Do you want to learn how to set up your subject to deal the right way?
how to structure it so that you don't have to worry about the do on sale clause?
But more importantly, you want to put together a subject to deal with.
You'll get paid not once, not twice,
not three times, but four times on that same deal.
I'm going to show you how to do that with this video.
All right.
Let's get started. Okay.
So here's the thing about subject to so many people are concerned
about the do on sale clause.
It is when you buy property subject to existing financing,
that means you're going out there, you're
finding a seller who's in a distressed situation
and you're showing them a path to get out of that
and you're helping them out, but you're also
being able to purchase their real estate and not have to get your own loan.
That's what makes this type of investing so phenomenal for real estate investors,
because you're able to buy a property with a little bit of money down
and you don't have to take on any debt because you're using
the seller's existing financing on the property.
But here's the problem for a lot of people, they have this preconception
that when you set these deals up that the lender will accelerate the note
and you're going to be stuck
in the situation where the property is being foreclosed on because someone's
going to notice that the property has been transferred to you from the seller.
Well, I'm going to show you
that no longer concern for you if you're doing this the right way.
Now, if you've seen some of my older videos on subject
to investing, well, I taught it a little different a few years ago. Why?
Because the market was different.
Hey, now we're in a situation where interest rates have gone up.
So there's a lot of reasons why a seller may want to accelerate a note.
So I'm going to show you how to avoid that.
Let's go over to the board and I'll show you what I'm talking about.
All right.
So let's say we're going to get involved with a subject to deal.
So we have a property here and you've got a distressed seller.
And so what you're going to look at doing is buying this property
from this distressed seller.
Now, in a lot of situations,
what we might do is set up a limited liability company.
In fact, I probably taught you that if you watch
some of my older videos on subject to do, in fact do this now in this environment,
we don't want to do that because as I said, I'm
going to show you how to avoid a lender finding out that this property
has been transferred to this entity, because that's really key here.
We don't want the lender who's on this property.
Let's say this was Wells Fargo, to find out that
this distressed seller here actually sold the property.
Because if you transfer the property from the distressed seller's
name to a limited liability company or to your name individually,
that's kind of a red flag if they were to pull title sellers
no longer involved with that property.
So we have to look at a way to create the fiction
that the seller is still involved or so that if they're looking,
they think the seller is still possibly the owner of the property.
Now, we're not doing anything fraudulent here.
All we're doing is creating the perception the seller does not own it.
Now, how do we do that?
Well, in order to do that, we're not going to use a limited liability
company as as our entity.
In fact, what I want to use is I'm going to set up here a land trust.
All right.
Now, I've got a lot of videos covering land trust, but what you'll do
is you create a land trust to take this deal down.
Now, in a land trust, you have to have two parties we've talked about.
You have to have a trustee and you have to have a beneficiary.
The beneficiary is the owner.
So obviously in my transaction here, what I'd like to do
is have a limited liability company that I've set up down here
as the beneficiary of this land trust.
So this one is going to be my beneficiary tree.
Okay, I just put Benny there.
And so that's me right down here.
This is my LLC now, the trustee.
All right, who are we going to make the trustee of this land trust?
Well, before we start thinking, well, it's going to be me or something or my LLC.
Now, we don't want to do that because again,
that's going to throw the lender off because if you watch my videos,
you know, when I talk about deed property into a land trust,
you deed it from an individual here.
And let's say this individual's name is Tom.
You did it to the trustee of this land trust.
So if a lender looks at title, I want to see Tom's name still appearing there.
So what I'm going to do now when I structure my deal is I'm going to list Tom
as the initial trustee of this land trust.
Now, think about the land trust that I really like
is the fact that the land trust is not a publicly available document.
That means no one can see the terms of this trust.
All they can see is what's on title.
And what you're going to see on title is that property transferred from Tom
individually to Tom as trustee of Put in the Blank,
whatever you want for the name of the trust.
So a lender, if they're looking at title, they're going to see Tom.
Tom and they going to figure out Tom still the owner.
But what's going on behind the scenes is what's a little different.
So in our trust, what we'll have set up here is Tom will be the initial trustee,
and then I'm going to have myself
or maybe in a separate LLC that I own as what we call the successor
trustee.
So I'm the successor trustee here.
Now, what is this doing for me?
Well, it's setting it up so that when we first transfer title Tom's
there is trustee.
But as soon as the title has been transferred,
I have Tom resign his position, and now I'm the undisclosed trustee.
No one sees the fact that I'm actually the trustee of this
of this trust, because that trust is not a public document.
Now, this works phenomenally well for not alerting lenders
to the fact that property has transferred to a third party
because of the illusion here that Tom is still involved.
The reality is that Tom is not.
Now, if you just stop there
and you didn't do anything else, well, you got a problem.
And that problem is, is that Tom still listed on title
as a trustee of this trust when in reality he's not?
So that's a concern for me, because if Tom was an unscrupulous individual
and he wanted to go out and try to sell this property to someone else,
well, he could probably do that or possibly get away with it
because all we'd have to do is create a fake trust, same name, everything.
Put his name on his trustee,
and then he would have the apparent authority to do so.
So I need to protect myself and that's what you need to do as well.
If you're going to be subject to
and you want to do this deal, this is really important.
Now, what I'm about to share with you,
this is what you must do to ensure that your interests are protected.
All right.
So what are those things that you must do?
Number one,
the first thing that you want to do with this is you want to get a trustee's deed.
All right.
So we want Tom to give us a trustee's deed
dating the trustee ship to you as an individual.
That's number one.
You have to get that
because if you're ever concerned about something comes up, too, and you want
to get your name on the trust on title, you have to go record the trustees deed.
So that's number one.
The second thing we need to do,
which is really just as important, is number one is do this.
We want to file a notice of interest against the property.
All right. So I want I want this LLC
to record a notice of interest or notice of contractor.
I like, you know, memorandum of interest.
This is another way of doing this.
You want to put something on title
that if Tom tries to do anything with this property
after you've already bought it from him, that a title company is going to go, Whoa,
there's this other entity out there that's claiming an interest in the property.
I need to reach out to that entity.
This way you get notified if something's going on,
then they reach out to you and say, Hey, we see you have
an interest in this property.
Can you explain that? Yeah, I bought the property from Tom.
Tom doesn't own it. Oh, well, Tom's representing.
He's trying to sell this property as his own property.
And then you pull out your paperwork, you can show them that Tom does
not have the ability to do that because he's not the owner
and he can't pass good title.
So these two items right here are critical.
If you're going to use this strategy, you got to file that interest.
Now, the third thing you're going to want to get is a power
gain, a power of attorney over the trust.
So you want to make sure that the trust
and I would have Tom do this point you the power of attorney.
So when you're setting up the trust, he's going to give you a power of attorney
over the trust so you can make the necessary decisions.
What type of decisions?
Basically dealing with utilities. Right.
You got to be able to get in there and deal with utility companies
because many times utility
and third parties, if they look and they see Tom listed as a trustee,
they don't really think about the beneficiaries.
That's all private.
So how do you get past that?
Someone saying, oh, I want all I want to do is work with Tom.
We have two options.
You either record your trustee deed, drop your anonymity, and possibly
then put yourself at subject to the due on sale clause
notifying the lender or to you again operate behind the scenes
with that power of attorney that Tom gave you as a trustee of the trust.
So that power of attorney I think is really important as well.
Nailed these three items right here.
And you've got a lot going,
a lot of way to protecting yourself with doing this subject to deal.
Now, I did tell you, I'm going to share
with you ways in which you can get paid for time.
So if you've been waiting around wondering,
all right, Clint, I've already got that figured out.
I've been doing this, but I've never been told there's four ways
to be paid when you're doing this subject to deal.
Well, here's what we want to do.
So when you're going into a subject to transaction, here's a property
right here and we've got our land trust set up right here.
Typically what we're going to do
with this type of deal a lot of times is we're going to buy the property.
So then I'm going to own the property in my trust and forget about the trustee
and the beneficiary. I'm not we're not focused on that right now.
So now I get the property, it's held in my trust name.
Then I'm going to turn around and I'm going to lease
the property to an individual. All right.
So that's my first payday right there, the lease.
So I'm renting the property out, I'm getting paid.
I'm bringing in money every month.
So maybe I bring in 1800 dollars.
And remember, I'm paying the mortgage on this property.
So I have 1400 dollars going out on the mortgage every month.
So that leaves me a net $400 profit on this deal on a monthly basis.
That's payday number one. Payday number two.
Maybe what I'm going to do with this individual is I'm going to tell them, hey,
would you like to have an option to buy this property in the future?
So this is where we bring in the lease option strategy
that some of you may be aware of.
I've got some videos on that.
So we could also give this person we'll call that option a payday.
Number two, an option
to buy the property.
That means they're going to give me money up front.
So in this case, maybe they give me $5,000 upfront for that option
to purchased the property within two years.
Now, whenever you're putting something like that together, it's important
that you do that right.
I'm going to cut a new video just on that option agreement
to make sure that you don't put yourself in a position where you couldn't
get rid of that property for much less than what you wanted.
So be on the lookout for that video.
So option number two, that five K, that money comes in,
they can buy the property in two years at a set price.
Actually, that money right there is free money.
You don't have to pay taxes on that until that option expires or it's exercised.
So keep that in the back of your mind.
So paid number two is tax deferred until something happens with the option.
So I've got the least income here.
I've got option income here.
And then a different way to get paid
is going to be number three course when they actually exercise the option.
This would be three of exercise
and they buy the house from me.
So now I'll get paid there because I've been paying that mortgage
down over two years.
House has gone up in value. We agreed.
Let's say the mortgage, what's left on the mortgage was $175,000.
I agreed to sell it to this individual
in two years for $250,000.
That's a $75,000 difference right there.
So that's my third payday.
Now, that's a lot, right?
You got $75,000 when the property sold off.
They exercise the option. You got the option money.
So there's another $5,000.
So now you're at 80 K on this deal.
Plus you're making $400 a month spread
on this deal, which is approximate, let's say, $5,000 a year.
So that's another 10,000 over two years.
So that's so so you add all that up.
We're actually talking about $90,000 right here.
Okay.
Here is the fourth payday and this is the payday
that a lot of people miss with these types of transactions.
And it's something
and there's a limited window to take advantage of this right now.
When I do this deal right here where I bought the property, right,
I need to run a cost segregation study where I'm going to go in.
I'm going to have somebody come in, look at the property
and then accelerate my depreciation.
So rather than depreciating this property
over 27 and a half years, I'm going to take the components of it again.
Check out my channel.
I got more videos on cost.
Segregation accelerated depreciation.
I'm going to take that and use the tax code to put money back in my pocket.
So on a house, let's say I bought it for there's $175,000 note on it.
Maybe I bought it for 200 K because I paid them $25,000
and assume the mortgage there.
So on a $200,000 deal, you're probably going to get about
60 to $80000 in deductions.
And depending on your tax bracket, you know where that sits, let's say you're
at a 20% tax bracket,
then you're looking at another 12 to $16000 in additional income.
Just based on the tax deduction, you're put in your pocket.
You see, that's four ways to get paid off a subject to transaction.
And you've got very little skin in this type of deal.
So if you learned a lot about how you put these things together,
there's many ways to do that.
If you want to learn more.
I have my tax and asset protection event that I teach every other weekend.
There's a link in the show notes below.
Go ahead and subscribe to that.
You're going to learn all about land trust, how to use them,
how to set them up, how to set up limited liability companies more.
What you're going to learn how to set this stuff up the right way
if you're a real estate investor, to make sure
that you're using strategies like this to put more money back in your pocket.
Look forward to see you on that event.