, they were, they were receiving money because they were running it as a, you know, sober living They just weren't paying the mortgage with it. So as you can see, and they were, they were all happy to say like, we did all this stuff, you know, we, we paved the side yard and, and we got this RV ramp in here. They put in new gates.

An RV.

RV.

And a Corvette.

Corvette, a new Harley. Yeah, a bunch of stuff. Um, uh, yeah, it has a nice backyard. This is, this is a pen for an animal, so I'm just gonna leave it like that.

Is that a real palm tree?

Yes, it's a palapa, I believe it's called.

Oh my gosh, palapa!

Nice spot.

Yeah, it's a, it's a, yeah, it's decent. I mean, it's, um, they painted it a weird color, but Uh, yeah, it's got a nice, nice backyard. Just needs to be cleaned out, you know. It's not like—

That's the remodeled kitchen that they did. It's not bad. But you'll see the colors that they chose for inside the house.

That's the question.

Really nice colors. Okay, come on.

Oh, it's the high-definition files.

I know.

You can have him turn that off for the next time he has to show something.

Just regular Android, no, no def. So that's the living room.

Yeah, right.

Yeah, exactly.

And you know, all the other houses on the block are just the typical, you know, tan on tan on tan. So I'm guessing maybe that's what we'll do.

Pretty much the whole house is like that, you know, lots of furniture in it, lots of different colors.

Did they take the furniture or leave it?

It's still there. They're still there.

Yeah.

This is a story in progress.

Yes, it is.

To be continued in the next episode. Yeah. You know, if they don't leave, you guys could just move in. Yeah, exactly. That's how we—

that's how we ensured our renters got help. We just moved in and moved out.

Oh, there you go. You do better. Start carrying boxes in. We did. We got extra roommates. My wife called ahead of time, we're going to start putting things in the back. They were gone. Maybe that stings.

Alex, how did you talk him into letting you come in the house to take pictures?

I told him we could possibly work something out, so he wasn't letting anybody in there. I was like, hey, if you let me take pictures, I might be able to do something. And so that's, that's part of the reason why he was like, hey, if you can, if you can do anything There we go.

Yeah, this is a picture of the garage.

Okay, do we, do we know what's there?

That's a real pig.

Is it real?

Oh yeah, okay. That's a real pig.

That's Full-size pig.

And then Alex says, well, what if they leave it? And I go, we can have a barbecue and a party. And then Lauren, she's like an animal person, and she says, no, we can't do that. And I go, why not? We can. Yes, barbecue. We went— Alex and I went to look at some property a few months ago or whatever, and this place was major distress. We come out and there's a distressed cat outside. I mean, this poor thing was like dying. And so Alex took some pictures, sent it to Lauren. She sent it to his mother. No, no, no, no, no, no, no.

My mom saw it on his Instagram.

Oh yeah, her mom saw it on the Instagram. They went over there and got the cat, rescued the cat. The cat's been adopted by a Coto de Caza family, is living in a Coto de Caza house. The picture that Lauren sent me was a cat on a boat. So it went from a bad life to a good life because of her. Pig barbecue, and you're all invited. Yeah, uh, that's it. Any other questions?

It was all for the pig photo.

Yes, any questions? Any questions? Okay, so if you want to do this, you have some deals, you want to learn more, please reach out. Uh, let me know if you find a deal. You want to partner up with us, it's fine. We can do that. You know, it just depends on what that looks like at the end of the day. So just let me know. Any other questions? No other questions? No? Okay. So you're free to network at this point. I appreciate you all coming out. If there's any food left, please take it.

Thank you.

Um, again, if not, thank you very much for coming out.

I appreciate it.

Thank you.