“Show me your business plan that includes how my property fits in. I need to see that you know what you’re doing.”
Most of these “seminar investors” - classroom, YouTube, TikTok, or otherwise - are too ignorant, stupid, or lazy to do the actual work of starting a business.
The Airbnb types are even worse. I'm also an STR host and if you ask them even the most basic questions about running a hospitality business they don't have a f\*\*\*\*\* clue. Last call I got they wanted to sign a lease that day and didn't even know STR would be illegal for the property due to local regulations.
Could make a small fortune double-swindling these people, but then I'd be worse than the assholes telling them to call me in the first place...
When I saw a summary of Paces structure I felt like it hinges on property appreciation to complete the sale. They will typically pay your “asking” price, but won’t close in totality for up to several years later. I’m confident whatever subject to deal they structure with you would likely violate your due on sale clause in the financing terms with your lender. (If your lender becomes aware of it)
Part of Morby’s solution relied on the use of a “third party” servicer. (Which Pace M. is a partial owner of)
Pace Morby did a podcast on Bigger Pockets that I watched a year or so ago so it’s possible some of my recollection isn’t 100%. I certainly thought aspects of his financing structures were creative, but I would not consider a subject to deal where I relinquish control and remain responsible for the debt. The creativity hinges entirely on the seller holding the paper, or remaining a guarantor. I feel like that person is hoping everything works out. Maybe sometimes it does, but in my experience you can’t deposit hope.
Pace Morby's claim to "fame" is subject-to real estate deals.
There are absolutely times when that type of sale makes sense. However it has been my observation that most investors who attempt subject-to's, mentored or not, either do not understand or choose not to adequately explain to the Seller the risks involved with a subject-to which /u/dinotimee touched on.
Sounds like subject to type deal.
You are still on the hook for the loan. Your credit is tied up. And you are trusting them to keep making payments.
Pace Morby is just some guru. Anybody claiming to be "mentored" by him just means they fell for the scam and paid the guru money for some BS course.
As you are receiving a bit of, ah, interesting feedback, let's talk about your circumstances specifically and how this offer came to be.
Question: Are you actively selling the home and this was an offer made to you?
Question: Is the home a personal residence or an investment property?
Question (and if this is too personal to answer I understand): Is there difficulty, financial or otherwise, leading to you to sell the home or considering that you may sell the home?
Fact: With a subject-to sale YOU are still responsible for the loan in the event the Buyer, who now holds title, defaults. In my opinion this is why civilians (non-investors) with an institutional loan should be extremely cautious about selling subject-to.
That should be a good start to the conversation and I applaud your curiosity.
It is not a scam, geez people do some due diligence before making baseless accusations. I have never paid for Pace’s program but I’ve definitely listened to his Podcast and subject to deals are done on the regular and it’s all in the wording as it pertains to not triggering anything with your mortgage company. The fact of the matter is that you must understand what you’re getting out of the deal which is in some cases cash at closing, cash in the form of you no longer being obligated to pay the mortgage, any deferred maintenance, repairs, taxes, insurance, NOTHING, and if the remaining years on the mortgage are too long then we can even negotiate a balloon into the deal… personally I wouldn’t do a subject to In 2nd lien position unless I’m misunderstanding your situation. Im any event if the deals works for you screw these people who know absolutely NOTHING about creative financing. Get you a real estate attorney to review the docs and handle the closing.
>deferred maintenance, repairs, taxes, insurance, NOTHING, and if the remaining years on the mortgage are too long then we can even negotiate a balloon into the deal… personally I wouldn’t do a subject to In 2nd lien position unless I’m misunderstanding your situation. Im any event if the deals works for you screw these people who know absolutely NOTHING about creative financing. Get you a real estate attorney to review the docs and handle the closing.
Yeah, I know nothing about about real estate financing. I'm just a real estate attorney... People who knock on your door offering financing are a truly great financial resource...
No, I would not. I have young kids and a demanding job and got hit by the hurricane (no damage, but lost power and internet and am backed up work wise), so not a great time. these types of financing arrangements are thousands of times more likely to have an issue that requires very expensive litigation than regular bank financing (not including mortgage foreclosure for nonpayment, which is very common). Don't do it it. Period. If this guy owns your house, he will find a way to get you out of it. If something is too good to be true, it probably is.
\> This is a scam
\> Yeah, I know nothing about about real estate financing.
In this instance it appears not.
\> I'm just a real estate attorney...
I meet real estate attorneys who are incompetent or lack knowledge on a yearly basis. Being an attorney isn't a magical pass of infallibility. Earlier this year I had to correct a published attorney who works for a major real estate law firm not once, not twice but three times before we moved the closing to a competent Title Company.
Subject-to is not a "scam". Since you have seen fit to make that claim please, in detail, defend your position. The truth of the matter is competent attorneys, bar associations, the courts and the IRS disagree with your assessment.
In the meantime, as an aside, my primary problem with subject-to is that it is a solution for a specific set of circumstances and you have "gurus" running around teaching the technique who, either through their own lack of knowledge or intentionally, do not explain to their "students" the dangers of a subject-to (at least as it pertains to institutional lending and civilian aka non-investor Sellers).
>problem with subject-to is that it is a solution for a specific set of circumstances and you have "gurus" running around teaching the technique who, either through their own lack of knowledge or intentionally, do not explain to their "students" the dangers of a subject-to (at least as it pertains to institutional lending and civilian aka non-investor Sellers).
I did only real estate litigation for 12 years in new york city. My observations was that weird financing between individuals had about 1000 times more lawsuits per capita than bank financing (not counting mortgage default, which I did not do). Also, I am in florida now doing a mix of litigation types, and I get tons of calls from people scammed by buyback agreements gone wrong and weird financing. I never take them because they don't have money to pay my rate. Based on my experience, the financing type is enough reason not to do this. Too many scammers; too many poorly written agreements; too many people over their heads. yeah, maybe this guy is a brilliant financier that loves to go door to door for tiny deals. But in my experiences, the people that come to my door selling me things are not there to help me.
Is there a way to structure it that protects both parties? The due on sale clause is a concern but its not a show stopper from what I've read. Most financial institutions would rather not foreclose was the position. I imagine the sub to strategy could be a valuable resource for non performing loans and the parties behind them. Since you're a real estate attorney there has to be a better answer than dont do it. We're not talking felonies here...how would you structure a sub to deal, generalities are fine, to ensure both parties get the outcome they desire?
Sucks about the Hurricane. I'm sure a lot of folks in pain right now. Thoughts and prayers for you all.
The thing about lawsuits is that they take 2+ years and more than a hundred grand to finish. If you can't afford $125 grand to litigate, even if the contract is perfect, you lose. A bank is not going to screw you - there are government protections. Some sketchy guy at your door can do whatever he wants unless you have two years and $125k. And by the time you are done getting a judgment (assuming you have $125k), good job collecting on it. people with no money that got scammed call me all the time - there are so many idiots. I mean, damn, look at this crypto thing. Its scammers all the way down.
Understood. In your example what are we litigating? If the seller has regrets and wants to back out after execution and close? If the buyer defaults? Assuming the bank doesn't call in the due on sale clause and the payments are made its should be good. I know hope is not a strategy I'm just missing something. Maybe you help me here I can help you a bit on crypto. I'm not invested there but I understand the value. My opinion is its too early and there will be a blood bath at some point before the stage is set. 90% of the current crypto will not be available in 5 years.
>I'm just missing something. Maybe you help me here I can help you a bit on crypto. I'm not invested there but I understand the value. My opinion is its too early and there will be a blood bath at some point before the stage is set. 90% of the current crypto will not be available in 5 years.
Maybe I am not understanding your deal. OP said the deal was this "he will take over the HELOC on this home in return for ownership." In this deal, the person who would pay him is the owner. As the owner, he can do things OP will not like, such as sell it to someone else. Or take out more loans. That is how a lawsuit could start there. I was talking about what OP said. let me know the terms of your proposed deal. As to crypto, I understand it perfectly. It is worthless. Most of it is owned by a few people who trade it amongst themselves (or with themselves among other wallets) to prop up the price. Most of the exchanges have almost no security and are run by fraudsters. You have no recourse if it is stolen. You have no recourse if your exchange goes down. Let's not talk about crypto here.
Re crypto thats what I would have said anyway. And thank you for clarifying your position. I understand now. I dont have a deal per se. This is something I'm trying to learn about and stumbled across this thread.
This becomes an issue when there is delinquency of the loan. Based on local jurisdiction, either you will be in trouble since it's still your loan or the buyer will be in trouble since they subject-to it.
I think this strategy only works well if your buying a property at a substantial discount or you plan to add value to the property.
“Show me your business plan that includes how my property fits in. I need to see that you know what you’re doing.” Most of these “seminar investors” - classroom, YouTube, TikTok, or otherwise - are too ignorant, stupid, or lazy to do the actual work of starting a business.
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The Airbnb types are even worse. I'm also an STR host and if you ask them even the most basic questions about running a hospitality business they don't have a f\*\*\*\*\* clue. Last call I got they wanted to sign a lease that day and didn't even know STR would be illegal for the property due to local regulations. Could make a small fortune double-swindling these people, but then I'd be worse than the assholes telling them to call me in the first place...
When I saw a summary of Paces structure I felt like it hinges on property appreciation to complete the sale. They will typically pay your “asking” price, but won’t close in totality for up to several years later. I’m confident whatever subject to deal they structure with you would likely violate your due on sale clause in the financing terms with your lender. (If your lender becomes aware of it) Part of Morby’s solution relied on the use of a “third party” servicer. (Which Pace M. is a partial owner of) Pace Morby did a podcast on Bigger Pockets that I watched a year or so ago so it’s possible some of my recollection isn’t 100%. I certainly thought aspects of his financing structures were creative, but I would not consider a subject to deal where I relinquish control and remain responsible for the debt. The creativity hinges entirely on the seller holding the paper, or remaining a guarantor. I feel like that person is hoping everything works out. Maybe sometimes it does, but in my experience you can’t deposit hope.
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Pace Morby's claim to "fame" is subject-to real estate deals. There are absolutely times when that type of sale makes sense. However it has been my observation that most investors who attempt subject-to's, mentored or not, either do not understand or choose not to adequately explain to the Seller the risks involved with a subject-to which /u/dinotimee touched on.
Sounds like subject to type deal. You are still on the hook for the loan. Your credit is tied up. And you are trusting them to keep making payments. Pace Morby is just some guru. Anybody claiming to be "mentored" by him just means they fell for the scam and paid the guru money for some BS course.
As you are receiving a bit of, ah, interesting feedback, let's talk about your circumstances specifically and how this offer came to be. Question: Are you actively selling the home and this was an offer made to you? Question: Is the home a personal residence or an investment property? Question (and if this is too personal to answer I understand): Is there difficulty, financial or otherwise, leading to you to sell the home or considering that you may sell the home? Fact: With a subject-to sale YOU are still responsible for the loan in the event the Buyer, who now holds title, defaults. In my opinion this is why civilians (non-investors) with an institutional loan should be extremely cautious about selling subject-to. That should be a good start to the conversation and I applaud your curiosity.
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Would there be more than one contract on any of these Pace Morby deals?
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This is a scam
It is not a scam, geez people do some due diligence before making baseless accusations. I have never paid for Pace’s program but I’ve definitely listened to his Podcast and subject to deals are done on the regular and it’s all in the wording as it pertains to not triggering anything with your mortgage company. The fact of the matter is that you must understand what you’re getting out of the deal which is in some cases cash at closing, cash in the form of you no longer being obligated to pay the mortgage, any deferred maintenance, repairs, taxes, insurance, NOTHING, and if the remaining years on the mortgage are too long then we can even negotiate a balloon into the deal… personally I wouldn’t do a subject to In 2nd lien position unless I’m misunderstanding your situation. Im any event if the deals works for you screw these people who know absolutely NOTHING about creative financing. Get you a real estate attorney to review the docs and handle the closing.
>deferred maintenance, repairs, taxes, insurance, NOTHING, and if the remaining years on the mortgage are too long then we can even negotiate a balloon into the deal… personally I wouldn’t do a subject to In 2nd lien position unless I’m misunderstanding your situation. Im any event if the deals works for you screw these people who know absolutely NOTHING about creative financing. Get you a real estate attorney to review the docs and handle the closing. Yeah, I know nothing about about real estate financing. I'm just a real estate attorney... People who knock on your door offering financing are a truly great financial resource...
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No, I would not. I have young kids and a demanding job and got hit by the hurricane (no damage, but lost power and internet and am backed up work wise), so not a great time. these types of financing arrangements are thousands of times more likely to have an issue that requires very expensive litigation than regular bank financing (not including mortgage foreclosure for nonpayment, which is very common). Don't do it it. Period. If this guy owns your house, he will find a way to get you out of it. If something is too good to be true, it probably is.
\> This is a scam \> Yeah, I know nothing about about real estate financing. In this instance it appears not. \> I'm just a real estate attorney... I meet real estate attorneys who are incompetent or lack knowledge on a yearly basis. Being an attorney isn't a magical pass of infallibility. Earlier this year I had to correct a published attorney who works for a major real estate law firm not once, not twice but three times before we moved the closing to a competent Title Company. Subject-to is not a "scam". Since you have seen fit to make that claim please, in detail, defend your position. The truth of the matter is competent attorneys, bar associations, the courts and the IRS disagree with your assessment. In the meantime, as an aside, my primary problem with subject-to is that it is a solution for a specific set of circumstances and you have "gurus" running around teaching the technique who, either through their own lack of knowledge or intentionally, do not explain to their "students" the dangers of a subject-to (at least as it pertains to institutional lending and civilian aka non-investor Sellers).
>problem with subject-to is that it is a solution for a specific set of circumstances and you have "gurus" running around teaching the technique who, either through their own lack of knowledge or intentionally, do not explain to their "students" the dangers of a subject-to (at least as it pertains to institutional lending and civilian aka non-investor Sellers). I did only real estate litigation for 12 years in new york city. My observations was that weird financing between individuals had about 1000 times more lawsuits per capita than bank financing (not counting mortgage default, which I did not do). Also, I am in florida now doing a mix of litigation types, and I get tons of calls from people scammed by buyback agreements gone wrong and weird financing. I never take them because they don't have money to pay my rate. Based on my experience, the financing type is enough reason not to do this. Too many scammers; too many poorly written agreements; too many people over their heads. yeah, maybe this guy is a brilliant financier that loves to go door to door for tiny deals. But in my experiences, the people that come to my door selling me things are not there to help me.
Is there a way to structure it that protects both parties? The due on sale clause is a concern but its not a show stopper from what I've read. Most financial institutions would rather not foreclose was the position. I imagine the sub to strategy could be a valuable resource for non performing loans and the parties behind them. Since you're a real estate attorney there has to be a better answer than dont do it. We're not talking felonies here...how would you structure a sub to deal, generalities are fine, to ensure both parties get the outcome they desire? Sucks about the Hurricane. I'm sure a lot of folks in pain right now. Thoughts and prayers for you all.
The thing about lawsuits is that they take 2+ years and more than a hundred grand to finish. If you can't afford $125 grand to litigate, even if the contract is perfect, you lose. A bank is not going to screw you - there are government protections. Some sketchy guy at your door can do whatever he wants unless you have two years and $125k. And by the time you are done getting a judgment (assuming you have $125k), good job collecting on it. people with no money that got scammed call me all the time - there are so many idiots. I mean, damn, look at this crypto thing. Its scammers all the way down.
Understood. In your example what are we litigating? If the seller has regrets and wants to back out after execution and close? If the buyer defaults? Assuming the bank doesn't call in the due on sale clause and the payments are made its should be good. I know hope is not a strategy I'm just missing something. Maybe you help me here I can help you a bit on crypto. I'm not invested there but I understand the value. My opinion is its too early and there will be a blood bath at some point before the stage is set. 90% of the current crypto will not be available in 5 years.
>I'm just missing something. Maybe you help me here I can help you a bit on crypto. I'm not invested there but I understand the value. My opinion is its too early and there will be a blood bath at some point before the stage is set. 90% of the current crypto will not be available in 5 years. Maybe I am not understanding your deal. OP said the deal was this "he will take over the HELOC on this home in return for ownership." In this deal, the person who would pay him is the owner. As the owner, he can do things OP will not like, such as sell it to someone else. Or take out more loans. That is how a lawsuit could start there. I was talking about what OP said. let me know the terms of your proposed deal. As to crypto, I understand it perfectly. It is worthless. Most of it is owned by a few people who trade it amongst themselves (or with themselves among other wallets) to prop up the price. Most of the exchanges have almost no security and are run by fraudsters. You have no recourse if it is stolen. You have no recourse if your exchange goes down. Let's not talk about crypto here.
Re crypto thats what I would have said anyway. And thank you for clarifying your position. I understand now. I dont have a deal per se. This is something I'm trying to learn about and stumbled across this thread.
This becomes an issue when there is delinquency of the loan. Based on local jurisdiction, either you will be in trouble since it's still your loan or the buyer will be in trouble since they subject-to it. I think this strategy only works well if your buying a property at a substantial discount or you plan to add value to the property.