Create Your Cash Sale Receipt Template for Legal Needs Effortlessly

Cash sale receipt template for Legal

how to do a subject two deal guys it's Rick in and I'm just going to break down the Simplicity of what a subject two is that's right it's called subject to anything else is kind of slang and we want to use the right terminology I'm going to give you the simple overview on how this works and then I'm going to show you actually how to underwrite and take down a subject two deal so guys if you want to learn how to do this do me a favor make sure you smash that like button hit that subscribe button so other people can find out how to do a subject to deal with out the complications of expensive courses so real estate really most real estate has three parts to a transaction so it's important you understand all three of these because then you can simply break down what you need to do on a simple subject two deal now what is the definition of subject two it's simply taking over the property with the existing debt in place that's it end of the story anything else people complicate it now subject to falls under the umbrella of creative financing it is a single strategy that quite honestly works really well and if you know how to use it you can help so many people out that really can't figure out how to solve their problem so let's get into it so as I said you have three different phases so number one this is your subject to house pardon my drawings but that's it so this is your subject two property and here's what you got to understand from a high Lev overview on how this works there's going to be three different parts of this transaction number one is going to be the deed okay the deed is actually your proof of ownership and the deed is usually contained by the homeowner this is important because this is what we're going to Target when you do a subject two deal now subject two deal is automatically going to insinuate there's existing debt meaning there's some sort of bank loan and a lot of people depending on what part of the country is there's going to be different say to do this and this so we'll do that number one number two is going to be either a mortgage or in some states it's called a deed of trust I know it's confusing but that's just how they do it they're they're Bas just look it up in your state you can figure it out a mortgage and a deed of trust is the exact same now this is what we call what I call the leverage device it basically means it's recorded and it announces to the world that you have debt on this property it's physically attached to this property and what that means is this property cannot be sold until this mortgage or daa trust is satisfied this is why banks are so willing to loan US money why because if I don't pay this mortgage or D to trust then what can they do they can they can go into the court and they can enter into a foreclosure and that is what we call the leveraging device so everybody understand it but there is a third document which we'll call number three here and then this is simply what we call a promiser note and it's exactly what it says I love how they name this one because I don't have to guess it is basically the agreement for the debt and here's the other thing is it's usually personally guaranteed by the new owner so everybody understands we have the DED this is your proof of ownership you can call it receipt whatever you want doesn't matter you get this piece of paper when you buy the house to show that you own it that gives you the luxury of paying the property taxes paying the monthly mortgage payment and the next one goes to the mortgage this is recorded in public records and it is tied to this property whenever they do a title search they'll see there is debt assigned to the property and until that debt is satisfied you technically cannot clear the property and get clear title we always talk about clear title this is what clouds up the title and this is why Banks get the loan because they have recourse if you do not pay that mortgage back they can foreclose on it and the third one is a promisory note and a promisory note is exactly what it says you promise to pay the bank back it is the agreement for the debt it's going to spell out the interest rate the amount of payments you're going to make uh if it's 30 years 15 years or whatever and it's going to tell you the fixed monthly amount and basically you're going to sign a whole bunch of documents on this saying no matter what you're personally signed on to this so even if you leave the house if you don't pay that debt back you're stuck so these are the three pieces you're going to do on a subject two deal and it's important to understand now we can go a step further here this is what the homeowner has now and this is what they can trade now a homeowner will give you this in a subject two deal and then what you do is you're going to take over the actual mortgage payment so think about this if they ow $100,000 on the home and say they even bought it I don't know a year or two ago and they got it in over their head which we'll talk about then they're trying to get rid of this mortgage this mortgage is what's killing them now these two to be honest with you are intertwined now if I'm going to take over a subject two deal I'm usually going to control this right here I'm going to have them sign it over and transfer it we'll talk a little bit more about that the next thing is I'm going to take this over this is the subject two part this is it you're just taking over the payment think about this if you took over your buddy had a really nice car and say he lost his job and you go listen I'd like to buy that car can I just take over the payments and give you five grand up front it's the same thing that that car is going to be assigned some sort of recording on it with a promiser note and then you are going to take it over subject two and so the seller gives this up and then you the investor and are subject to this is what you're taking over here's the dirty little secret about subject 2's the promisory note in the perfect world we would exchange the seller for the new buyer but guess what the bank is never going to allow that happen until it's paid off so the promissary note forever is going to be linked to this mortgage which is a little bit of the pitfall of doing subject two some people don't want they want their name off that promissary note and they want their name off the mortgage remember guys you cannot do that you have to understand that for you to get the deed you take over the mortgage payment these are already locked in either you pay them you let the bank foreclose on them or they have to be settled out that's the only way you can do a subject two the word subject two means taking over the existing debt on the property so we have the deed we have the deed of trust or mortgage depending on what state you're in and then you have the promisory note we get the deed there might be some sort of financial compensation we agree to take on the mortgage why because it's attached to the property if we don't do it then we lose the rights to use the house wherever we want and then the promisory note is long as we make payments we live up to that agreement remember our names never personally on it and so I know what you're thinking Rick why on Earth would anybody want to do this strategy and I'm here to tell you it's simple let me erase this real quick you could fast forward this section would would be perfect so the real question is why why do people do this why subject twos so let's talk about from the seller standpoint first and then what we'll also do is we'll do the investor that's you so I've been doing this long enough to understand exactly why people do this what type of seller sells a property subject to little to no equity everybody got that little to no equity maybe they just want to avoid foreclosure maybe they want to save their credit these these two kind of go hand inand we'll put a plus sign on there some people want to do tax avoid it so if they own an investment property and they own it outright or maybe they recorded a hard money loan or something like that some people when they get older they don't want to pay the capital gains depending on everyone's unique situation and they want to get out of tax abidance either way for the most part all roads always lead to a subject two is the only solution I can't stress this enough to you why think about this if you had a property that was worth $300,000 and say you owed $280,000 in debt on a mortgage and you wanted to sell it say you just bought it a year or two ago so you think okay I got $20,000 in equity wrong so if you want to sell the house just for what you bought it for before 300,000 um you figured about 10 to 12% in closing cost let's just do 10% they're going to owe $30,000 which means for them to close that deal they have to bring $10,000 to the table think about this who wants to bring $10,000 to the closing table and what I do is when I walk through this situation is I try to solve every issue going through I actually try to wholesale the house I try to pay all cash and when I find out that they're going to have to bring a check to the closing table it's hard to get a seller to convinc of that and I go through everything we talk about avoiding foreclosure we ask I always ask them why don't you just list it with a realtor they already know they can't because they they can't afford to pay the realtor fees so at the end of the day the subject two should be the only solution for these types of deals it's so black and white when I get a subject two deal I don't have to talk anybody into a subject two deal it is usually the only fit for that property it just comes down do the numbers work for you and that's where you you've got to have some discipline some patience and some wisdom to learn how to do creative financing because I see so many people out there and go do subject two deals and they get so excited doing the deal they have no idea if they're actually going to make money let's go over the investor side and see why they would do it so the the biggest and most important is no Bank qualifying if you don't know what I mean by this do me a favor walk into your local as an investor and tell them you want to buy a property with little or no money down and tell them you don't want to give them tax returns you don't want to give them financials and let me know how it works out it's absolutely brutal and even if you're perfect you're usually going to have to bring and put down 20 to 30% so the beauty about this is you get into with little to no there's absolutely no Bank qualifying at all guys I can't tell you this is one of the main reasons why people start in subject two because a you don't have good credit B you don't have the funds for it which leaves me the next one is little Capital required think about this if I'm going to buy a $300,000 property I got to put down 30% 20 say 20% plus closing cost I mean that can be as much as like $75,000 and let's be honest we a lot of people don't have it I didn't have it when I started out that's why I did a subject two which I'm going to go over the numbers on the next section here you get to get low interest rates because you take over people with with low interests on previous mortgages especially from the ones back from four and five years ago some of these loans were under 3% they're absolutely amazing deals and here's to me my favorite part is do deals others can't what do I mean by that I found subject twos through my wholesaling business and they would owe more than the property's Worth or like the numbers were very very tight and I go man how can I help these people out now it took me a year or two to figure out how to do it but I figured out how to do subject two deals why because other wholesalers used to just give me these deals and I found that there lack of experience and lack of patience I just teamed up with the right people and figured how to do it I didn't do them off the bat but these are all the reasons why an investor and a seller would do it guys the bottom line is when I talk to a seller that needs a subject two deal they're usually bending over backwards for me to do the deal for them it should be the only fit you should never ever have to talk a seller to do a subject two deal here's my suggestion go through your wholesale business find the people that you can help out the wholesale and then the ones that are in a situation where they have to bring money to the closing table see if you can make the numbers work don't worry on the other side of this board I'm going to walk you through it so you understand how to do it and at the end of the day you've got to understand they have to be 100% cooperative and you should be the only solution for a subject two deal that means you have a good deal if you try to talk people into it or they're not completely on board you're literally wasting your time remember the more people we can help the more creative we get in our Solutions the more money we should always make so let me switch over the other side and show you how to do a typical subject two deal and here's a different guys is I teach this differently why because I see so many people do subject two deals that really have no idea what they're doing so first and foremost I want you to understand this you need to consult a local real estate lawyer wherever you're doing this I'm sorry if you skip this part it's going to cost you in the long run these are legal documents you have to go through and I'm not a lawyer you're not a lawyer don't try to be a pretend lawyer if you really want to do a great subject two deal you can use the help of a lawyer once or twice to set you up in that current market and state and become familiar with all the laws and make sure you are compliant I can't stress this enough now how to do a subject two deal I'm going to run you through this don't worry it's recorded you can run through it number one run through your wholesale business and do not change it I can't repeat this for those of you that want to do subject two because you bought a course and somebody said you don't have to compete with all the other wholesalers you're just going to run out of time and money wholesaling is what produces the cash to buy subject two deals if you go out and just hunt for subject two deals how are you going to finance them all now some of you have money but you're going to run out but I'm here to tell you do your wholesale business to create the cash flow to buy assets to build your real estate portfolio if you commit to do creative financing maybe you took a subject two course you're going to run into a multitude of problems number one you're going to run out of cash and number two you're going to have plenty of deals out there but you're not going to know how to make money with them and you're going to have to come back the whole whelling how do I know this I've seen countless people do it over and over subject two requires experience the best way to get experience is talk to as many Sellers as you can through your wholesale business and from that find the people that truly need your help that fit for that subject too and then you can get the guidance and the help to get it done if you try to do subject to or creative financing only I promise you you're going to run out of money everyone who I've want I've done 30 40 50 deals but like they have no money how do you get the money it's always going to be from wholesaling if if you think you can replace wholesaling off the bat with little to no experience just doing subject twos you're sadly mistaken you're going to run out of money and you're going to have to come back and learn wholesaling from me and Zach I rather you teach you the right way number two I don't believe subject two is a beginner strategy why because you're not familiar with the paperwork you're not familiar with the lingo and number three you don't know how to put these deals go together you might in theory but the reality is when you get out there you're going to see a lot of different situations I probably passed 30 subject two deals till I did my first one so I could completely understand them if you think you're just going to take someone's course jump on a subject two and make a ton of money you're sadly mistaken these are a long-term play but I want to show you how you can actually incorporate subject twos into your wholesaling business and make money at all three points let me show you how to do it number two you need to understand a subject 2 should be the only way to solve the problem meaning if you're doing a subject two it's the only way way to solve that seller's problem why because there's existing debt on the property that's recorded against the property and the only way to get past this is have somebody take over that note let's face it guys if they could sell it traditionally they most likely would and they wouldn't need people like you and me so I want to find people that are stuck in that situation and when it arises I have the tools I have the knowledge and I know how to take these deals down the next one is underwrite the property numbers underwrite the mortgage you guys actually have to find out what the value of the property is and find out all the underlying numbers how do I do that go to x leads.com they'll tell you what the equity is right there on the first page so you don't waste time but you also have to underwrite the mortgage what do I mean by that you need to know what the monthly payments is you need to know how much the mortgage is for you need to know if it includes principal interest tax and insurance called Piti and most importantly we need to know if they're behind on any payments you also want to get an idea of the rental rates once again X leads.com solves all this and then you want to get the value and if there's any repairs it's a lot of information this is why I stress subject two is not a beginner strategy it is something you build in your wholesale business and when you learn how to take those deals down you have a legal understanding of how to do the documents and you are the only fit for it and the seller is 100% on board knock it out of the park and the next ones I put in here is the seller has to be 100% on board if you have a seller has 99% they got a 1% reservation don't do it it's going to blow up on you you're going to need their help with additional paperwork with escros with insurance and if they have the slightest bit of remorse they're going to back out on the deal and you're going to waste a lot of time and money so everybody I do a subject to deal with as well as you they have to be 100 probably 110% on board if there's any slight hesitation don't do the deal because you need the their help sometimes all the way till the end I find if they have any reservations those are the deals that I absolutely regretted in subject to so make sure you're solving a problem and you're pretty much the only person that can solve the problem that makes them happy that makes them excited to work with you and they'll wind up hugging you for solving their problem now after once I know the seller's on board I going to tell you right now this is the part A lot of the beginners screw up they don't clearly estimate the repairs on it so any new subject 2 deal doing and say you're in your first year or in your second year try to keep your repairs under 5K why number one it limits your Capital number two it gives you more options with the property but if you're going to do a subject two with 10 15 20 30,000 it's going to cost a ton of capital it's going to cost even more time and most of you aren't prepared for it and if you have little to no money you do not want to go down this Rabbit Hole find someone you can either partner up with they help put up the capital or take the deal down or try to get it sold traditionally I'm telling you if somebody has to fund a big repair bill it's going to severely limit your options in a subject two deal my personal Bel anything under 5K why because I can get it cleaned up in a week or two I can do a rent to own I can do a wrap I can almost do anything the higher their repairs the more money you're going to have to come up front trust me in the beginning try to find nice clean houses they're so much easier I promise you in subject two now here's why I'm going to talk about the the three-prong approach you can make money up front you make money in the middle and you make money at the end here's why I do this differently than most other subject to investors and guys I'm going on my 22nd year and I haven't had any problems with this now number one the upfront fee most sellers want some sort of money to exchange the deed we all agree with that I'm here to tell you most of you don't understand the go for no approach most of you don't understand means Act veloc of go for no stop trying to guess what your seller wants and just make them a low offer what do I suggest a lot of you all think you know you got to give them 10 or 20K I'm here to tell you I don't even talk numbers like that I offer anywhere from a th000 to 5K up front in exchange for the deed and you know what I've had people giving me their houses without ever even asking for money I like to induce them to buy them on board some of them need in moving expenses so start out with a 000 and go up to 5,000 stay Within These numbers because if you offer too much up front you're not going to make any money and if I want to show you how you make money up front in the middle and the end you have to go with this philosophy if you think you're going to give somebody like $30,000 and think you're going to make any money up front you're going to get killed in this business is everyone going to say yes absolutely not but this is where you negotiate remember we're talking to people that if they don't do something they're going to lose the house anyway so they're already going to get zero and a big fat bill so sometimes offering between $1,000 and $5,000 works for them remember every house has a different situation you have to underwrite the house and the value and guys if the value of the house is 3,000 and they owe $395,000 on the deal don't do the deal you can't fix a bad deal unless it's Unique like downtown or Waterfront do not get tied up in these types of deals because you bought a subject two course there's plenty of them out there they're really not that hard to find you want to find stuff that has up value meaning the value should go up and you can make the cash flow work so if the property is compl completely overleveraged don't do those deals if they're bad for the current owner they're going to be bad for you so here's what like one to 5K so say say you had to give them four $5,000 I'll even go to the extreme I'm being nice today why do I want it so low because if I'm going to put in there on a buyer I'm not going to get in the details how we sell it I'll do another video on that I've already done a ton of them is you can do a wrap which means you you're just the middleman on them taking over the mortgage you can do a lease option you can do a rent to own heck you can do a straight up rental but I want you to understand if they were going to rent that house from you and say the house rented for 3,000 a month and if they were going to rent it they have to leave the first month they'd have to leave the last month and a security that's $9,000 here's what I'm asking for my buyers 15,000 I try to get three times whatever my payment so this is so if I had a $10,000 payment I would want to try to get 30 here so if I start doing a bigger number here I make very little money and what's my net cash flow on that that's like getting a $10,000 assignment fee up front Okay that's step number one on the up front Okay that's one number two in the middle find out what the the mortgage monthly payment is and find out if all the expenses are tied into it so if I'm getting if if the rent if the payment's 1488 a month I should have done a round number let's do a round number because I can't do the math on that let's just call it500 okay in the perfect world I would like to get two times but the reality is you want to get 1.5 is really going to be the target what do I mean by that if I'm getting 1,500 I i' like to charge $3,000 a month but if I do 1.5 which I'll do a calculator right here the range would be basically 2,300 bucks why because you have no idea you could have a vacancy you could have a lot of problems with the property you got to have some sort of spread on here so if my spread's between $800 to $1,500 a month I know a lot of you're saying like Rick that those are crazy numbers I'm here to tell you this is how you make money with a subject two if you think you're going to make money by earning $100 a month you're going to get killed in this business the numbers always go up keep in mind the tax and insurance will go up over time and if you don't plan ingly even though you pass those cost on sometimes you get stuck with them that's what you want to do and then the last one number three is your end price so let's say the properties worth 300,000 I usually like to add 10% on it or a little bit more let's call it so say my contract price is say I bought it for them for $280,000 okay my personal thing is I like to add 02 to my contract you can even do 0.25 but you got to be careful because sometimes the numbers because I want them to be able to buy it so if I buy it for 280,000 * 280 * 1.2 that puts me at 336,000 and guys I want you to understand this here's a really cool part about subject twos every month they make a payment the principal goes down so they're paying down the mortgage for me they're saving my original sellers foreclosure they're saving their credit and here's the really cool part when I go to sell it at 336 they put 10,000 down so they owe me 326 and say I had a $280,000 mortgage and say 5 years went by and I knocked it down to 265 check this out this is my favorite part and this is why everybody loves to do creative financing one that's $61,000 plus the original 10,000 plus the cash flow we added in the middle on it so that's 61+ 10 and say we only average 500 bucks a month for 60 months 500 * 60 that's another $30,000 so from that deal we did 30 uh let's see 6 9 10 that's $101,000 now remember there's three phases where you make money in this so if I make 10,000 here that's number one I get paid up front just like a wholesaler would you're taking a little bit less number two if I take that middle money we said that's going to be let me come down here that's 30,000 and then if I looked on the end money that winds up being 61,000 and guys this is the reason why subject twos are awesome and you know what here's what I want you to do continue doing your regular wholesaling business when somebody comes up with a property that there's very little Equity or they're in some type of pre-foreclosure situations these are the ones that you want to jump on now what I would do is I would meet with my local title company or if you're doing it virtually and say listen I'd like to do some subject two deals what contract do you think is acceptable most State contract cont s already have the subject to line built into them so the contract's easy what I want you to do is meet up with a lawyer to take down the deed correctly and you record everything perfectly to make sure your transaction sticks do not guys I cannot repeat this do not buy someone's course and just assume that paperwork's correct even with the courses I bought it I still run it through a lawyer and there's so many different ways to do it remember you're basically doing a technical it there's nothing against the law on subject to remember you need a 100% Cooperative seller and you ideally should be the only fit for them because they've tried Realtors they've tried listing it on their own and if they don't do something they're probably going to lose the house and the amount of stress they have these are the people that we want to help out guys let me know if you want to do some subject twos I love doing these types of deals I like to make money up front I like to make it in the middle and I like to make it at the end and guys here's the really cool part is when you sell these things you can do like whatever you want Sometimes some you guys can even buy a house for yourself and take it over subject two qualifying for banks is challenging in today's market and if you can avoid it and you can help a seller out subject twos are perfect guys if you enjoyed this video do me a favor make sure you smash that like button hit that subscribe button and share the secrets of subject to with someone that needs help with it guys this is rickin and I'll see you in the next video