He Made a Mountain Out of a Mole Hill...

Many years ago there was a guy I knew very well that started out in real estate investing with no real money to his name. He earned a small paycheck from his employment in a non-profit organization, but that barely provided the basics.

What set this poor man apart from other poor men, was that he had a dream of financial independence and wasn’t going to take "no" for an answer.

He was old school. He wasn’t a fast-buck operator. He didn’t settle for a string of short term gains from quick flips, and pant like a rodent endlessly rotating his Hamster wheel looking for the next quick profit deal like many insist is only possible to do today.

Instead he kept his nose to the grinding stone looking for solid, long term deals that would eventually provide for a comfortable retirement and time for his family in the meantime. These were just “mole hill” deals. Nothing to get excited about.

As careful and thoughtful as he was, his first "mole hill" deal resulted in a catastrophic loss. After literally saving up for several years for a down payment on his first investment property, the major employer in the area closed its doors and fired thousands of people.

This tsunami of unemployment decimated the rental market as hundreds of landlords lost their tenants and homes became vacant, including my friend’s rental house. Many had to give up. My friend also lost his house, along with all his cash he'd saved and invested.

However, another difference emerged in this man, and that was that he believed that he could overcome this setback and achieve his dream of financial independence ...somehow.

Starting from scratch, he began saving money again, slowly, in order to invest again. Within months, he took another risk and began offering his tiny amounts of money to sellers who would agree to finance him. He endured much rejection. This included negative attitudes and opinions about his goals and ambition from those who knew him and what he'd previously "accomplished."

People also scoffed that such a poor man could make any progress in this market, and that real estate investing was a dead-end, or a fool’s folly. Meanwhile, it wasn’t long before he found a seller, or two, who wanted his money more than their property. So, with that little bit of success, he began looking for ways to come up with more down payment money to give to more sellers.

He decided to buy and sell cars he found cheap. He worked swap meets and fairs selling car accessories. His wife worked a part time job for extra cash. Of course, the important thing to remember was that he maintained a vision of financial independence that kept him motivated when he was tempted to get discouraged.

None of his deals was anything to write home about. They were all small potato deals, or “mole hill” deals.

However, after plodding away unceremoniously investing in deals that anyone would consider small time, he emerged the owner of over two hundred income producing properties in about ten years.

Scoffing turned into admiration and amazement as onlookers and former naysayers proclaimed him to be a genius, and that everything he touched turn to gold. Otherwise, how could such a modest man accomplish so much with so little, they thought.

My friend pushed all those mole hill deals together to create a mountain of wealth. In fact those mole hills together represented over fifteen million dollars in equity. Those small potato deals turned into a mound of steaming mashed potatoes with a slathered helping of gravy on top.

So the moral here is to move forward how you can, and remember that mole hills become mountains, if you get enough of them together, and there’s no stopping you if you are willing to start where you can, and continue without stopping ...and ignore those who can’t imagine your success.

If you are anxious and willing to make a mountain out of mole hills, but you need a way to get gobs of down payment money for profitable, long term deals...or you just want a way to get cash... I have a proven way to scrape up that cash, and would feel privileged to help you.

Click here

Shark Bait Marketing | Sub2 Deals

LANGUAGE WARNING

Only For Shark Marketers...

My "Five Point Solution" to marketing for profit...

I can't quote Frank Kern here, because this is a "G" rated blog. However, I'm heading into "R" territory for the purpose of clarity and emphasis of relating what one of the most respected marketers told me yesterday.

Meantime, what Frank taught forced me to rethink my marketing. Before I get to that, there are four marketing keys that are missing from 90% of the marketing I'm seeing. I am guilty of missing a couple of them myself, which makes this post important to share. Yes, my blog has content!

Very quickly the four keys are...

1. Headline must easily and immediately expose a "need" in the prospect.
2. The offer must easily and most likely appeal to a certain prospect.
3. The prospect must easily and effortlessly take advantage of the offer.
4. The prospect must benefit from what we have to offer, opposed to other offers. Easy, huh?

Well, if we can translate those four keys into our advertising of houses, apartments, or whatever, then we'll almost own our market. I say "almost," because Frank got me thinking about this one fundamental marketing question to ask regarding my message to market advertising.

That is, to ask, "What is my prospect's biggest, 'Bad Ass Problem'?" (B.A.P.) I told ya Frank has an "R" rated style. The answer to that question is foundational and fundamental to making money. All profits flow from the quality of that answer.

Meantime, my prospective buyer's B.A.P. is not being able to buy their dream home with conventional financing. So, my "bad ass solution" is offering financing on their dream home. Now, as you'll see in a moment, there has to be a distinction between what I offer and what someone else might. What is that?

Well, I don't do credit checks for one thing. And for another, I don't qualify them. If they've got the cash, and can fog a mirror, they qualify. Simple, yes.

I'm out of room here, so let me summarize the formula I'm now following (hopefully they're self-explanatory).

Five Point Formula...

1. Determine the prospect's biggest need.
2. Headline the need.
3. Appeal to a specific prospect with that need.
4. Offer an easy solution to that specific prospect.
5. Highlight the advantage of your solution over every other.

Much more can be said, but that'll get you thinking.

Uber Junk Mail Copy

Recently I read a long report on how to do direct mail correctly. The author explained that bulk mailers will "do anything" to get you to open their mail piece.

As a result, he informed us that we should do the same thing. I disagreed. If everyone else is doing the same thing, how do we stick out from the crowd. Well, we don't.

If everyone is mailing "yellow letters" to pre-foreclosures in our farm area, does it makes sense to mail yet "another yellow letter" to the same prospect? Well...? If so, what sticks out here? We're just another yellow letter.

Imagine, however, getting "yet another letter" from Publishers Clearinghouse... Do we open those? Do we? My grandma does. Why...?

Because hope springs eternal, and the envelopes are gaudy, messy, urgent sounding, and unique.

Just being gaudy, or messy, or just urgent wouldn't do much in my opinion. All my other junk mail fits that description. However, "uniquely" gaudy, messy and urgent sounding is what separates the sheep from the goats, as far as I'm concerned.

Meantime, again, Publishers Clearinghouse does a fantastic job of overcoming the din among fellow junk mailers by being uniquely gaudy, messy and urgent.

So the question remains... "Why does Publishers Clearinghouse" have to go to so much effort at standing above the crowd?"

The answer is that they really are sending "junk mail" and it looks like it. So, they've got a deforming handicap, as it were. Something must be done to overcome or disguise that problem. What might this be exactly ...and why again?

Let's take a woman who needs to take attention away from her gigantic nose.

What might she do to "hide" her nostril-laden features? She might wear big glasses. If that isn't enough to do the job, she might wear huge glasses with all sorts of distracting "jewels" glued on them. Think Dame Edna. Now, of course wearing huge, jewel encrusted glasses is not to flaunt wealth... No, it distracts attention from her anteater features.

It's the same with Publishers Clearinghouse bulk-mailish appearance. They need a way to keep your mind's eye off the fact that there's NOTHING inside that doesn't require a purchase, or worse ...there's nothing we actually want.

So, how's this fit into our direct mail efforts, you might ask.

I say, don't mail what everyone else is. Stick out. Be organic. Don't mail Click2Mail for example, or use any other "bulk mailer." Why? Because we'll have to work overtime, overcoming the "bulk mail" look that cause most recipients to file our mail in the trash.

So, what actually works, you ask. I say, "whatever that is not being used by the majority of competitors. That's what works." I'll add, "Be unique. If everyone is mailing handwritten "birthday cards" to prospects, then it's time to send "checks" in the mail."

If everyone is doing "checks," then we send DVD-size mail. If everyone is sending DVD-sized mail, then maybe it's time to send Zebra-printed postcards. If the zebra thing is getting over-sent, we try pictures of ugly, run down houses with a housewife standing on the front lawn in curlers with a caption, "If you're still doing open houses ...call me."

Of course this doesn't address having high quality mailing lists in the first place, regardless of the mail piece. However, that's the other secret of successful direct response marketing; having a good list.

If you would like to discover a way to make money without a job or credit, check out the free video presentation below...

No Job! No Credit! No Problem!

"No Down" Sub2 Deals

Way back in the 1980’s Robert Allen told a group of us that no down deals are every where, but that’s just the beginning. He said, don’t rely solely on no down deals after you’ve got some money. Cash lubricates would be cash cows that are a bit sticky to glue together. So, limiting ourselves to no down deals, will keep us from making LOTS more money off deals that actually take some money to glue together.

I’ve never forgotten that.

Meantime, I’ve always loved learning about ‘no down payment’ financing techniques. And when I discovered the “Holy Grail” of “no down” financing strategies a few years back, I always had options available to me that I never realized were possible before.

Sub2 has been the holy grail for most of my friends, too, who’ve discovered how powerful it is. If we can make $10,000 in four days by flipping a house we only paid twenty dollars to control, imagine our giddiness in pocketing fifty thousand in cash on a nice home ...and only giving the seller just five or six thousand in “play money” for the privilege.

Going back to Robert Allen for a sec ...limiting ourselves to “no down” deals may be necessary for us at the beginning, but after getting some cash in our pockets, we can start negotiating really juicy deals for ourselves that nobody else would dream was possible.

Speaking of dream deals, do you realize that owners of expensive homes are more likely to bail on a house if they have half an excuse... than owners of “bread and butter” homes...? Yes, these upper end sellers know how make money, but like anyone might, get temporarily strapped. These are the same sellers that often believe that they can make it again, and are willing to do what’s necessary today to solve an immediate cash flow problem. And that includes giving us their deed in return for getting out of a loan payment.

Five or six thousand in moving money, debt relief, pain relief, and a chance to regroup is often the right recipe for pocketing what three agents combined could make in a year.

Think outside the box. If “no down” Sub2 deals are fantastically profitable,. imagine what “small down” Sub2 deals can do to grease the skids to wealth...!

If you would like to learn how to do these fast money deals click here: Fast Sub2 Deals

"Why Sub2 Investors Give Up..."

The real estate business is always making room for those who are not afraid to work. The fact is the harder one "works" in real estate, the more one learns, the more distinctions one makes, and eventually ...the more money one makes. It's just the law.

Of course, we see the pros make this business look like a walk in the park. And all the gurus tell us that if we just follow their prescription that we'll be just like the big boys in no time.

Well, that's true that gurus do offer meaningful short cuts and systems that help us get traction very fast. However, just because somebody has the gold mine, doesn't mean they're committed to mining it.

I've witnessed students buy my Sub2 course, which is specifically geared to bypass as much wheel-spinning and frustration as possible, and then do practically nothing with it. Here they've got a tool that could help them buy their own dream house, or dream car, and instead they put the tool on the shelf "until they can get around to using it." How long do they want to wait to live prosperously, I ask myself.

Other students, have turned terrible situations around for themselves. They didn't wait around for the stars to line up, to get cracking.

Last month a student contacted me about his investing objectives. He wanted some help getting organized and putting a system together to buy some income property. When I found out what his deadline was, I was practically gulping air, it was so ambitious.

I'm not sure whether it was out of desperation, vision, or what, but his goal was short-fused. It's inspiring an fun to help someone reach an important, if not difficult goal. So, what was the deadline? March 1. So we got cracking! He took the steps necessary to familiarize himself with data sheets, and started making calls on properties. Now he's advertising for sellers and I am excited about helping him reach this goal...

At the same time, this was happening, I had just about had it listening to other newbies complain, "there's no deals," "I can't find anything to buy," "agents are jerks," "sellers want too much," and blahdy blah, and "I want to give up", because they can't find low hanging fruit like the gurus all promised will happen if they fork over $5,000.00 for their boot camp. Of course I don't promise "low hanging fruit," but I do promise the ability to recognize it! There's a difference.

Well, "Reality Knocking! Hello!" It's takes effort to do real estate profitably. That's what my new student is learning, too. I told him that he needed to complete 50 analysis sheets on 50 different properties so that he could learn to instantly recognize a deal. Slowly and painstaking we plowed through a couple income property data sheets so he could get acquainted with the process (and I relearned some important assumptions at the same time). Did you know that sellers will lie about their numbers to gather interest? Anywhoo...

Well, to really drive this point home about the work involved in finding deals, I received a call from a car salesman who wanted to lease purchase a house for himself. I told him that I had nothing in his area, but I would help him find something that he could negotiate on his own (after all he's a professional negotiator). I told him that he would have to put in some hours on the phone, and pointed him to the most likely prospects.

The next day he called me to let me know he found four potential deals ....after about 8 hours of cold calling. After he told me the terms he was throwing out, I could only sit in awe at what the sellers said they were interested in doing with this guy. Of course the next thing out of his mouth was that he wanted to bird dog for me. Of course I said, "nah, I work my own deals, thanks, but no thanks." NOT! Of course, I took him up on his offer as soon as I could get the word "Fantastic!" out of my mouth.

Well, I've got a student digging for income property gems and learning to recognize deals on the spot, and a used car salesman looking in just the right places for deals for himself (and me) and neither of them are complaining about the hard work involved so far.

So, forget about finding the low hanging fruit, and start digging for buried treasure in your own gold mine, and dig out the juicy deals that nobody else knows exists, like my students and bird dogs are willing to do. Then in no time, you'll reach your goals and somebody will assume it's just as easy as the gurus say it is!

"Mortgage Assignments vs Sub2"

For the luv of gawd do not do fall for this "mortgage assignment" fad. Traditional Sub2 deals are fine, but assigning a mortgage (transferring title from a seller to a buyer who cannot get a loan, and collecting a fee off the deal, and walking away, is the stupidest, most short-sighted strategy ever.

Imagine with me...(I'm sure the MA gurus have a quick, if not torturous answer for my objections)... Say, we transfer title to a buyer who cannot, for a variety of reasons qualify for a new loan, and perhaps he puts up as little a 3% of the sale price as a "down payment" on an underwater property... Of course this is a recipe for default, if not severe credit damage the seller, and an abject case for a lawsuit.

Consider a default on a loan by the original borrower... That borrower often squats in his home until the bank either pays him to leave, or the bank agrees to a short sale offer, or the bank modifies his payments, etc.

Either way, the original borrower enjoys free rent (especially since the bank won't even talk with him UNTIL he stops making payments.

Well, what in gawd's name does a defaulted "mortgage assignment" buyer have to lose by sitting in that same house rent free? His credit isn't on the line, and even when the bank forecloses, the foreclosure doesn't show up on HIS credit ...and he can't be evicted until after a trustees sale, which might take a year or two...

So, what's the downside for the buyer if he defaults and then sits in the house rent free for months? Losing a couple thousand in down payment money? Hey, the more he put up, the more incentive he has to be a squatter! After all, he saving many potential thousands of dollars living payment free regardless of what he paid up front.

Bottom line the original borrower's credit is getting screwed six ways from Sunday. Nice. By contrast, in a traditional "subject to" transaction, the buyers (us) stay with the transaction until our end/user buyer refinances the loan(s), or bails on us.

Either way, our buyers DO NOT get the deed before paying us off first.

At the same time, we protect the original seller/borrower from loss and damage by making sure the loan payment is made regardless of what our end/user buyer is doing. Frankly, we make more money when our Sub2 buyer bails on us, because we can resell the house for another down payment! This is a professional (and profitable) service we provide to the original seller. We've built a back-end profit into the deal.

With a mortgage assignment, again, the person putting the seller and buyer together (us) walks away once the fees are collected, and the deal is consummated. That's all fine and dandy as long as our buyer doesn't default and/or get stupid by squatting in the property. In that case, nobody is assisting the buyer in getting financing either. He's on his own.

Sellers rarely have the expertise to assist a buyer in getting financing. That's why sellers rely on real estate agents most of the time to handle this detail. In this deal, we have no incentive to help any further. We've got ours!

Meanwhile, with a Mortgage Assignment, if the buyer either decides he's tired of the property, or can't get a loan (isn't being assisted by anyone like us in getting a loan), and/or has a fight with the seller, and/or decides to screw the seller by not making any more payments ...and finally, just to add insult to injury does NOT move out... what recourse does the seller have?

Well, the seller just evicts the "mortgage assignment" buyer for not paying right? Uh, no. The MA buyer is the TITLE HOLDER. The only entity that has the right to evict a defaulted MA borrower/owner is the lender/lien holder ...and that right only comes after a trustee sale.

So the original borrower is up a creek without a paddle. The original borrower's credit is being screwed AND he can't evict the MA deadbeat from the house.

On the other hand, if we were still in the Sub2 deal, like we should have been, we would be protecting the seller from a Sub2 deadbeat buyer by NOT transferring or assigning the DEED to our buyer before he paid us off. Also, we reserved funds to keep the loan current until we got a new buyer in place.

The MA gurus are saying that escrowing a Grant Deed back to the seller is the insurance policy against a buyer's default. That bogus, if not tenuous alternative, touted by the MA gurus, is ILLEGAL to perform in several states that require judicial foreclosures if ever, and whenever there is a transfer of equitable interest.

This includes Contract For Deeds (in CA). Well, if we have a buyer who actually HAS the title in his name, there's nothing short of a judicial foreclosure that will legally force the MA buyer to abandon the property despite being in default.

So, if we want to make money on pretty, low/no equity homes, we stay in the deals, and DO NOT transfer title to our credit challenged buyers, while at the same time protect the original seller from damage and loss.

Otherwise, we better make sure we do our MA deals behind a corporate entity; plan to be sued and hide our assets, because we WILL be sued by the seller who gets his credit trashed by a MA buyer who defaults and won't pay, and ...won't move.

Mortgage Assignments are the dumbest strategy to hit the creative real estate market in recent history.

Why not just shoot yourself in the mouth right now and save yourself the grief of doing 3 to 5 in Leavenworth after your seller gets a judgment against you for fraud.

Wait! You say? Is a mortgage assignment fraudulent? No.

However, explain to a judge how you didn't take advantage of an unsophisticated seller by "talking" him into transferring his deed to a credit challenged buyer, and collecting a HUGE fee at the seller's expense and ignorance, and later damaged his credit, inhibited his borrowing power, upended his reputation, and thwarted his earning ability.

That'll be interesting testimony.

Stay away from mortgage assigning.

Free Corvette With Purchase ( Sub2 Deal )

Finding treasure is fun! Finding antique bottles lying around in an abandoned house is a joy for me.

My friend Chip and I used to scrounge in abandoned railway stations and old warehouses in Kansas City and find the most fun stuff ever. We scavenged the old dispatcher’s office that had been empty since the 1970’s. I found a hand-made note paper roller that was nailed loosely to the wall. I still have it as a reminder of good times spent scavenging with my friend Chip.

Speaking of Chip, he led me to this secluded little dump outside Olathe, Kansas where we found a rotted box of old, colored glass insulators. I was in heaven. Chip could care less. I still have those insulators. They’re pretty to me. Violet, blue, aqua, pink, brown and white. It’s like Christmas looking at those things. I imagine the history each of those pieces of early artwork disguised as electrical hardware.

The reason I mention all this is that finding treasure is the spice of life. Everyone loves to do it. It’s addictive behavior. Why else would people scour beaches with metal detectors for necklaces and coins...on beaches!!!

Well, Barney Zick wrote once that leaving treasures behind in homes we want to sell will compel buyers subconsciously to buy our houses. They may not even have liked our house the best, but the thought of getting something for free just makes some buyers irrational buyers. We’re talking about leaving pianos, sewing machines, bicycles, rockers and what not. Buyers love free stuff.

My friend John told me once that a week before Christmas one year he had sold three or four houses, but the last one was not selling. So he went to his used car dealer friend and asked if he had any “sexy cars” on the lot. His friend had an old Corvette available. So John bought the Corvette, put it in the garage of the house that wasn’t selling, raised the down payment by a little more than the cost of the car, and had the house sold in two days. He advertised “Free Corvette With Purchase of Home.”

John says he likes to include freebies with his house to make them more attractive. I have always loved this concept. I’ve left antique bicycles and appliances behind before. I’ve also left bedroom sets. It really helps sell a house, when the buyer believes he’s getting something for free.

So, think about what you can “accidentally” leave behind in the next house you try to sell, and see if your days on market are shortened up substantially.

"Why Sub2 Investors Give Up..."

The real estate business is always making room for those who are not afraid to work. The fact is the harder one "works" in real estate, the more one learns, the more distinctions one makes, and eventually ...the more money one makes. It's just the law.

Of course, we see the pros make this business look like a walk in the park. And all the gurus tell us that if we just follow their prescription that we'll be just like the big boys in no time. Well, that's true that gurus do offer meaningful short cuts and systems that help us get traction very fast. However, just because somebody has the gold mine, doesn't mean they're committed to mining it.

I've witnessed students buy my Sub2 course, which is specifically geared to bypass as much wheel-spinning and frustration as possible, and then do practically nothing with it. Here they've got a tool that could help them buy their own dream house, or dream car, and instead they put the tool on the shelf "until they can get around to using it." How long do they want to wait to live prosperously, I ask myself.

Other students, have turned terrible situations around for themselves. They didn't wait around for the stars to line up, to get cracking.

Last month a student contacted me about his investing objectives. He wanted some help getting organized and putting a system together to buy some income property. When I found out what his deadline was, I was practically gulping air, it was so ambitious.

I'm not sure whether it was out of desperation, vision, or what, but his goal was short-fused. It's inspiring an fun to help someone reach an important, if not difficult goal. So, what was the deadline? March 1. So we got cracking! He took the steps necessary to familiarize himself with data sheets, and started making calls on properties. Now he's advertising for sellers and I am excited about helping him reach this goal...

At the same time, this was happening, I had just about had it listening to other newbies complain, "there's no deals," "I can't find anything to buy," "agents are jerks," "sellers want too much," and blahdy blah, and "I want to give up", because they can't find low hanging fruit like the gurus all promised will happen if they fork over $5,000.00 for their boot camp. Of course I don't promise "low hanging fruit," but I do promise the ability to recognize it! There's a difference.

Well, "Reality Knocking! Hello!" It's takes effort to do real estate profitably. That's what my new student is learning, too. I told him that he needed to complete 50 analysis sheets on 50 different properties so that he could learn to instantly recognize a deal. Slowly and painstaking we plowed through a couple income property data sheets so he could get acquainted with the process (and I relearned some important assumptions at the same time). Did you know that sellers will lie about their numbers to gather interest? Anywhoo...

Well, to really drive this point home about the work involved in finding deals, I received a call from a car salesman who wanted to lease purchase a house for himself. I told him that I had nothing in his area, but I would help him find something that he could negotiate on his own (after all he's a professional negotiator). I told him that he would have to put in some hours on the phone, and pointed him to the most likely prospects.

The next day he called me to let me know he found four potential deals ....after about 8 hours of cold calling. After he told me the terms he was throwing out, I could only sit in awe at what the sellers said they were interested in doing with this guy. Of course the next thing out of his mouth was that he wanted to bird dog for me. Of course I said, "nah, I work my own deals, thanks, but no thanks." NOT! Of course, I took him up on his offer as soon as I could get the word "Fantastic!" out of my mouth.

Well, I've got a student digging for income property gems and learning to recognize deals on the spot, and a used car salesman looking in just the right places for deals for himself (and me) and neither of them are complaining about the hard work involved so far.

So, forget about finding the low hanging fruit, and start digging for buried treasure in your own gold mine, and dig out the juicy deals that nobody else knows exists, like my students and bird dogs are willing to do. Then in no time, you'll reach your goals and somebody will assume it's just as easy as the gurus say it is!

The Big Sub2 Stick...

It has occurred to me that too many creative investors really aren't that "creative" at all, in the usual sense.

Once, creative investors defined themselves by looking beyond the obvious (thus creative) to find profitable ways to make money in real estate that traditional (non-creative) investors might look passed.

Subsequently, the creative investor found ways to make even more money during the holding time, that the average investor wouldn't consider. Let's look at "seller financing" as an exit strategy. "Ugh!, says the traditional investor, whose only exit strategy is buy/hold/sell for cash.

Yes, seller financing is considered the red-headed step-child of exit strategies for traditional investors. Nobody wants to look at it, or claim it as their own, because to the traditional wholesaler, flipper, or merchandiser, this represents a failure to perform...

That is, the objective of the traditional investor/flipper is to buy for cash and immediately sell higher for cash. So having to finance a sale, is like saying, “Mommy, I did a boo-boo, please spank me...” Okay, maybe that’s just me... :)

The old way of flipping works fine until there's a hiccup in financing, appraisals, or inspections that make the property unsellable for the "right price". Then "Plan B" goes into play...or, "Plan C'... or, "Plan D'..., or Oh, crap, not the "Last Resort Plan?" Yes, seller financing. This exit strategy just represents a "muck up" if you will of the original plan to “get out fast for cash.”

For the Sub2 investor whom isn't bound to traditional liquidation methods, "seller financing" is "Plan A", not the “Oh, crap!” plan." Before I go further, one of the biggest sticking points about the “Oh, crap!” plan of seller financing is the risk of default by a buyer.

The average investor fears the "liar loan squat." That is, the buyer stops paying and won't move, and forces the investor to cover the payments on his own investment situation. This is what the amateurs sweat, twitch over, and dread and dread, as if it were a diagnosis of terminal cancer, or permanent head injury (just to make it vivid).

Yawn...this only happens to amateurs who don’t know how to limit risk with the “Big Stick.”

For the professional Sub2 flipper, “liar loan squatters” are some faint anecdotal thing that happens to others. At the same time, those who inform themselves on how to limit the risk using the “Big Stick” make consistent, huge money in less time than the average investor does.

Meantime, the profits on a Sub2 deal, that appear at face-value to hover between "average and 'don't do it'," are substantial. And of course, the profits can be unbelievable on Sub2 deals that hover between "dreamy and heavenly".

However, limiting risk, is only the beginning of the profits. The juicy profits are in these five words: “Down Payments. Rinse And Repeat.” That just means knowing how to find buyers with down payments, and when/if a default occurs, elegantly moving in another buyer who can "hopefully pay", but nonetheless has ANOTHER down payment. Yay, for repeat seller financing and multiple down payments...!

Frankly, I'm only talking about seller financing of marketable homes that "everybody" would like to own...not the 45-year old, stucco boxes with one-car garages, gravel roofs, and wall heaters (I've owned many of those). Who wants to buy one of those and put up a bunch of money...? Nobody. That's why the government invented low-income, no down, HUD loans, so buyers with no taste (j/k) can buy these unmarketable, ugly, obsolete hovels that nobody wants (after making sellers do all sorts of retrogrades to make them "habitable" and financeable).

So, what is the “Big Stick?” you might ask...? Hmmm?

You can find the "Big Stick" in my Sub2 investing course I call... ( Click Here )

"Honey, I Found A Sub2 Sucker...!"

I've been offered some bizarre sub2 deals. One lady had several rentals to get rid of that she was ready to walk away from. I didn't know why she would walk away, but they were all over-financed by a large margin.

Sometimes, upside down deals can be worth "messing" with, if there's no time limit to refinance the loans, and the existing financing is stable. That is, the loans are not "neg ams" negative amortizations, interest only, or adjustable loans with high interest caps, and the like.

When the principal keeps going up, and the income doesn't...trouble happens. When the payment goes up and the value doesn't...trouble also happens. Anytime, the payment structure is unpredictable or likely to get out of control...trouble happens...for those that, without thinking things out, do these deals against all better judgment.

Well, when I found out what her payments were, I thought, "This was either the worst terms ever, or the best ones ever. She was $200,000 underwater (over-leveraged) with her loans, but her rents covered her payments.

Well, after talking with her I discovered the most amazing thing... And it wasn't what I expected...

She had pulled a quarter million out of these properties two years previous, then the market tanked, and finally she was left with a quarter million in the bank, and upside down by the same amount. Of course, I'm kidding... She didn't have squat in the bank...left. Like many amateur investors who accidentally "hit a jackpot" in real estate timing, she blew the money on...whatever...!

Okay, whats this have to do with "a Sub2 sucker deal"...?

Well, despite the common misconception, not every seller writes with crayons that gets themselves in a crack with real estate and is willing to do a Sub2 deal with us. Some sellers are quite sophisticated. Meantime, it's up to us to figure out which deals are worth a hoot, and which ones just make us "look" like we write with crayons in the aftermath of a deal gone terribly wrong.

That all said, let's take a look at a good deal and then compare with some bad ones...
Good deal...

• Seller has one or two loans that total 90% loan-to-value, or less (or 10% equity remaining, or more).
• Seller needs out of the payments/situation "yesterday"
• Seller has "gone through" at least one failed escrow and perhaps two real estate agents.
• Seller has a fully amortized, fixed rate, or reasonably-capped ARM loan, with no balloon payments coming due.
• Seller needs to salvage/maintain/improve his credit.
• Seller needs/wants to qualify to buy a cheaper/different home.

When the stars line up, we've got a good deal. Now, here's the anatomy of a "bad" deal from a "good" prospect.

• Seller has one or two loans that total over 100% loan-to-value, or more (or no equity remaining).
• Seller needs out of the payments/situation "yesterday" and can only short sale, default, or modify the financing .... and screw his credit...
  
• Seller can't list his house conventionally, because he'll have to pay out of pocket for the closing and real estate costs..
• Seller has a fully amortized ARM loan with higher interest payments, high cap on the interest and a balloon payment due (all of which will torpedo this deal).
• Seller needs to salvage/maintain/improve his credit (He's screwed).
  
• Seller needs/wants to qualify to buy a cheaper/different home ( His option used to be to, "buy and bail," until last year, when banks got wind of this tactic ). That is, the seller maintains his credit, buys another house, cheap, and then lets his old house "go back to the bank" (maybe the same one that made him the new loan...! heheheh.

To recap: Good deals:

1. Motivated seller who writes with crayons (just kidding) and has burned through a couple agents and failed escrows.
   
2. Low interest rate loans with no balloons or adjustments.
3. At least 10% equity.
4. Wants to buy another house immediately.
   

Bad deals:

1. Motivates seller who writes with crayons (just kidding, again!)
2. Teaser rates, high rates, negative amortizations, high interest caps, early payoff dates.
3. No equity, or upside down.
4. Dreams of buying another house sometime before the "rapture"
   

3 Steps To Sub2 Success...!

I responded to an email last night that I think you should read...

A newbie investor wanted advice on how to get into real estate investing...

I receive requests like this every week and a half.

Frankly, I used to lap up the opportunities, until I realized that the ones wanting my help didn't really know what they wanted. I discovered that unless I had a very clear, precise idea of where they wanted to go, it was a case of the blind leading the blind. No thanks. What really frosted my cake, was that none would follow my advice anyway, since they really weren't committed to their blind journey in the first place.

So, I decided I was done with that. Now, when anyone wants help, I have them do a little exercise (not little) before I waste time. Here's what I said to my future "mentee" last evening...

"John [name changed],

Size yourself up...
Evaluate yourself honestly and frankly...and ask...

• What are my skills?
• What are my strengths?
• What are my weaknesses?
• What have I set out by “faith” to accomplish, that seemed impossible, but succeeded in doing despite the obstacles? That is, how determined have I been at following through to the end of a difficult achievement...?
  

1. What is my most important, pressing, must-have, goal?
2. What is my absolute deadline that it must be achieved?
3. What is the consequence of it not being achieved other than my life will come to an end, and/or I’ll be embarrassed to the point of committing suicide, because I’ve told everyone in the world what I was going to do, and by what date so it MUST happen, or else?

Frankly, if you can answer the last 3 questions, I would love to help you further. However, if you’re not really sure about these yet, then I’m going to be a poor source of help.
Don’t feel bad, if this isn’t a solid situation for you yet. I understand.

However, nobody does squat, really, without knowing the answers to those three questions first, including me. So I just gave you some very important feedback that will set you ahead of the pack.

Meanwhile, read everything you can on real estate, and above all control your thoughts. Remain positive and thankful for everything you have, and completely STOP focusing on failures, doubt, worry, self-doubt, or what others might think of your goals, dreams, deadlines, or accountability to them.

Finally, I highly suggest you get a copy of both of Tony Robbin’s books, "Unlimited Power” and “Awaken The Giant Within”, and finally “Get The Edge.” You might not be ready for these yet. You have to be in the mindset of changing the way you think.

It may take something fairly traumatic to “get you there”. Meanwhile, the books are a lot to absorb, but “Get the Edge” is not hard, and is fun to listen to. However, if there’s a problem or challenge in your life right now, Tony Robbins has enormously helpful things to offer, that have changed my thinking habits 180 degrees."

Now, I'm waiting to see if John examines himself well enough to be open and clarified in his thinking to absorb and appreciate anything else I have to offer. We'll see.

"When You Absolutely Must Have $30k In 90 Days..."

Wow, after three weeks of preparation, I just finished the final touches on a 30-minute presentation outlining how I learned how to do "subject to" deals from my friend Mitch.

In the video, I share the story about Mitch, the guy that we all thought was a drug dealer, because he drove nice cars and lived in a view home with a pool, but nobody ever saw him at work.

Ha Ha! Little did we know that Mitch was a professional negotiator and sales trainer that morphed his training into buying upscale houses from motivated sellers without down payments or using his credit...

Well, I got Mitch to tell me what he was up to several years ago now, and frankly, what he showed me changed my life forever.

Normally I put content here, but today, I'm just offering a free video presentation that shares exactly how my friend Mitch made thirty or forty thousand dollars in just a few days of buying pretty houses without qualifying for loans, or offering up his credit. In the video, I also show examples of what can be bought using "subject to" financing that surprises most people.

Here's the link to the video... FREE VIDEO PRESENTATION

"When Cash Isn't King...Then What...!"

We've all heard the term "Cash Is King." And cash certainly open doors in most circumstances. A couple of questions...

What happens when a lot of players have cash? What advantage can we maintain here? Answer: Sometimes there is no obvious advantage and it's just a matter of who came first; who has the best relationship with the "gatekeepers", or perhaps who has the best "proof of funds", and finally, who has the lowest barriers to a closing.

Well, that's all fine and dandy, but once we've got the property, paid all cash, and buried all our equity into one egg (or two), then we're done investing for a while. Unless we can pull our cash back out, we're stuck waiting...and watching those with remaining cash buy up more deals. What to do? This is exactly the question my friend "Joe" [name changed for privacy] asks in the following actual post made in a forum I participated in dated 8/13/2010...

Quote - "Bob" :

"...most of my purchases were all-cash, many which I refinanced later, in order to buy more properties. You might logically think that paying all cash was a big advantage, but it really wasn't at that time. There were so many multiple investors with all cash bidding on the same property (ie.30 offers and 15 being all cash), that "all-cash" just got you in the door but didn't guarantee anything. And in addition, in order to have your offer get serious consideration, you had to waive termite expenses, waive all repairs, buy AS-IS, waive appraisal, etc., etc.

Now I am maxed out and cash poor, looking for loans that are almost impossible to get (keep getting turned down). Before, I was a sheep in wolf's clothing but now I will be forced to get creative to get into any more deals.

Now my friend Bob has to get creative, because all his cash is buried in a couple of deals. Just for giggles, let's imagine that Bob decided not to pay all cash, but do some creative financing at the get-go to make money.

Let's say that instead of paying cash, he found a seller who wanted out of his mortgage payment "yesterday" if you will, and Bob offered to take over his payment today, instead of waiting for a conventional buyer. Let's list some criteria for the creative deal...

• the house was in the upper/middle price bracket of $500,000 (not some dump).
• there is less than 10% equity remaining (>$50,000).
• the seller needs out today, not in 30, 60 or 90 days which a conventional sale/escrow would require.
• the payment was fixed for 30 years at 5% with no balloons due. ($2,415/mo)
  
• the seller gave Joe his title in order to seal the deal and get relief from the debt.

So Joe gives the seller some moving money, takes title, and takes over the loan payments. Now what? How does Joe make money again, you ask.

• Joe only gave the original seller $2,000 to move.
  
• It cost about $200 to close and record the deed and another $300 to clean the house, mow the loan, and treat the pool for a total of $2,500 in overhead costs.
• Joe advertises the house for sale with seller financing.
  
• He asks for $525,000 with no qualifying, and a small down.
  
• He finds a buyer with $25,000 for a down payment. This is less than 5% if the purchase price, but several times more than Joe gave to the seller.
  
• Joe nets $22,500 in cash from the sale today.
• Joe now waits for the buyer to refinance the loan and pay off his remaining equity $50,000.

So, again, how much money does Joe have tied up? Did I hear a "zero"? How much money does Joe have in his wallet now? Over $20,000? And how much money does Joe need to do another deal? Less than $3,000?

And who is giving Joe permission to make all this money so easily? Nobody, except Joe.

No banks are telling him "no".

Not even his wife is saying "no" to this deal. Hmmm.

How many deals can Joe do before he runs out of money? If you have an answer, you're the profit prophet of the millennium, because there are not limits --- except Joe's time, energy and desire.

This was called a typical "subject to" transaction.

P.S. If you would like to know how Joe will do this without burying his money in deals, click the following link:

"Make Money With No Credit or Down Payments Today!"

Scroll to the bottom of the page and click on the product image for a free video presentation.

Sub2 Marketing Future!

"Ugly Sub2 Coughs Up $26,000 in 18 Months...!"

This house is going to cough up $26,000 in rents over the next 18 months.

Meanwhile, we found this house after two hours of driving our farm area and taking down addresses of vacant and abandoned property.

I researched this property and found out the owner lived close by. The property is in default, but not scheduled for a trustee sale.

It's been vacant since last Fall.

Now all this information helped me know how to pitch the seller. The fact that the seller wasn't even trying to rent out the house tells me this seller was tired of dealing with it and out of options.

Well this house is a great candidate for a loan mod and/or a short sale. The property is in terrible shape outside, and needs a cosmetic overhaul inside. Flooring, paint, some hardware replacement, and built-in appliance installation(s). Then there's landscaping overhaul (cleanup, trimming and watering). Total estimate $3,500 (less if we don't replace the flooring).

Market rents are $1.00 per square foot or $1,460 a month with 1,460 square feet of rent-able space, not including the garage.

While we rent the house out, we'll work with the owner to modify the loan, or short it. The 2nd will get about $3,000, and the first will be reduced by $30,000 for a total encumbrance of $90,000. Plenty of room for profit with a sale of $158,000 to a credit challenged buyer.

Meanwhile, our rent of $1,460 over 18 months will net us about $26,000. We'll pass on the cost of back taxes to the end user, if our short sale/loan mod is successful, and include it in the sale price. Meanwhile, we've got insurance costs of about $700, and we're paying the buyer a few hundred for granting us title (held unrecorded in escrow, which is our personal safe deposit box), until we can successfully negotiate either the loan mod or short sale.

All this to say, Sub2 profits come after taking action, not sitting around wishing things were easier!

Normally, I would tell you about just the pretty houses we buy, but this proves that money can be made out of something ugly, too!

If you would like to know how we structure deals just like this one, click the link below.

"How To Make $26,000 in 2 Hours...!"

The Sub2 Chihuahua Rides Shotgun!

This is my Terrier/Chihuahua mix Wolfie resting on the way home from a prospecting journey.

We checked out a new farm of multifamily income properties that look like fabulous Sub2 deals in the making.

Nobody knows these properties are for sale! YES! And the sellers are scared spit-less about the vacancy rates in the area, and don't have the courage to weather a storm. YES!

Not to mention that the unit prices are shaping up to be fantastic high cash flowing deals for a knowledgeable investor. Meanwhile, taking over poorly operating buildings and getting them turned around without any financing obstacles is REALLY nice, if not just a giggly thing to ponder.

Did you know the most cash flowing properties are the same ones the bank is least desirous to lend on, or likely to finance for a decent rate?

Yes, we can find the baby cash-cow dumps with a potential 25% capitalization rate, but because those properties are located in C-minus or D-plus areas, the bank holds its nose and says, "no thanks" to our requests for loans. How come the most secure deals are the ones banks don't like, I ask?

Here's one hypothesis. Banks are like low-return pride of ownership types of buyers. They like to plow money into low-return ["A"] projects that they can point to and say, "We lent on that!"

How nice.

Now if you ask the bank's borrowers what their returns are on those same "A" properties, they might say, "Uh, about 2.5 percent." Uh, huh.

Well, I like bigger returns. We prefer meaningful returns, not ones that can't even match the costs of rising energy. We find these juicy returns where the average investor doesn't want to shop, and the average bank doesn't want to lend. Yay!

There are so many opportunities waiting for the courageous and the proactive. Meanwhile Wolfie, the Sub2 Dog, will ride soon again looking for stray cats and bicyclists to bark at while we talk with sellers who don't know how to turn a lemon into lemonade the sub2 way!

If you would like to know how Wolfie buys cash-flow opportunities without a credit check or down payments, click here: "Screw The Bank!"

"Pimp My Sub2..!"

Only in San Bernardino, CA will you find the "Pimp my Tattoo" mobile tattoo clinic and bus conversion! [well, i guess this bus actually goes 'anywhere']

Yes, friends step aboard and take a trip directly to the psychedelic express to "tat" nirvana! Or not.

I barely got this photo snapped before the bus turned left at the next light. If you notice the graffiti all over the back of the bus in white spray paint. I had to laugh at the graffiti on graffiti situation. I could barely tell which was supposed to be there, and which was not. [It's supposed to be there! Who knew?]

Meanwhile, the bumper read: "pimpmytattoo.com" so I gleefully refer you to them, because I'm so impressed with their marketing gimmick! At their site, you'll see better pictures of the actual bus I saw (being driven in Ohio).

The real reason I post this, is because it draws attention to the cash flow opportunities that exist in these areas. These are management intensive locales, but at the same time opportunities to create an income stream that doesn't require an arm and a leg to get into.

Anytime I hear someone say that there's no opportunities in real estate anymore, I now just direct them to San Bernardino County. Owners change hands often in these places. Often the owners that knew there was cash flow, also didn't know how to manage a business, or how to market correctly. They're the same ones that become, "don't wanters," as Robert Allen describes them; those who want out of their properties. These same owners will accept very creative terms just to save their butts.

I bought an apartment building in an economically depressed area very similar to this. I got in free. All I had to do was apply my professional management skills to turn the place around. It didn't need rehabbing as such. It was just in need of some a consistent, professional, management application to create both cash flow and a substantial amount of equity on paper.

It's simple, but not always easy, however. Tenants that were used to a loosey-goosey management style from the previous owner, which created the mess for the owner in the first place, underwent a severe case of "management overhaul shock" after I pulled in.

Many tenants bailed on the situation, because they had no intention of following any "new" rules, or actually paying their rent on schedule. Did I mention my gigantic late fees?

Anyway, Sub2 financing came in so very handy for this situation, because nobody in their right mind would have tried to get financing on this failed management hell hole, otherwise. The seller knew it. I knew it.

Find a seller with a problem, not a property with a problem, and get rich solving the seller's problem with the property. Yay Sub2!

If you would like to know how I bought that property without new financing click here: "Screw The Bank!"

"Creating Money Out of Thin Air...the Sub2 Way...!"

Sub2 financing can offer the fastest track to wealth creation ever.

When my family first started investing in single family homes in the late 1960's, credit was THE most important thing to "worry" about, apart from scraping up the 20% for a down payment on a conventional loan. Of course that was for our OWN home, not for an investment property. Trying to get a loan for an investment property was a whole different animal. The rate and terms were worse, AND you had to qualify for the loan as if you were servicing the loan yourself, without considering the rent from the property.

Things have changed since then. What hasn't changed, is the practice of taking over existing loans. This method has been used to get around the qualifying process banks have required since loans were invented.

However, the government institutionalized 'non-qualifying' loan assumptions. Wasn't that convenient? Yes, one person would originally pull their pants down and expose their financials to some bank, and qualify for the Federal Housing Authority-backed loan. Then when it was time to sell, they could just let somebody take over their loan just by signing a couple of documents.

This was technically "subject to" financing, but had no name until after the "Due on Sale" clause was invented. Meantime, there was no income verification and no credit check to take over these FHA loans! Yay. And the original borrower, yes, was still on the hook for the loan...! Nothing had changed. Except...

Eventually conventional lenders stopped allowing their loans to be taken over without qualifying. They included a term called a "Due on Sale" clause. Why did they do this? Because they were losing money when sellers would allow buyers to take over their low-interest rate loans at 10% instead of qualifying for brand new 18% loans. Well, this 8% spread wasn't going to be lost to a bunch of amateurs! Nosirreee Bob!

So, banks scared off the "sheople" (who were otherwise seller-financing new buyers at 10%, instead of 18%) by including the dreaded "Due on Sale" clause in all new loans. Now this clause didn't mean that a bank WOULD call a loan that was not properly assumed, but it just wanted the right to make more money off the new buyer in the event it was profitable for them.

Well, ever since interest rates fell to the point that most seller financed deals were MORE expensive than conventional bank's terms, no bank in their right mind would call in a perfectly healthy loan.

As a result of the lower conventional rates, the DOS clause has been a flaccid threat to anyone taking over a loan the old fashion way.

Now, how do we create money out of thin air with Sub2?

There are two ways (at least), but the fastest way is simply to resell a house for a higher price, on terms to someone who "really" wants your house, who cannot qualify for the "cheaper" conventional loan. This could be for reasons including being new to the community, changing careers and employment, recently losing a house in the bubble market crash, and other reasons that temporarily keep them from qualifying for a new conventional loan without putting up 20-25% down.

So how exactly does this help us create money out of thin air, again?

Well, we're not going to sell a house to a buyer who needs financing from us for the same amount we paid. We're going to raise the price as a premium for our service. Typically we'll raise the price by 10% over retail ----- or if we got the house for 10-20% under retail, we can ensure a FAST resale by offering the house for today's retail value, and then work to get our buyer refinanced as soon as possible. Usually this takes at least 12 months.

The second way to create money out of thin air, is to charge a slightly higher interest rate than what we're paying. This isn't usually a large amount, but it all goes directly to our bottom line.

So creating money out of thin air just means that we created extra "value" out of thin air. We market our houses to a niche of potential homeowners that will pay a premium price in return for the privilege of owning their own home --- without having to qualify for a loan, or even having their credit checked, and most importantly putting up less down than any bank would require.

The value of what we offer is SO POWERFUL that we can actually create value (money) out of thin air!

Meanwhile, our buyers will beg, borrow, and 'probably' steal to give us a down payment and take advantage of what we have to offer them with sub2 financing.

For more information about a turn-key system that will allow you to do this over and over again like clockwork click here: "Screw The Bank!"

Open Wide and Say "Sub2!"

Getting information out of some sellers is like pulling teeth.

I had to laugh last week (again), when a FSBO kept answering my leading questions with "I don't know," and "no" and "yes" answers.

I mean, they were playing so close to the vest (which isn't unusual for FSBOs) that they couldn't expound on the description of their house to save their life.

It was ready to water-board them!

One answer that is always hilarious to me when I request the seller to describe his house is, "What do you want to know?" Is that the worst answer ever?

What do I want to know!!!!!!?????

Just tell me about your friggen house!

However, I used to confuse this with lack of salesmanship on the part of the seller. Not anymore. Sellers that can't express themselves are often hiding a problem they need us to solve. At the same time, "un-forthcoming" sellers often need desperately to sell, but are in denial, or exhibiting "pain avoidance."

On the other spectrum, we have the "Chatty Cathy" who cannot stop talking about her house, and expounding on every single real and imaginary (as in made up) feature and benefits of her house. Sometimes, these folks are as desperate to sell as any close-vested seller out there. However, the "Chatty Cathy" is going to be less work to close on, if it's gonna happen.

So what? Well, it's important to figure out if we're dealing with a time waster, or as as Robert Allen puts it, "a wanter," or a desperate "don't water." Either way, we NEED to know why a seller is selling.

This usually requires a 30-minute routine of friendly questioning according to Barney Zick. He said that a seller can't lie to us for more than 30 minutes about why they're selling. I agree. However, some sellers are so slow at giving information we can't tell what they're lying about for probably 45-minutes.

It's in the cases where the seller is not forthcoming that we might be tempted to walk, or short-change the negotiation process by not allowing ourselves, and the seller time to "work" on the deal.

We don't like to admit that, as buyers, we have a need for satisfaction in the negotiations just as much as the seller does --- even if the seller is not aware of his need.

So going slow, controlling our emotions, and allowing the conversation to meander across all the seller's motivational elements, allows us time to naturally develop a rapport with seller, find the "becauses" that are necessary to justify what we want, and find out what we can give up in order to give the seller what he needs (and less about what he might "want") --- and achieve satisfaction in the negotiations so that all parties know they worked their butt off to get a deal struck. This is an important moment to remind ourselves why we want all the decision-makers present during the negotiations or "everybody" won't feel satisfied."

Meantime we'll equity strip the fast-talking, motivated sellers that have diarrhea of the mouth! j/k