GI236: Subject To Real Estate Deals with William Tingle

GI236 Subject To Real Estate Deals with William Tingle

William Tingle began investing in real estate in 1999 by taking a $5,000 advance from his credit card and since that time he has taken the deed on over 500 properties. For over 10 years he operated a real estate business where he wholesaled and rehabbed numerous properties each year but found his real niche in Subject 2 deals; which we will talk about today.

Watch The Episode Here:

Listen To The Podcast Here:

Transcript:

Announcer:
Welcome to the Global Investor Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host Charles Carillo combines decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now, here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have William Tingle. He began investing in real estate in 1999 by taking a $5,000 advance from his credit card and since that time he has taken the deed on over 500 properties. For over 10 years he operated a real estate business where he wholesaled and rehabbed numerous properties each year but found his real niche in Subject 2 deals; which we will talk about today. So thank you so far much for being on the show today, William.

William:
Hey, thanks, Charles. Honored to be here. Just, just glad to talk to your to your followers today.

Charles:
Yeah, we touched base months back when I was on your show, and it’s awesome to have you on here. As our listeners know, the majority of what we talk about on the show is we talk about a lot of multi-family investing and what William Howes. Before we get into it, give us a little background on yourself, because I just gave you kind of a brief overview, but if you can give us a little bit self about yourself personally and professionally prior to getting involved with real estate investing.

William:
You bet. I was in the restaurant management business. I actually, to go, to go a little further back, I quit school in the ninth grade. A lot of big story behind that. I won’t bother you with that today. But, so, you know, I got started in the restaurant business as a dishwasher and worked my way up because in those days, if you worked hard, if you showed up, you got promoted pretty quickly. And anybody that’s been in the restaurant business knows how it works. So I found myself 20 years later you know, almost 40 years old. And you know, I was a district manager covering multiple states, making pretty good money. But I worked all the time. I never saw my family, my wife, my kids they were both pretty young at the time and I thought, man, there’s gotta be more to life than this. And one night at two in the morning I was flipping channels and a Carlton Sheets infomercial came on. And I, I know if you’re some of your listeners after no

Charles:
Money down, no money down, no

William:
Money down, and, and there’s always these palm trees swaying in the background. And I thought, man, you know, and, and, and some of the people he had on the show, it was just crazy. They, I mean, you could tell that they weren’t, you know, like super, super smart. And I thought, well, that works for me. You know, I’m only in a ninth grade education. Maybe I can figure this out too. So I whipped out the credit card, ordered the Carlton Sheets course, and you know, I, the difference in me and a lot of people is I actually did what he said to do. I didn’t know any better. I didn’t know it wouldn’t work. I wasn’t surrounded by people telling me it won’t work. ’cause I didn’t tell anybody what I was doing. And so I actually went out, started doing what he said. 30 days later I bought my first house. Then next month I bought a next house. And after four or five houses, I said, whoa, this stuff might really work. And that’s how I got started.

Charles:
That’s awesome. So when, what was your first real estate investment with that? I mean, his whole thing was buying I, my dad had the program, I listened to it many years back, but it was single family rentals. Is that what it was?

William:
Right. That it was single family homes, primarily. Now you, if, if you have the Carlin Sheets course, you know, it’s 10 miles wide and about one inch deep. He covers everything under the sun. Yeah. But not very in depth. But I decided early on I wanted to do single family stuff. So that’s what I did. And, and through networking, I met another investor who said, listen, there’s a small local bank where you are, they’ll do investor loans, and, you know, ’cause I didn’t know anything about subject two at the time. So I went down there and met with the banker, and he said, well, you’re gonna, yeah, I’ll finance you for some stuff, but you’re gonna have to have some skin in the game. And I thought, well, gee, Carlton said I didn’t have to have any money, so how can I work this out creatively?

William:
So I had taken a $5,000 advance off my credit card to start my business. And I told this banker, I said, well, listen, I got this house that I’m interested in, and what if instead of giving you cash for a down payment, I give you say, three grand and you put that in a CD in your bank in whole, that is security. And he said, okay, I can do that. So all said and done, I bought this rental property from this family that had moved away, had a tenant in it, but after prorations and everything, I got the house and I walked away from closing with a check for $871. And I said, wow. I got a house and I got a check. And I didn’t have to put any money down technically. So it worked out for us.

Charles:
That’s great. That’s great. So when we’re talking about subject to, and you, you mentioned it as being the most dependable and consistent way to build wealth in real estate. So what is buying a Proje project? A property subject to,

William:
You know, buying a property subject to is really just taking over the loan that’s on the property. Now, when we say subject to, it could be subject to a lot of things. If, if you call me today, Charles, and you’ve got a house you need to sell, maybe you’ve got an IRS lien on it, maybe you’ve got judgments, multiple judgments, you’ve got a mortgage, but the deal makes sense. I can get you to deed me that property. I can take over the payments on your mortgage. I can take over the responsibility of paying out all of those debts on your property. And that’s what we do when we buy subject to, we take over payments on the property, typically, that’s gonna be what it is. If there are any additional liens and judgments, we’ll get those satisfied or we’ll take over the responsibility for those as well.

Charles:
And I guess one of the big questions that might happen, and we’re not, none of us are attorneys on this, but is purchasing a property with existing finance, financing legal? And how do you structure that?

William:
It is perfectly legal. You know, the next question you’ll get from people is what about the due on sale clause? Because most residential mortgages, most mortgages in general have what is called a due on sale clause. And what that means is if you transfer a title or any interest in the property without the approval of the lender, they have the right to call the full loan due and payable. Violating that due on sale clause is not a criminal thing that you do. It’s a violation of a clause. It’s just an agreement between the purchaser and the financer. So doing that is, is really, it’s, it’s, it’s not criminal in any way. You won’t go to jail. There’s no due on sale jail. It’s perfectly legal to take over a payment subject to any state in the United States in a lot of countries across the planet.

Charles:
When I was speaking to my asset protection attorney years back, and he was telling me, he goes, it is in there. But out of all the times that I’ve had clients do it, not one time, it’s has it come back? And and obviously, yeah,

William:
Yeah, we bought hundreds and hundreds of houses. Our students have done the same. We’ve never had a due on sale issue ever in, in 20, over 20 years of doing this.

Charles:
So it’s obviously in the paperwork you should talk to your attorney before doing it. However these are just experiences that I’ve had myself and William, and then also my attorney. So it’s one of those things that you kind of work off of that. But right,

William:
So

Charles:
William, with this, the strategy, I see the strategy working fantastically when you’re in markets or you’re in parts of the market cycle that is, you know, at the lows, right? Where people might have higher unemployment, these type of issues. You know, right now, why would a seller ever sell with subject to financing? Especially since over the last three or four years we’ve had such an increase in home prices and home equity. I mean, where are most sellers most likely to be, you know, not really underwater anymore, right?

William:
You know, people get into all kinds of situations all the time, and it just really depends on the seller situation. I can give you a couple of examples from this year. Now we’re in northwest Arkansas, home of Walmart, home of JB Hunt, home of Tyson Chicken. This is one of the hottest markets in the country, even still today after Covid, a lot of people move here for these big industries. Homes usually sell very quickly still. We’ve had people give us properties this year with tremendous amounts of equity. Now, I’ll give you an example of one guy who knows why some people do these things. The last house we bought we’re actually remodeling to move in. This couple got behind on their payments. They, you know, they, they listed the house for sale. It didn’t sell. He had taken a job where he made a lot less money and he just couldn’t keep up.

William:
He called us several months ago, talked to us about buying it, we proposed buying it, taking over the payments. He wasn’t ready. He wanted $50,000 for his equity, and that was more than we were willing to pay. Now, you move forward a few months, he actually called us. Literally, he said to me, he said, William, I know I talked to you a few months ago. He said, here’s my situation now. He said, my bank account’s empty. I haven’t made this month’s payment. I’m not gonna be able to make this month’s payment. I don’t wanna wreck my credit. I’ve gotta do something right now. Can you help me? Final and bottom line was we bought a $300,000 house for the loan balance of $225,000. We wrote the seller a check for $12,000 and got a great house in a nice neighborhood that we’re actually fixing up a little bit to move into ourselves.

William:
So that guy just got in a little bit of trouble and he needed to do something very quickly. He didn’t want the uncertainty of listing it again and maybe it wouldn’t sell. He needed to do something today. And we’ve had people just get into those situations. Divorce is the same way. We need to sell this house. We want to get out of here. What do we need to do? Sometimes when people are under pressure or in trouble, the amount of equity they have doesn’t matter anymore. And if you’ve ever been divorced or had a situation happen to you in your life, you, you understand that. But it, it just happens.

Charles:
Yeah, it’s great that you’re able to structure these these situations as a win-win for both the investor and also the home seller. Because I think you have a lot of people out there that might I think you have a lot of people in the wholesaling or in other types of, in these industries that are taking advantage of people. So it’s great that you and your students can structure this as a win-win, where you’re able to help them out while also doing good, making a good deal for yourself.

William:
Right? And the best part you get a house, like take the example I gave you of the couple that sold us the house that we’re, we’re gonna actually move into. So we bought this $300,000 house for $230,240,000, but it’s at 3.1% interest, Charles, 3.1% interest. There’s a $1,500 a month payment on this house, 500 of that. A full third of that payment goes toward principal reduction. You can’t get anything like that in the market today.

Charles:
So with that being said what does an exit strategy, I mean, how does that work? Where and how do you structure with him? Because this gentleman, let’s say for example, he’s gonna have this sitting on his credit, and even though it’s it’s up to date, right? Let’s just say it’s current. That’s the better wording. He probably at some point wants to buy another house. And so he probably wants us off his credit in some time in the near future. He probably doesn’t care about it now because his credit’s great now and everything’s fine, and he is working on getting everything back to order in his life. But how do you structure it? Where are you going to now refinance him out in five years? Are you gonna sell it in five years? Are you saying, Hey, we’re gonna hold it to maturity?

William:
We tell our sellers when that question comes up, and sometimes it will. We tell our sellers, we can’t guarantee you when this loan will be retired. I just can’t make that promise. I don’t have the ability to know what’s gonna happen three years from now. The, the, you know, the bank may not give anyone a dime in three years. We’ve seen that happen in previous cycles. So we can’t make that promise. All we can promise is an on-time payment until that day comes. Now, our typical exit strategy is to sell the house with seller financing and encourage our borrower to refinance within a relatively short period of time, three, four years. But again, we can’t guarantee that life happens to people. They get divorces, they separate, they lose jobs. But we just promise an on-time payment. Now, interesting thing, typically with a sub two after one year of someone else making the payments, and you can show documentation of that, the banks will wash that debt liability.

William:
Now, all of ’em won’t do it. Some of ’em will, but at a minimum, they will give your seller a 75% credit toward their DTI which is the same they would get if they rented that property out. So they will at least get that. Now, I don’t know what’s gonna happen to my seller in the future. I can’t predict their future income, how they handle the rest of their credit. But we don’t make promises on cash outs we make on-time payments. And then we’ll provide them with documentation down the road should they need help with a new purchase.

Charles:
Yeah, that makes sense too. I mean, obviously a 3.1 mortgage rate, even if it was 4.1 or even 5.1 I mean, it’s kind of crazy to <laugh> refinance out that if you don’t have to do, you have money sitting in the stock market and you’re worried about it, or worse, you have money sitting at the bank not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate but can’t find deals, don’t have the time to get funding. And the last thing that productive people want to do is manage real estate.

Charles:
We find the deals, we fund the deals, and we manage the tenants, the termites and the properties. Partner with us@investwithharborside.com. That’s invest with harborside.com. Go to invest with harborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time, go to invest with harborside.com. That’s invest with harborside.com. Now, one thing you, you said about the exit strategy, I kind of wanna dig into it. So obviously the seller trusts you. You find the, you find the seller, he trusts you. You now have access to paying the mortgage. He doesn’t really have access to that anymore. Obviously there’s gonna be something in the agreement that says if you stop paying, he’s getting the house back, or something happens on that front. But when you go now to another party and say you sell the property with seller financing and we’re still using the original seller’s financing, correct?

William:
Right? Correct.

Charles:
How do we, I mean, how do you guarantee so you’re not putting a bind that, ’cause now you’re, you’re a bank almost as well here or facilitating like a servicer. How are you making sure that that mortgage is paid? Are they paying you and then you are making sure it’s paid? Or are you really just passing them everything and saying, Hey, make the payment here, you know, please make the payment here. That’s how it works.

William:
If I make you a promise, Charles to make your mortgage payment every month, it is my responsibility to stay in the middle of that transaction. Mm-Hmm. <affirmative> if I put a buyer in that house and they don’t pay me this month, your mortgage payment is still going to be made. It is my responsibility to either get those borrower but my buyer out and get someone new in. But in the meantime, I’m on the hook for that payment. So we stay in the middle of these things until they’re completely retired. Yeah.

Charles:
That’s the best way of doing it, I think. Yeah, because that way you’re not finding out three months later the guy’s calling you, Hey, my credit’s damaged. I’m like 90 days behind, all this kind of stuff. So yeah,

William:
We don’t, we don’t want that call at all. In fact, a lot of people, you’ll hear this sub two is such a buzzword now because of the interest rates going up. And you see a lot of these people out there talk about wholesaling sub two deals, which I say is just the worst. If I promise you to make your payments, I can’t assign my promise. I can’t If if I, somebody else says, Hey, I’ll take that deal for 20 grand and I take 20,000 and pass it off to another investor, and that investor doesn’t pay, you’re gonna be looking for me when the loan doesn’t get paid, you don’t even know this other guy. So that’s, that’s not a good way.

Charles:
Yeah, if I was on that seller’s, the distressed sellers side, that would be my main thing is making sure the credibility of William and making sure he’s, you know, gonna be taking care of this and what he says, because I don’t want the property back, obviously, you know. So so we’ve, we’ve talked about exit strategies and kind of going back to the beginning a little bit. I mean, what have you found to be the best methods for finding sellers who might be interested in selling through a subject to, and then another part of that is, is subject to one of the only things you keep in your tool belt or do you teach your students maybe, you know, are you gonna wholesale this or are there other things? So what might work best for a potential seller?

William:
The vast majority of what we do is sub two. We actually target specific people that are most likely to sell this way. You just can’t beat it. You don’t have to get approval from a bank. You get super low interest rates. Now, I, I challenge any investor who tells me that they can go out and get a loan at three or three and a half percent. We’ve seen what seven, 8% interest rates for investors do to cash flow. I can buy houses all day long at 3% or less. But so we look for specific people that probably need our services. That can be people getting divorces, people in foreclosure, foreclosure’s a big part of our business. We actually door knock talk to these people. Our first step is to try to help them if they want to keep their house, because most people want to keep it. And if we can assist them with that, we’ll certainly do it. If they’re in a situation where they wanna sell it, hey, we’re we’re buyers and, and we want to do that too. So foreclosure foreclosure investing, that’s a big part of what we do.

Charles:
So you’re buying lists, let’s say that are pre foreclosure and then you’re working it out? Or how does that work?

William:
We, I have never been a list buyer. I create list, list lists that you buy are old Mm-Hmm. <Affirmative> or stale or 10,000 other people have bought ’em. We actually go to our county website on a weekly basis and get the freshest notice of defaults that are filed at the courthouse. And those people we’re gonna be knocking on their door within a couple of days. So we’re, we’re usually out there before they even know the notice has been filed. That’s how quick we are out there.

Charles:
And then they’re gonna work out with their bank and you’re gonna get them current. And in part of that, you’re taking over the property.

William:
Well, what’ll happen, most of these people are behind. They’ve either had a loan modification several months before and still haven’t made any payments, or they’re just behind. And we just come in if they wanna sell, we find out what they need as far as cash, what they’re expecting. Let’s say somebody’s 10,000 behind their payments are 1500 bucks a month, hadn’t made a payment in six months, and they want 10,000. So we’re looking at 20,000 to get into the house. It’s in very good condition, but it’s worth 300. We know we can get 30,000 down from a buyer, so it makes sense to, to lay out 20, get 30 from a buyer, we’ve got 10,000 in our pocket plus cashflow. That’s a typical deal for us.

Charles:
Yeah. And then that’s not gonna work with a typical wholesaler that, because by the time that they get under contract, by the time that they assign it, this person’s deep in, you know, they’re, they’re even more behind in this foreclosure process, whereas you’re coming in fixing it right away. And that allows them to everybody to salvage everything, which is, which is great.

William:
Right. And, and not only that, but people that are six months behind on their mortgage, they’ve got a real dinging in their credit, we’re going to to help their credit back, catching those payments up and making them over time before we sell that house. So that’s gonna help their credit out a good bit.

Charles:
Yeah, for sure. That’s gonna make it a lot less painful for them down the road when they’re looking for credit. Right. So William, if we have someone that was saying interested in being an aspiring subject to investor, what would be some advice you’d give them?

William:
Well, first of all, don’t fall into this trap. A lot of people set out there for you that you can automate everything that you do, especially when you’re focusing on subject two. That’s about relationships. You’ve gotta have conversations with people and face-to-face is better. Like I said, we go out and we door knock, we work locally. Now you can do it long distance. It’s a little bit more, more difficult, but just get in front of people. Have a lot of conversations and you’ll buy houses. But all of this, you know, I know people buy houses by texting 10,000 people a day. But, but if you really wanna make good deals, our average profit on a deal this year was over $70,000. And that’s in a hot market. Okay. and we didn’t work very hard. I gotta tell you you know, we, we work probably on our real estate business, maybe 15 or 20 hours a week. So even in a hot market, you can make money, have a lot of conversations with people, and you’ll buy houses.

Charles:
Yeah. Build that report with those, with those sellers and seeing how you can help them.

William:
Right?

Charles:
What are, other than that, where people are not building rapport with investors, they’re trying to automate everything and all streamline everything, let’s say, what are other common mistakes you might see subject to and real estate investors make

William:
The, the biggest mistakes that you can make is not fully disclosing to your seller exactly what’s going to happen here. And having that disclosure in writing multiple times. You want everybody to be on the same page. If, if I’m making your payments for you, Charles, for the next year, two years, five years, we may not even speak, but we have a relationship that’s ongoing. You’re counting on me to make payments to not harm your credit and that sort of thing. And I’m counting on you not to get angry and make a problem down the road, because sellers can get upset if you don’t fulfill your promises. So don’t make promises you can’t keep fully disclose what’s going on, make sure that, that they understand that this can impact them for some time down the road. Those are the biggest errors that I see. You know, a lot of new investors are afraid to tell the seller too much. Well, if I tell ’em we may not pay it off for years, they may not let us have it. If the possibility of that loan being on their credit for years makes them uncomfortable with it, they shouldn’t do it anyway. Tell your seller what’s gonna be happening and don’t, you know, don’t be afraid to do that. Yeah.

Charles:
And for most people too, keeping a mortgage, a current mortgage on their credit it’s like improves your points by like 40 points or something. I mean, it, it has a, it has a significant, significant importance to your credit score. And so someone keeping that on there, that’s current, obviously that’s the key, is gonna be something that’s gonna assist them down the road with having that mortgage. So, sure. Very, very interesting. So William 25 years almost as a real estate investor starting from a credit card advance, how is your relationship towards money changed over those decades?

William:
You know, the, the biggest, I heard this a long time ago, is that money doesn’t change who you are really. If, if, if you’re broke you’re, and, and you’re a jerk, you’re probably gonna be a jerk when you’re rich. You know what I mean? The biggest thing for me with money that I’ve noticed personally is that when I was broke, I felt like I needed a lot of props. I needed a nice car, I needed this, I needed that. When you get to the point to where you have more money or you have plenty of money to do the things you wanna do, I think you become a better steward of it. You, you, you don’t need those things to impress people. You, the confidence level increases. So it’s like I guess the more, the more I had access to money, the less I needed to spend it to prove something. So, if that makes sense, I don’t know. Yeah,

Charles:
Yeah, yeah. It makes perfect sense. Yeah. I I think it’s with people that initially get money, they might be sucked into that. And I think over the years they’ve kind of find themself. I think it’s something that they don’t need it as much anymore.

William:
Right. But I agree. What

Charles:
Do you think are the main factors that have contributed to your success over those years?

William:
Gosh not being afraid to work. You know, we, we talked a little about that before we came on today. I’m telling you, finding people that you can count on and depend on to do things is really tough out there. And I just you know, from a young age, like I said, I quit school in ninth grade. I had to work to make it, you know, I was on my own and just not being afraid. Like I said, when I bought that Carlton Sheets course, I, I didn’t surround myself with people that said, it won’t work. It won’t work. I just did it. I, I followed a plan. If a lot of investors have shiny object syndrome, they buy a course, they read about a third of it, and then they put it back on the shelf. It doesn’t matter what you want to do, whether it’s multifamily, single family commercial, it doesn’t matter. Pick something, follow a course from a reputable teacher and do what they tell you to do, and your chances of success improved tremendously. Yeah.

Charles:
No, that’s really true. It’s interesting that you’re, you’re not reinventing it. You’re really just following a roadmap that’s already been charted and traveled and you’re really just asking them and, you know, following it and then getting support along the way with any kind of questions you might have. So, William, you have a group coaching. You have one-on-one coaching. You have all different types of things for people getting involved with real estate investing in subject two. How can our listeners learn more about you, your book, and your business and your coaching?

William:
Well, the easiest way to learn about us is to check us out on our YouTube channel, sub two tv.com. That’s SUB, the number two tv.com. It’ll take you right to our YouTube channel. We release a new video just about every day. We do podcasts, we do YouTube lives, and we release just training, general training videos. That’s the easiest way to find this. Beyond that, we have probably the, the most affordable creative finance coaching on the planet@sevendollarscoaching.com. Seven bucks a month. And I’ll answer your questions for you and we’ll, we’ll teach you how to get out there and talk to sellers and buy houses.

Charles:
That’s fantastic. So thank you so much for coming on today, William, and looking forward to connecting with you here in the near future.

William:
Oh, for sure. I appreciate you having me on.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

Announcer:
Thank you for listening to the Global Investors Podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit global investor podcast.com and don’t forget to join us next week for another episode.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

Links and Contact Information Mentioned In The Episode:

About William Tingle

William Tingle, Host of Sub2Deals.com is a nationally known real estate investor, investing coach, author, and public speaker.

William had worked in the restaurant business for almost 20 years when in 1999, he ordered a Carleton Sheets Nothing Down course off of a late-night TV infomercial. He read it and took a $ 5,000 advance from a credit card to start his real estate investing career. Exactly one year later he quit his job for good, paid the credit card off, and has to this day never used a penny of his own money for investing.

For over 10 years he operated a real estate business where he wholesaled and rehabbed numerous properties each year but found his real niche in what he calls “Sub2”, buying subject to existing financing. To date, he has taken the deed on over 500 properties and even though he “retired” in Belize in 2010, he still continues to buy 20 to 25 properties a year in this manner in select markets throughout the United States.

He has trained and coached countless students all over the country to become financially successful real estate investors.

Are You a Fan? Subscribe, Rate, Review & Share – Click Here To Learn How

What question do you always wish I would ask but I never do?

Connect with the Global Investors Show, Charles Carillo and Harborside Partners:

Scroll to top