when I first started in real estate I wish somebody broke down step by step the entire process of a subject two deal that's what we're going to be doing for you today timeline and process of a subject two deal here's what you should expect step one all the way through step seven you want to stay to the end because here's the thing I'm going to show you how you get paid upfront by putting a subject two deal in your portfolio a lot of people will shy away from buying a sub two deal and instead they'll wholesale a subject two deal because they go I'm not ready to hold a rental and also I want to get paid UPF front so on this deal the address is 3932 West Myrtle so you guys know we actually do this business and one of the things I'll give you down in the description below is the closing document so that you guys can see all the numbers associated with this deal this house right here is the house that we're going to be talking about and the story associated with it has been well documented so as we go through these steps the other thing I want to point out to is the other videos that we have built around this entire house I took the time the energy you guys DM me on Instagram and you say I if I just knew the exact process the exact steps the exact every little thing it would help me so much to start taking action so that's what we're going to be doing today all right so obviously we need to start now where do we start we don't start with trying to learn contracts we don't start with trying to get a title company we don't start with these things at the end and I see a lot of people go can I get a copy of a contract I'm like you really don't need a copy of of a contract I know that that is just like demystifying for a lot of people but the place that you start is you have to generate leads and another way to say the word lead is say opportunity you need to be able to look at a lot of deals okay and the four places that I'm getting most of my deals right now I'd say 80% of my deals are coming from these four ways so right now prop. A is one of the ways that my team generates leads what does prop AI do prop. AI through AI have conversations with sellers it will call sellers sellers think it's a real person it's not and prop. a will generate leads for me with foreclosures expired listings all sorts of those things I also use Loi Blaster Loi Blaster goes not to sellers it goes to agents so prop. A is for sellers Loi Blaster is for reaching out to agents then I get a lot of referrals in fact I got a referral this morning from Eric and I want to show you what I wish somebody showed me okay I don't say yes to every deal but I can make money on every deal which is kind of cool so check this out Eric Martinez one of my sub two students sends me an address 15886 West ashin here's the mortgage rate that o that's a big mortgage rate must be a big expensive house and I can get into a big expensive house for 20,000 bucks check this out if I click on this and I pull up the address I immediately know this is an opportunity right so you need to start with with opportunities I'm telling you where my opportunities come from this is a referral from a student and he says I have a deal and I pull this up and look at this this is a nice house really really nice house but it's he's buying it for like 875,000 I don't want this house in my portfolio it has an HOA it's an expensive mortgage but what I will do is if I go to pastor.com buers map and you can see that I have buyers all over the country that go here and say pace find me a house so I actually this is kind of cool check this out Glendale this person says I can afford 1,800 bucks okay I need more buyers in Glendo this person says they can afford $3,000 so I don't have a buyer for this particular house yet but what I told Eric is I said I don't want that deal it's too expensive of a home for me do you have an inspection period and that means you contracted with a seller you have 30 days to have the ability to cancel it any time he says yes I have 30 days I said let me find you a buyer so I think I can find a buyer for that house and I can make 10 or $15,000 on that subject two deal without me putting it in my portfolio the fourth way I get deals is people that post in my sub 2 Community right I built a community it is a paid community and I have deal after deal after deal after deal I could probably find 15 or 20 deals a day that I can make money on just in the Facebook group for the private sub2 community so those are the four place is I'm currently getting deals okay this particular lead actually came from Loi Blaster okay and the original offer was sent to an agent and the agent never actually replied to us and so a couple of weeks later we realized that agent got fired and it was an expired listing so then we followed up and called the seller directly through prop. so we generated a lead and we ended up having a first conversation with the seller the seller's name her name is cheryn what's great is that this video will suggest other videos for you the entire time testimonial from cheryn why did she sell to me why did she let me take over her house what is the structure of the deal we have a whiteboard video breaking down all the numbers of this particular deal so cheryn calls us back and I have my first call with her is recorded and currently on YouTube okay this first call was about 45 minutes but we only put about 12 maybe 15 minutes of it on YouTube so we have a first conversation and during every first conversation with the seller I ask way more questions than I speak I'm asking questions like what's kept you from selling the house why didn't you go through a real estate agent what's happening if you sell the house where are you going to move you'll see all of those questions in that video my goal is also um you know my number one thing is I want to find their pain because when you go up to the map you've got a seller right here living in their house here's the seller here cheryn on Myrtle this is pace and we obviously talk to cheryn and we start asking questions do you have a mortgage on the house yes do you actually own the house yes deed is the ownership okay deed is ownership she owns the house but she does have a bank she owes a mortgage to so I start asking those types of questions and what I'm doing is I'm trying to find the the pain that she has locked up and she's not willing to give me in the first 10 15 20 minutes the key to opening a her pan is Solutions and Rapport and Trust that is the key and I think that about 42 minutes into the phone call on the first phone call she finally tells us the real problem and that is to be expected in almost every seller situation it was foreclosure okay she's in foreclosure and she had a lot of problem so let's go through and I want to tell you guys her main problems in a different color so you can guys can see when somebody asked the question of why would a seller ever sell a house to you subject two well cherylyn has a bunch of them the number one one reason she wanted to sell is because it was too much for her and what do I mean by too much she bought the house in 2005 how do I know because I asked the questions in Step number two how long you be on the house what's going on tell me where are you going to move if you if I do buy the house where are you going to move where are you going to go I want to know the whole story of your life and she bought it in 2005 when she had kids the house is way too big for her now she so there's a reason the house is too big it's too much make sense it it's so lost on new people that they don't understand that actually is a reason why somebody would sell their house um but Airbnb is what she decided I'm going to go turn this into an Airbnb she goes and gets a helck on the house a home equity line of credit so now she has a mortgage payment and a home equity line of credit the contractor that she hires to do the renovation to get it ready for the Airbnb ends up stealing money from her another pain Point she then finds another contractor she's spending money on her pension and she's using her pension money to get the renovation done on this Airbnb what ends up happening is she finishes it she puts it on Airbnb and it fails now I'm not saying that Airbnb in this situation failed I believe that cherylyn is not an Airbnb person right that's not what she does for a living she was a school teacher how do I know find pain understand build rapport offer help what all the ask ask the what ifs like what if I buy your house what if you don't get the number you want what if this what if that and I find all of these things but I I realize that she is losing money on her Airbnb because she's not an Airbnb professional she's a school teacher who just retired it's not where she's acquired skills so for all of these reasons and more here's another reason she falls behind the payments the airbnb's not bringing in enough money she has now a mortgage and a helck it's suffocating her she's retired so she doesn't have her full income she only has a pen I so she's running into the situation of I can't afford these payments I'm now facing foreclosure one of the biggest things that she was running into I didn't find this out until uh the end of the first call but what I found out is that she also has a dad a father that is going through surgery and her family needs her help in St Louis Missouri so she says I need to leave the house but I'm stressed out by it and I don't know what the heck to do and I tried to go through an agent I tried to go through other Real Estate Investors I don't know what to do okay cool so what I did is I said I'd love to help you what was great is she when we called her okay here she looked me up online she looked our company up online and she saw a seller testimonial another seller testimonial of I me taking over somebody else's payments and chery Lin goes wow okay this person's trustworthy and she called me back so cheryn calls me I obviously have Rapport I have trust I have all of those things which then allows me to do this the most important thing I offered to help her and I said hey I'd like to give you three solutions I've got three ideas for you and as I'm explaining these Solutions I was realizing that a lot of the stuff I was telling her was kind of going over her head and something that's really important is when you are working with somebody that's never heard of subject two or seller finance or co-living or air like it's overwhelming to them and the best thing to do is go on an inperson appointment so that is Step number three on the phone you'll see I ask her hey can I just stop by like I haven't showered for the day I look gross but like do you really care can I come over and can we sit there and I'll give you all the solutions so literally an hour after I have the first call with her I then get in the Prius and we drive all the way up to her house and we go to an in-person appointment now this gives me the ability now in person to look at the house make sure that it is a house I want um I give detailed options I wrote them down now somebody here brand new you might go Pace this is really daunting like I don't know how to generate leads I don't know how to talk to sellers yet and I don't definitely don't know how to go on in-person appointments well first and foremost neither did I I did not know how to do those things I wasn't born with that skill I was nervous the first time I did it the second thing is that you don't have to like you could literally just get referrals of deals from students or see deals inside my community that somebody's already generated the lead had the conversation done the first appointment done the followup got the contract you could skip the line on all of these things just letting you know you could skip the line on all of these things if you were just in the sub2 community you could just buy deals from other students in the community or do what I'm doing with Eric on that deal where I just get his deal he's already generated the lead talked to the seller went on the appointment did the next couple of steps all on his own and then he came to me and said hey I did all this hard work do you want to help me sell this deal and I'm like yeah I'll make 15 grand on all your hard work so can you skip all of these steps yes you can skip these steps as long as you are in in a community of people that are willing to share deals with you so I go on the first pointment first appointment I'm looking at the house I'm giving detailed options I take some photos I take some videos not because I'm really like Curious so much about the house but just in case I want to send it to Molly or somebody else on my team I'll tell you who Molly is in just a second I double down on the Rapport and the way I do that is I compliment her house because you'll see I get a testimonial from Sherin and we closed the deal and I asked her for for a testimonial that's actually in one of the processes that we always follow in the testimonial she says I just loved how nice you were about my house and you actually said I had good ideas and you actually complimented me and that made me feel like you cared my M I did I went through the house I complimented you you did a great job and she's like you didn't beat me up I didn't feel like you were trying to negotiate with me and lowball me like I that's the beautiful thing about creative Finance I don't have to lowball anybody and I got I gave her a true understanding of subject two I gave her a true understanding of her options which were three here's a cash offer go through an agent partner with me let me take over the mortgage payments so she went through those things and guess what I did not bring I did not bring a contract to the house I did not have to have a sub2 contract or walk through the paperwork with her my next step in the process always is right here wait wait and follow up and you'll hear in the testimonial with cherylyn later down in the series she will say I love that you didn't come to the house and make me feel a certain way you gave me so much time to breathe and really think about it so I gave her space I didn't even check in I was about to check in with her and I'd say like four or five days went by after our in person appointment and I was about to text her and go hey do you have any questions right this is the best way to check in with somebody he's like hey do you have any questions about our appointment if you don't go with me please please let me know which way you're going and maybe I can provide a resource to you that's how I follow up I'm always trying to find the best solution for them by the way was a good solution for her to go through a real tour no absolutely not this was an absolute impossible deal for a real estate agent unless you were a real estate agent that understands creative Finance then you could have made all the money I'm making um so no a real estate agent could not impossible for this to be solved with a listing impossible so I told I said if you need resources you need something let me know it also was an impossible deal for a wholesaler and I'll tell you why the number she wanted and more importantly the number she deserves okay cheryn is a retired school teacher my friends we want to make sure that we get our sellers the best possible number available and when you're a wholesaler the only way you make money as a wholesaler is for every dollar you take out of the seller's pocket is the dollar you get to put in your own pocket okay that is how it works when you're a wholesaler now I'm not saying wholesaling is bad I've wholesaled hundreds and hundreds maybe a couple thousand deals I did wholesaling primarily okay all the way back in back in the day in 2014 2015 2016 2017 I was one of the number one home Vestor franchise owners in the in the country so I've done a lot of wholesaling back in the day okay I love wholesaling nothing wrong with it but the only way for me to make money as a wholesaler is to take money out of the seller's pocket so seller says I want $450 and I go well the only way for me to make my $20,000 assignment fee or my $30,000 assignment fee is for me to take it out of your 450 so then I lower to 410 or 380 or whatever in Creative Finance that's not how it works the seller says I want 46 450,000 the number is not important to me how we get to that number is important to me and that is why creative Finance actually solved sherlyn's problem and she loved it okay so again you can skip all of this to step six you never have to do this in your entire life you never have to learn any of these skills in your entire life I'll give you a good example Elena tang and Kirk Tang students of mine of sub 2 they came in and they go Pace we're busy Engineers we don't have the time to do all of this stuff I go yeah just skip the line she's like what do you mean skip the line I go it's a strategy it's called skip the line and she goes what do you mean I go just have somebody like Pace or Kevin Cho or Tyler Townsley Eddie Maron I could go on and on we have probably 5,000 sub two students that are only working on finding deals and they don't necessarily want to own most of those deals they want to wholesale those deals and she says really I could do that so Elena tang and Kirk Tang went and bought 24 sub two deals put them in their portfolio all within 12 months they bought all the sub2 deals from sub2 students they got all the sub two all the money for their down payments and their closing cost and all that stuff also from sub two students and so they're like this is the greatest thing that we've ever done in our life you can also skip the line okay so if you're out there going paste this sounds daunting you can also skip the line the way you do that join the sub to Community Link is down there below okay so before I checked in with her she reached out to me and we ended up having a second call okay we ended up having a second call and this is where that second call happened by the way I'm going to tell you the same thing I've been saying this second call was probably an hourong call and it is so good it's an hourong call we ended up putting I think about 15 minutes on YouTube close the contract so this is the next step is I close the contract that is a very harsh way of saying what I do um but the way I do it is I have this call and on the call I went through and I explained to her the process and I went back through what I talked about here what I talked about in person what I talked about on the first call I reiterated a lot of the things that I said and then I had a closing line I asked her the closing line I said are you good to have me just have Molly reach out to you and we get um we get the menu started that was actually my closing line and she said yes let's move forward let's get the deal done and so what my next call is okay I have a top tier TC her name is Molly and I get my top tier TCS to help me do all of this stuff and I want to give you guys a really great resource if you ever need a title company or a TC in your area Molly will tell you the title company in whatever state you're in and the top a top tier TC that she has personally trained on my methods and my paperwork and all that stuff Molly will connect you with those two things for no cost like she will help you out with that now you're going to have to hire a TC transaction coordinator and you're going to have to pay closing costs but email Molly at p.com and just say hey Molly either a I'd like to learn how to be a top tier TC we have a TC that makes 50 Grand a month transaction coordinator not on my team she's in our community and she makes 50 Grand a month just helping other people do their paperwork Molly will tell you the title company we use in any 50 any of the 50 states Plus Puerto Rico Molly will also connect you with any top tier TC that she has personally trained so Molly sends the contract okay the agreement I never call the contract in agreement when I'm talking to a seller but this is the way it works Pace calls the seller I introduce myself I talk through her problems I ask ask her all the questions I find and uncover her pain we went through all the things I uncovered I then go through and I give her the options those options are in the call she then says okay on the second call here on step number five she says okay I'm ready to go so what we do is we send this contractor agreement to cheryn cheryn signs that agreement and we take that agreement and we send it to the title and escro Company so this is is a title rep this is escrow and this is their assistant okay title is the people who are doing the insurance escrow is the people that are managing and and doing all the things I'll talk about in Step number six and then they always have an assistant so I take that contract and I open escrow with EMD okay this EMD was I believe $5,000 and I borrowed that $5,000 from a gator if you guys want a list of gators I'll give you that in the description down below as well that's who gave me the EMD for this deal okay I didn't have to come up with any money I didn't have to use any of my own money the EMD was given to me by a gator okay so now we've officially started the transaction and chery Lin signed the agreement I've got the contract we then do something that is really interesting we start one of those slack channels every one of those addresses on the leftand side has a specific channel that my team can commu communicate with and so now again a lot of of the things I'm telling you you are sitting here going this is frustrating and overwhelming and this sounds like way too much to learn I get it I had to learn it too I had to go on appointments and screw up a thousand times I had to do all of those things and I did all of those things while running a construction company so I get how frustrating it is but again can you cut the line yes you can absolutely cut the line you don't have to go through all this arduous journey of learning all these things if you choose to do so you can be like Elena and Kirk Tang or hundreds of my other community members that just buy deals from other students okay you don't have to learn any of this stuff you literally don't have to learn how to talk to sellers you don't have to learn paperwork you don't have to learn that just jump into the community you can buy deals from people then at this point this is really interesting I don't really start underwriting a deal until we open escrow and I know that that sounds crazy a lot of people think well I have to underwrite and I have to comp and I have to do all these things on the front end I've just learned and this is really important for you guys to understand from a process I've learned over all of the years that I will go and comp and underwrite a 100 houses to get one under contract so I thought why don't I just get houses under contract open escrow and then go through and comp and underwrite those deals um instead of wasting a lot of time on the front end I'd rather spend more time generating leads and getting on the phone than I would comping properties and I'll tell you why you close the contract you send the contract to the title company what ends up happening now is that the title company goes and looks at all the records in the world they look at Credit Credit records they look at UCC one filings they look at County Recorder pre like they look at every record to get you a title report and a title report from the title company is going to tell you all the problems with this house it's going to tell you yep she does have a mortgage and so this is what this one told us okay they said yes she does have a mortgage okay so they checked they verified that for me yes it is the correct interest rate you're thinking I think the interest rate we took over is like 3% something along those lines I'll break that down in another Whiteboard video giving you guys all the details of every little intricate number I don't want to underwrite a house until we've gone through actually one of the hardest things to go through you guys think the hard thing to go through is generating leads conversations appointments followup you think that's hard it's not it's not until you get a title report that all the challenges actually begin right they do all the good things they verifi the information that cherylyn told us but then they also found one a lawsuit on the house two another lawsuit on the house and three a lean from another lawsuit on the house so here I am this goes through I'll give you guys the timeline check this out start to First Call was about one week okay we called we sent out an offer to an agent the agent never replied I think it's because they were in the process of getting fired then the we used prop. to get a hold of her a week later cherylyn had looked me up they had she had looked at a seller testimonial I did did and she calls us about a week later from first conversation to first appointment was literally 1.5 hours I had the call and Eric and I immediately jumped in our Prius and we drove up to the appointment okay then the wait and followup was 3 to 5 days right then the second call that was about a one week later so in order to get a contract start to finish really one week two weeks 3 weeks so it took three weeks right here this time frame took three weeks all right that took 3 weeks the process of opening escrow and starting this whole entire thing to figure out these things the lawsuit the lawsuit the the lean that took two months by itself so I want to point something out there if this takes 3 weeks and this could take 2 months or even longer you don't have any clue how hard it is once you get a house under contract you have no clue it is very challenging and if you want to be me and like control the whole process it's very very hard if you want to cut the line and just buy deals from other people it gets a lot easier but at the same time you're not learning all these valuable skills I think these valuable skills are transferable to everything else in your life so so I prefer to have gone the hard way and I prefer to own the process meaning I can generate a lead I can get a contract I can build relationships with sellers that is a valuable skill I'm grateful and glad that I acquired message okay but it doesn't mean you have to do it you can cut the line so this law these lawsuits took us two months to overcome I had to hire an attorney where did that money come from that money came from a gator I went to a gator and I said I need another $5,000 and that g same Gator gave me five grand here gave me five grand here I got a private money lender a gator to help solve the issues we were communicating with the seller and this one's a big one you have to ass wait and assume issues are going to pop up when you are about to close a transaction you have to assume that transactions are going to have issues what happened here is that a couple years ago cheryn when she was taken advantage of of this by this contractor she said I'm not you know what I'm not even going to finish the renovation I'm just not going to finish the renovation I'm just going to sell it and so she goes out and she starts answering postcards and cold calls from Real Estate Investors AKA wholesalers and she gets a wholesaler to buy her house the wholesaler opens escrow right starts the transaction and then never performs why because he bought the house way too high with cash and so he goes I can't find a buyer I can't sell the deal that's what wholesalers do knew so that wholesaler then goes away she's stuck she goes to sell with another wholesaler and the wholesaler does the same thing to her so now she has two memorandums on the property and then we find out that there was an illegal deed transfer another real estate investor tried to Rob this lady of her ownership and they did a quick claim deed and it was just a mess we found out all sorts of things but every i' I'd say 99% of the deals we do we find something in the title report that needs to be fixed before we close escrow 99% of them okay especially people that are going through foreclosure or some sort of hard situation there's always going to be something in the title report so again this is the actual hard part of a real estate transaction once you open escro this is where the challenges start most people like I got a contract I'm so excited I'm like when you get a contract it's like getting a ticket to a horror show and the horror show is the escrow process it is a freaking nightmare and we've done thousands and thousands of these that we're not surprised anymore we're just not surprised we expect it we wait and we assume and so when a deal something like this pops up Cheryl Lynn was like oh my gosh you you're not going to cancel on me are you and I go no we're going to figure this out we're going to solve this problem and so we spend the next two months solving the problem getting an attorney involved to go to these stupid wholesalers and removing the lawsuits removing the memorandums removing the lean all of those things and we communicate with the seller every single week so anyway we we put all this together we solved the problems and then this one's really important I run all my numbers on a deal and I run those numbers first because I not only want to give Cheryl a little bit of cash I had to catch up her aers I had to close escrow I had to hire an attorney I had to cover EMD and I also wanted to pay myself 15 grand up front and so a gator brought me my $15,000 up front and I got paid 15 grand to do this process my gator also paid my top tier T TCS literally every single thing was paid for by a gator and so running my numbers and saying this is how much I need I will show you that in the Whiteboard video breakdown of the all the numbers of a sub2 deal transaction okay so in this transaction here's what ends up happening yes we have the contract yes we've opened escrow all of those types of things what ends up happening is we have solved her pain right we've got rid of her foreclosure we figured out how to get her the number she wants tidle and escro have gone through and found these issues my team has come through here and we've solved these issues we hired an attorney then the title and escro people say okay we're good now we can transfer the deed ownership to you via subject two literally a subject to transaction is that simple it is just the title ncro company checking on the title report clearing all issues and then transferring the deed to my name that's it that's as simple as I can put it the mortgage in the bank stays in the seller's name seller moves out seller moves on with their life and they go on with their life the mortgage stays in their name I now can put a tenant in that property and I can fill that up and I can cash flow I made 15 grand up front I have a deed in my name I have full control and ownership of the property I now get all the tax benefits I if the property goes up in value I get all of that right all the ownership benefits are me I own the property so all of this stuff so far every single one of my sub two students that are finding these deals will do all of that for you and then bring the deal to you so you can just put in your portfolio or they can let you move in the house if you choose to do so okay so we then close escrow closing escrow means finalizing the transaction it means the transaction is done what happens is people everybody gets their money the money is distributed I always before the seller gets their money I ask for a testimonial I then f sign final docs with the notary I then get the utilities turned on we get the contractor scheduled we get the property manager and then I get a nice tasty check for 15,000 now in this process I want you to know I've brought in a gator to not only cover all of my costs and pay myself sell 15 grand I also brought in enough money from the gator to cover my first two months of payments my first two months of utilities my first two months of landscape maintenance all of that stuff so I literally have a buffer that I don't have to worry about not getting a tenant in there right away and I raised that money from a gator I then structure the deal in a way that I bring in more money than what it cost me now at the very end of this process if you look up the county record office who is the owner of a subject two deal at the County Recorders Office office the owner of this property is Pace right pace is the owner of this property and I'll give you a quick cheat code just go to startwith prime.com that's the company that I use they do all of my llc's my corporate structure and tell them can you give me a map of exactly what pace is doing and they'll give that to you start with prime.com and they'll help you get your set up your LLC set up okay cool I feel like we've done a good job of this do we understand the process and the steps of how challenging a sub2 deal can be I'm telling you right now if this is a traditional real estate transaction there are so many more steps involved in a traditional real estate transaction subject 2 is the easiest real estate transaction you'll ever do on the planet and the reason being is you don't have appraisers you don't have inspectors you don't have Banks going in and like requiring you to give pay stubs and you don't have any of those really challenging parts to a real estate transaction this is actually pretty simple it's the most simple way a transaction could be done but it is the full process start of a lead to the day I make 15 grand to the day I also get my tax benefits my cash flow and all of those types of things gosh this makes me want to go out and get like 10 more deals this week I can make 150 Grand in one week by just buying 10 deals from sub two students and getting paid 15 grand up front putting in my portfolio making three four 5,000 $22,000 per month on each house it's crazy I didn't even need a drink of water until right now appreciate you guys so much we'll see you in the next video