Stage 1 (Early Downturn): Grant Kemp, Daniel Moore – S4E4
Market Cycle Overview: https://youtu.be/AQbCCAw1U-U
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4:45 – Of the 6 phases of a market cycle, we are currently in phase 1 (early downturn) because most investors who got in on the upswing are experiencing increasing cost per deal and much more effort to close deals.
12:00 – Using creative finance is as simple as gaining the knowledge to be able to employ the different financing strategies.
13:20 – The “Subject To” strategy will be the key to success.
14:33 – Propelio Academy has all this information from investors who have used every strategy in every phase. Propelio Academy – https://goo.gl/9kPQz5.
15:05 – The perfect subject 2 candidate has been in their house between 2-8 years.
17:50 – Grant built a portfolio worth around $6,000,000 between 2013 and 2015 by using creative financing including subject to.
19:44 – The deal itself shows you the strategy. For example, if you can get a deal at:
0-75% LTV (Loan to Value), then you can FLIP that deal. Today Money (You get tomorrow).
75-80% LTV, then you can WHOLESALE that deal. Today Money.
75-82% LTV, then you can HOLD/RENT that deal. Tomorrow Money.
82-105% LTV, that is an OWNER FINANCE deal. Today and Tomorrow.
105%+ LTV, that is a SHORT SALE deal. Today Money (You get next year).
20:24 – Today money (Cash) is one-time money from wholesales and flips. Tomorrow money (Assets) pays out over time such as rentals and owner finance deals.
21:56 – You need both in order to succeed as a real estate investor. You need cash to keep your assets alive and you need assets to stay alive tomorrow.
30:52 – Subject 2 is an acquisition (purchasing) strategy, not a disposition (selling) strategy. Buy Subject 2 and sell with a Wrap. Subject To/Wrap Video – https://goo.gl/9kPQz5.
32:50 – Grant kept getting resistance from sellers regarding the Due on Sale clause, which states that if you sell your property, the bank has the right, not the obligation to ask for the remainder of the loan to be paid off in full. Due on Sale Video – https://goo.gl/9kPQz5.
36:52 – If you do not know Subject 2 when the market is going down, you will be dead in the water. “Subject To” is purchasing a property “subject to” the underlying lien staying in place.
A “Wrap” is selling the property to another individual at a higher interest rate and principle.
39:00 – The best news for investors is when the national news announces “The Market is Crashing” because average homeowners heard the same news. Knowledgeable investors leverage that as an opportunity. You must shift your mindset from “We GIVE MONEY to people for houses” to “People GIVE ME HOUSES for the opportunity for me to make money”
49:35 – If you are the only investor who can pay what the seller wants, you are likely to get the deal. Most investors only employ one strategy, which is cash wholesaling.
52:55 – Never accept less than a 10% down payment because anything less is a default waiting to happen. The down payment must cover your back payments and any additional capital expenditures.
56:20 – Buying rentals on an appreciating market gives you many opportunities to exponentially increase your net worth.
56:39 – Hypothecation, Notes Receivable Lending, Collateral Assignment
1:07:14 – Grant’s Advice: If you are just getting into real estate investing, go heavy on Subject 2/Wraps. Don’t do rentals.
1:16:04 – When people sell, I get greedy. When people get greedy, I sell. Buy rentals at market cycle stage 3.
*The assumptions, views, opinions and insinuations made by the host / guests do not reflect those of Propelio