Copyright Notices. Legal Notices

Transcription

1

2 Copyright Notices Turn-key Systems, Inc. All rights reserved. The original licensed purchaser of these materials is authorized to use all advertisements and marketing tools in this kit for personal use only. These are copyrighted consulting materials, published by the Turn-key Systems, Inc. Any unauthorized transfer of license, use, photocopying or distribution of these materials to anyone else other than the licensed purchaser is prohibited and will be prosecuted to the full extent of the law. Legal Notices This publication is intended to provide accurate and authoritative information with regard to the subject matter covered. It is offered with the understanding that neither the publisher nor the author is engaged in rendering legal, tax or other professional services. If legal, tax or other expert assistance is required, the services of a competent professional should be sought. From a Declaration of Principles jointly adopted by a committee of the American Bar Association and a committee of Publishers and Associations This book is intended for instructional purposes only. Every effort has been made to reflect the applicable laws as of the date of the publication of this book. However, this is a dynamic field of endeavor in which new laws are enacted, old laws revised and/or reinterpreted on a continuing basis and where statutes, rulings and precedential case law are constantly changing. Readers are advised to proceed with the techniques described herein with caution. Neither the author, printers, licensees nor distributors make any warranties express or implied about the merchantability or fitness for any particular use of this product. Copyright Marko Rubel & Turn-key Systems, Inc. Page 1 of 147

3 Earning Disclaimer OUR LAWYERS INSIST WE MAKE THE FOLLOWING DISCLAIMER below, which in essence says that WE CAN NOT GUARANTEE YOUR SUCCESS, and the results presented in this course are not typical, which means that you may make little or NO MONEY AT ALL with this program. Individual results will vary greatly and in accordance to your input, determination, hard work, your finances, knowledge, various other skills, and ability to follow directions. Please read below. EVERY EFFORT HAS BEEN MADE TO ACCURATELY REPRESENT THIS PRODUCT AND IT'S POTENTIAL. THERE IS NO GUARANTEE THAT YOU WILL EARN ANY MONEY USING THE TECHNIQUES AND IDEAS IN THIS COURSE MATERIALS. EXAMPLES ARE NOT TO BE INTERPRETED AS A PROMISE OR GUARANTEE OF EARNINGS. EARNING POTENTIAL IS ENTIRELY DEPENDENT ON THE PERSON USING OUR PRODUCT, IDEAS AND TECHNIQUES. WE DO NOT PURPORT THIS AS A GET RICH SCHEME. ANY CLAIMS MADE OF ACTUAL EARNINGS OR EXAMPLES OF ACTUAL RESULTS CAN BE VERIFIED UPON REQUEST. YOUR LEVEL OF SUCCESS IN ATTAINING THE RESULTS CLAIMED IN OUR MATERIALS DEPENDS ON THE TIME YOU DEVOTE TO THE PROGRAM, IDEAS AND TECHNIQUES MENTIONED, YOUR FINANCES, KNOWLEDGE AND VARIOUS SKILLS. SINCE THESE FACTORS DIFFER ACCORDING TO INDIVIDUALS, WE CANNOT GUARANTEE YOUR SUCCESS OR INCOME LEVEL. NOR ARE WE RESPONSIBLE FOR ANY OF YOUR ACTIONS. THERE CAN BE NO ASSURANCE THAT ANY PRIOR SUCCESSES, OR PAST RESULTS, AS TO INCOME EARNINGS, CAN BE USED AS AN INDICATION OF YOUR FUTURE SUCCESS OR RESULTS. MONETARY AND INCOME RESULTS ARE BASED ON MANY FACTORS. AN AVERAGE USER MAKES NO MONEY WITH THIS PROGRAM. WE HAVE NO WAY OF KNOWING HOW WELL YOU WILL DO, AS WE DO NOT KNOW YOU, YOUR BACKGROUND, YOUR WORK ETHIC, OR YOUR BUSINESS SKILLS OR PRACTICES. THEREFORE WE DO NOT GUARANTEE OR IMPLY THAT YOU WILL GET RICH, THAT YOU WILL DO AS WELL, OR MAKE ANY MONEY AT ALL. THERE IS NO ASSURANCE YOU'LL DO AS WELL. IF YOU RELY UPON OUR FIGURES; YOU MUST ACCEPT THE RISK OF NOT DOING AS WELL. Copyright Marko Rubel & Turn-key Systems, Inc. Page 2 of 147

4 REAL ESTATE INVESTING AND FORECLOSURE BUSINESSES AND EARNINGS DERIVED THERE FROM, HAVE UNKNOWN RISKS INVOLVED, AND ARE NOT SUITABLE FOR EVERYONE. MAKING DECISIONS BASED ON ANY INFORMATION PRESENTED IN OUR PRODUCTS, SERVICES, OR WEB SITE, SHOULD BE DONE ONLY WITH THE KNOWLEDGE THAT YOU COULD EXPERIENCE SIGNIFICANT LOSSES, OR MAKE NO MONEY AT ALL. ALL PRODUCTS AND SERVICES OFFERED BY TURN-KEY SYSTEMS, INC./MARKO RUBEL ARE FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY. USE CAUTION AND SEEK THE ADVICE OF QUALIFIED PROFESSIONALS. CHECK WITH YOUR ACCOUNTANT, LAWYER OR PROFESSIONAL ADVISOR, BEFORE ACTING ON THIS OR ANY INFORMATION. USERS OF OUR PRODUCTS, SERVICES AND WEB SITE ARE ADVISED TO DO THEIR OWN DUE DILIGENCE WHEN IT COMES TO MAKING BUSINESS DECISIONS AND ALL INFORMATION, PRODUCTS, AND SERVICES THAT HAVE BEEN PROVIDED SHOULD BE INDEPENDENTLY VERIFIED BY YOUR OWN QUALIFIED PROFESSIONALS. YOU AGREE THAT OUR COMPANY IS NOT RESPONSIBLE FOR THE SUCCESS OR FAILURE OF YOUR BUSINESS DECISIONS RELATING TO ANY INFORMATION PRESENTED BY OUR COMPANY PRODUCTS OR SERVICES. Compliance with Law SINCE LAWS ARE CONSTANTLY CHANGING YOU MUST CONSULT WITH YOUR OWN ATTORNEY TO DETERMINE THE TECHNIQUES, PROCESSES AND IDEAS PRESENTED IN THESE COURSE MATERIALS ARE LEGAL, AND IN COMPLIANCE WITH YOUR LOCAL REAL ESTATE LAWS, FORECLOSURE LAWS, AND OTHER LAWS. IT IS YOUR OBLIGATION TO INVESTIGATE ALL OF THESE LAWS OR REGULATIONS, AND TO ENSURE THAT ANY IDEAS, WEBSITES OR SERVICES OFFERED BY TURN-KEY SYSTEMS, INC. COMPLY WITH THOSE, AND ANY OTHER LAWS. Copyright Marko Rubel & Turn-key Systems, Inc. Page 3 of 147

5 Table of Contents I. HOW TO MAKE MONEY WITH THIS COURSE... 6 A. How to Get Coaching & Support... 6 B. Your Future... 8 C. How to Study This Course... 9 II. INTRODUCTION: The BIG Picture! A. Why Invest in Real Estate...10 B. Right and Wrong Way to Invest In Real Estate...12 C. Golden Rule...16 D. Niche2Wealth MY BUSINESS MODEL...17 E. Why Is Investing In Foreclosure Real Estate So Profitable?...24 III. FORECLOSURE INVESTING STRATEGIES A. The 3 Foreclosure Investing Strategies...26 B. Pre-foreclosure Market Buying Directly From the Seller...27 IV. REAL ESTATE INSTRUMENTS & FORECLOSURE PROCESS A. Definitions: What is Foreclosure?...29 B. Promissory Note...30 C. Security Instruments Used: Mortgage & Deed of Trust...31 D. Foreclosure Process...33 E. Deficiency Judgment...38 F. Redemption Rights...39 G. Reinstating the Loan...39 H. Forbearance Agreement...40 I. Discounting Liens...41 J. Important Liens...42 L. Local Rules & Statutes...43 M. Example: California Statute...54 Copyright Marko Rubel & Turn-key Systems, Inc. Page 4 of 147

6 V. PRE-FORECLOSURE INVESTING STRATEGIES A. The 5 Ways to Profit...69 B. The 5 Most Common Deal Structures Wholesale Method Reinstatement Method Short Sale Method Advanced Business Resources...91 VI. MARKETING HOW TO FIND DEALS A. Generating Hot Leads The Big Picture...93 B. Shotgun & Targeted Approach to Marketing...95 C. Bandit Signs...96 D. Direct Mail...97 E. Steps to Plan Your Direct Mail Campaign F. How to Find Those in Foreclosure G. What to look for on the list? VII. MARKETING HOW TO CONVERT DEALS A. Importance of Proof B. The Secret Weapon C. Importance of Follow-up VIII. NEGOTIATIONS HOW TO GET THE DEED A. The 4 stages of your sales cycle B. At the House Deal Making In 9 Steps IX. CLOSING THE DEAL GET THE DEED A. The Right Way Title Company Closing B. The Quick Way Kitchen-table Closing X. LEGAL FORMS XI. COURSES, SYSTEMS & RESOURCES Copyright Marko Rubel & Turn-key Systems, Inc. Page 5 of 147

7 I. HOW TO MAKE MONEY WITH THIS COURSE A. How to Get Coaching & Support You re about to embark on an exciting journey of unlimited wealth creation! Our goal is to give you support and help you expedite your success. In the beginning, you will have a lot of questions and may need some help with deal structure, etc. Therefore, your first step is to claim your 30-day coaching and support by going to this website: Here s your FIRST step: Go To: to get your private LOGIN for PLATINUM TELE-COACHING Membership *** In order to access additional bonuses, you need to use THE SAME that you used when buying this course. Copyright Marko Rubel & Turn-key Systems, Inc. Page 6 of 147

8 Platinum Tele-coaching Membership provides invaluable support via online mentoring forum, the live monthly calls, and you get to use Marko s live Sellers Testimonials via Prevention Center affiliation to create instant credibility. This is instrumental to help you make money as soon as possible. You get 30 days access for $1.00. After the initial 30 days, the cost of the membership is less than cup of coffee a day, and you get to hang around the movers and shakers in the industry (all of our successful students are part of it, and contribute on the forum!). Incredible value! IMPORTANT: to get this complimentary coaching, go to (enter this whole URL). Make sure you use THE SAME that you used when buying this course so you can access additional bonuses. (NOTE only new members are eligible for the $1 coaching.) SPECIAL BONUS: once inside the membership area, click on the NPC tab and set up your own Prevention Center website. This website provides live seller testimonials helping you build credibility with the prospective sellers. HUGE VALUE!! In addition, it has an automated online follow-up built in. ATTEND THE NEXT LIVE CALL: while inside the membership area, go ahead and familiarize yourself with the FORUM where you can ask questions, and also make a note of the date and time of the next group LIVE Q&A call (set a calendar reminder). It is proven that our members who regularly attend those calls become successful a lot faster! Copyright Marko Rubel & Turn-key Systems, Inc. Page 7 of 147

9 B. Your Future Different industry reports show that the tsunami of foreclosures is to continue till While this may be a bad news for the amateur investors who depend on appreciation in order to profit it is great news for pros like the one you re going to be after you acquire and implement the techniques described in this course. You will soon be able to start cashing big checks, while helping homeowner in trouble at the same time. It s exciting, exciting, exciting!! There s rarely a day that goes by in my life without receiving a success story or a copy of a check generated by one of my coaching clients or users of my systems!! It is the ultimate proof that this is the time to create wealth, while most people stay glued to their TVs watching how bad economy is, how our government is ineffective, complaining about inflation, etc. I know you are different because you stepped out of that daily notion and got this course. For your own sake, please follow through by studying it. Your next step after studying this course is to participate on our webinars and attend our live training. It is definitely true for our business that the more you learn the more you earn! Start now! Copyright Marko Rubel & Turn-key Systems, Inc. Page 8 of 147

10 C. How to Study This Course The strategies that you re going to learn in this course don t require you to use your credit, or to have any Real Estate experience. Having access to cash will definitely help you, but there are plenty of deals you can do without having any! However, the one thing you really need is the knowledge! Therefore, follow these steps 1. FIRST sign-up for your $1 Coaching Membership follow the instructions from the previous page. Do it today since it expires in 10 days. 2. Then PRINT this manual, and put it in a 3-ring binder. This will be an important reference manual for years to come, so make it neat. 3. Read this manual ONCE quickly, and then watch the videos. 4. Use the supplied Workbook to take notes while watching the videos. 5. Study this manual by reading it again AFTER you watched all the videos. Tip: Most investors fail because they never get to understand the big picture! I ve seen it all too often and that s why I included the Investor s Playbook as a bonus with this course. I highly suggest you read it at your first opportunity. Copyright Marko Rubel & Turn-key Systems, Inc. Page 9 of 147

11 II. INTRODUCTION: The BIG Picture! A. Why Invest in Real Estate More fortunes have been made in Real Estate by more people than by any other means, in good times and bad. As a matter of fact, so-called bad times can prove to be opportunity times. - A. D. Kessler INDEPENDENCE! Avoid swapping hours for dollars Be your own boss Set your own hours Take vacation when you want Choose your course Take direction that YOU think is right FOR YOU! WEALTH ACCUMULATION Power of leverage Big Profits Appreciation Equity build-up Tax shelter Achieve Goals & Dreams Retire in style Help others Copyright Marko Rubel & Turn-key Systems, Inc. Page 10 of 147

12 PEOPLE BUSINESS Provide service to sellers Provide shelter to buyers Make a difference for others Give the purpose to your mission! Go ahead and write down your reasons to invest in real estate: The time for action is NOW! Build Your Financial Future in the Field of Proven Opportunity! Copyright Marko Rubel & Turn-key Systems, Inc. Page 11 of 147

13 B. Right and Wrong Way to Invest In Real Estate Before we even start, I want you to think about something fundamental How can you buy and own Real Estate? Take a moment and think about it HOW? In order to leverage on all of the wealth building components of Real Estate, you need to OWN it. But how do you buy it, how do you fund it? There are not that many options There are ONLY three ways to buy Real Estate: 1. Using Your CASH You can use your savings to pay for a property. Most people don t have hundreds of thousands of dollars in their bank account, but even if you do, how many properties can you buy? Not 10 or 20 And why would you risk your savings anyway? 2. Using Your CREDIT You can go to a bank and get a loan, but that requires good credit and a sizable down payment. Let s say that you had both The required down payment will limit you to only a few deals, plus the high investor interest rates will make it impossible to have cash flow. On top of it, the banks will require a personal guarantee making this VERY Copyright Marko Rubel & Turn-key Systems, Inc. Page 12 of 147

14 risky! I don t know if you realize, but by signing and personally guaranteeing the loan, you are putting everything you own in jeopardy Do you realize that you are risking your position in life!?! Why would you ever do that? If something goes wrong and you can t cover those payments, the bank will foreclose, and by doing so, they ll most likely incur the loss. By you guaranteeing that loan, you gave them the right to go after you for recovering their loss, ultimately pushing you into bankruptcy! I can t even begin to describe how many people I ve met in my over 10 year long Real Estate career that lost everything by personally guaranteeing loans. Why would you ever do that if you don t have to? For now, REMEMBER, you should NEVER do this! Side Note 1: Some of you may be thinking that the way to go is to use the Hardmoney lenders. Absolutely not! First of all, the financing terms make it impossible to buy and keep properties it s a short term financing intended for rehabs. The interest rates are way too high to create cash flow from the properties. Plus, many will also require the personal guarantee! Watch out! These lenders are small companies that will be a lot more aggressive in going after you in case Copyright Marko Rubel & Turn-key Systems, Inc. Page 13 of 147

15 of default. There are situations where using hard-money sources makes sense, but in most cases it s a too expensive way to fund the properties, and as I said, it does not allow you to keep them for a longer term. Side Note 2: Some of you may be thinking that you can get cash from private lenders. That is feasible for a few properties, but not for 5, 10 or 20 that you need in order to create real financial freedom and not on a longer term of 3 years or more, which you need in order to build massive wealth. Note: Once you read the Investor s Playbook, you will understand why you need that many properties. Private lenders are regular people like you and me, and most of them don t want to lock in their savings for many years. Plus, you will need to show them your track record in order to get their money, which is not possible if you re just getting started. Borrowing small amounts from private lenders is easy, but that s not what we are talking about here. We are talking about financing the whole purchase price. In my over a decade long Real Estate career, I ve met only a few who were able to put together multiple lenders and buy tens of properties. Unfortunately, one ended up in a jail for security violations, etc. And that leaves us with THE ONLY WAY TO BUY REAL ESTATE Copyright Marko Rubel & Turn-key Systems, Inc. Page 14 of 147

16 3. Using Other People s Credit Dear reader, this is the ONLY smart way to buy properties without taking risk! This way, you buy a property by leaving the existing loan in place, and continue making payments on it. You never formally assume that loan, and the seller stays personally liable since they are the one who personally guaranteed it in the first place. There are plenty of motivated sellers who will agree to this scenario in order to save their credit from a foreclosure, or to get some cash from the sale. This technique of using other people s credit is known as buying subject to. While we re going to discuss different strategies to make money from foreclosure real estate in this course, the subject to technique is the most profitable one. It is called reinstatement strategy and we ll discuss it in detail in the later chapters. And to reinforce the important points discussed in this section, think again Do YOU know any other way to buy Real Estate except the above #3? Is there ANY other way than explained above? There is NO other way! Do you understand why using your cash is not an option? Do you understand why signing for a bank loan is risky? Copyright Marko Rubel & Turn-key Systems, Inc. Page 15 of 147

17 C. Golden Rule Based on what you learned in the previous chapter, let s implement the rule that will save you from taking unnecessary risk, going through lawsuits, and possibly losing all you have. The following rule makes the investing risk-free, as it should be: GOLDEN RULE: Do Not Write Big Checks! Do Not Jeopardize Your Credit! Do Not Make Promises to Sellers You Can Not Keep! SUMMARY: Wrong Way: Save for a down payment, and Qualify for a bank loan! Right Way: Use Other People s Money when needed! Use existing financing on the property guaranteed by seller! Copyright Marko Rubel & Turn-key Systems, Inc. Page 16 of 147

18 D. Niche2Wealth MY BUSINESS MODEL Before we even start with how to make money with foreclosures, I would like to share with you the business model that has made me millions and continues to be the best investing strategy for quick cash, as well as for long-term wealth generation. First of all, I do not buy properties that need major rehab. The only properties I consider are pretty houses that are in ready to move-in condition, or only in need of light cosmetic repairs (carpet & paint). If I get a lead that needs more than cosmetic repairs, I wholesale it to another investor. The acquisition side of my Niche2Wealth Business Model is buying houses by taking over the seller s existing loan (a.k.a. subject to ), giving me an opportunity to buy an unlimited number of properties without using my credit, and in most cases, without using any of my money. The process is very simple. You buy the property by getting the ownership via deed without paying off the existing loan. The existing loan stays in place and the buyer (you or I) continue making payments on that seller s loan. At first look, some of you may think that would be illegal, but it s not. Actually, to be precise, in the state of HI and NH, the foreclosure statute of these states makes it illegal when the seller is in foreclosure. If the seller is not in foreclosure, it s legal even in those states. Copyright Marko Rubel & Turn-key Systems, Inc. Page 17 of 147

19 Tip: You need to read the statute in your state or talk to an attorney familiar with the creative Real Estate to make sure you comply with the local laws. As discussed in the previous sections, there s only ONE RISK-FREE WAY to get the ownership without taking risk, and that is buying subject to. Now, some of you may ask if the lender would approve such a transaction or if the buyer needs to assume the loan. The answer is we don t even ask the lender for permission and we don t want to assume it or guarantee it either. This transfer of the ownership without paying off the loan violates the due-onsale provision in the mortgage (or deed of trust), allowing the lender to call the loan payable in full upon discovery of the transfer. The fact is they never do. Over the last decade, I personally purchased hundreds of properties this way, and not a single lender ever asked. As you know, the lenders are getting plenty of properties back due to non-performing borrowers (via foreclosure), so why would they ever touch a loan that s getting paid on time This subject to acquisition method has been around for decades, and I took it to another level by systematizing the process into a very niched business. SIDE NOTE: You should not listen to some gurus who don t have the full understanding of this process and will tell you that this is illegal or not possible. Copyright Marko Rubel & Turn-key Systems, Inc. Page 18 of 147

20 If you give up on this method, you are in fact giving up on the most powerful acquisition tool available to Real Estate investors! There is so much misleading information out there, so one has to be careful whom they listen to. Tip: You will receive the complete course on this subject, called Get Started with Subject To in your membership area, within the first few months of your membership. I know that you still may have a lot of questions on this technique, but for now, just realize that it is possible and it works. Now, let s talk about how to sell the properties you acquired using the above described method for HUGE PROFIT. First, try to answer the following questions: Do most people out there have perfect credit, or is it bad to average? Do most people out there have the 20% down payment required to get a loan? As you realize from these two questions MOST people out there don t have perfect credit and don t have the 20% in cash for a down payment. The recession has left a lot of people with a damaged credit rating, plus the tight lending guidelines make it very hard, if not impossible, to get a bank loan. What does that mean? Copyright Marko Rubel & Turn-key Systems, Inc. Page 19 of 147

21 It means that if you re selling your houses the same way everybody else is selling them, then you ll get what everybody else is getting and that is an unsold house! By the way, this is in a way, a definition of insanity doing the same thing over and over and expecting a different result. The bottom line is if you are looking for a buyer who CAN get a bank loan, you are selling to a minority of people out there, thus increasing your holding time/cost, and ultimately reducing your selling price and your profit. What if you can sell to the majority of people out there with any credit? What if you can double your profits by doing that? The result will be an expedited way not only to sell your properties, but to build wealth as well. Here s the premise of my business model that I go by: When you can sell properties that most people want to live in, and when you can sell them in a way that most people can afford to buy, then you are fulfilling the need of the majority and consequently, you end up making a lot of money!! So, while all the homeowners and all the other investors out there are competing for those few buyers with perfect credit and a down payment, we ll focus in a totally opposite direction untapped opportunity! Copyright Marko Rubel & Turn-key Systems, Inc. Page 20 of 147

22 We ll act as a bank (provide the financing) and sell to people with ANY credit! This is the majority of people out there, so our pool of potential buyers will be hundreds of times bigger than what our competition has. This is something totally NEW to you, and again, it will make more sense once you learn how simple it really is but try to understand how powerful it really is when you can sell properties to the majority of the people out there! Those buyers cannot even consider all other houses for sale out there because they need a bank loan to buy those other houses, which they can t get! This makes your house stand out between all the other houses for sale. You literally have no competition to sell your house. Your house comes with financing, while all others don t! In most cases, our houses for sale are the ONLY houses in those neighborhoods that are available without a need for bank financing. Because of that Our houses sell faster and for top price because we have multiple buyers interested in them, instead of the other way around. This results in a faster sale and more profit. We act as a bank and provide financing on our own by passing on the existing financing from the previous seller. In essence, we provide owner financing to our buyers. Copyright Marko Rubel & Turn-key Systems, Inc. Page 21 of 147

23 Now, it s important for you to understand that once you own the property, you can sell it any other way or even rent it out. The below diagram shows how you acquired the property subject to the seller s existing loan, and the exit strategies available to you: As you can see, once you own the property, all of the exit strategies are available. You can: a) Sell on a Wrap to buyers with any credit, and 10%+ down payment. b) Lease Option it and receive 3-5% non-refundable option consideration. c) You can even rent it out. d) You can sell it outright to a buyer who will come up with the new financing and cash you out. This way the seller s loan gets paid off. Copyright Marko Rubel & Turn-key Systems, Inc. Page 22 of 147

24 Obviously, the methods in a) and b) above are the most profitable because you receive a premium price, monthly cash flow, and you benefit from principal reduction and often benefit from appreciation as well. Now I know that you have a lot of questions, and some of you might be confused. However, I hope you got an idea on how my Niche2Wealth business works, and more importantly, how it can make you a lot of money without ever fixing a single house and dealing with all of the associated hassles. Tip: Read the Investor s Playbook that you received as a bonus for more details on the above. Tip: Watch training video #1 for more on the above. FORECLOSURE situations are a GREAT source of sellers for our Niche2Wealth Business. You need a motivated seller in order to get them to agree to leave their loan in place and trust you with making payments on it. People in foreclosure are willing to do that, and when you make the payments on their loan, you re in fact improving their credit. It is a win-win. Copyright Marko Rubel & Turn-key Systems, Inc. Page 23 of 147

25 E. Why Is Investing In Foreclosure Real Estate So Profitable? Here are the reasons 1. High Sellers Motivation due to potential loss of their home, equity, credit, etc. the sellers are willing to give you a discount on price, or terms, or both. 2. Sellers Deadline deadline helps the decision making. 3. Lenders Motivation huge discounting possibilities. 4. Creation of HUGE Equity Spreads due to all of the above. 5. Possibilities of using OPM you can use other people s money take over the bank financing, or have the seller carry back a portion of their price. 6. No Money Down Deals put under contract at a good discount and wholesale it quickly, etc. Copyright Marko Rubel & Turn-key Systems, Inc. Page 24 of 147

26 III. FORECLOSURE INVESTING STRATEGIES The Foreclosure process starts after a borrower has been delinquent on monthly payments for some time usually 3 to 4 months. It starts with Notice of Foreclosure, which depending on the state the property is in, may be called Notice of Default, Notice of Trustee Sale, Lis Pendens, etc. It ends with the foreclosure auction where the property is sold to the highest bidder, or goes back to the lender and becomes an REO. Copyright Marko Rubel & Turn-key Systems, Inc. Page 25 of 147

27 A. The 3 Foreclosure Investing Strategies As noted on the above diagram, there are three distinct investing strategies during the foreclosure process. The Pros and Cons of each of each strategy are given in the video module #2 and you can write them below after watching it. #1 PREFORECLOSURE MARKET > buying from sellers before the auction sale Pros: Cons: #2 BUYING AT AUCTION > buying at court house steps need CASH Pros: Cons: #3 BUYING FROM BANKS > buying REOs (after banks get them back) Pros: Cons: Copyright Marko Rubel & Turn-key Systems, Inc. Page 26 of 147

28 B. Pre-foreclosure Market Buying Directly From the Seller Strategy #1 WHOLESALE OR FLIP Get it under a Purchase & Sale Agreement (or an Option Agreement). Flip it to an investor who will close before the auction date. Strategy #2 RETAIL Get the deed subject to, may reinstate or not. Sell it to a retail buyer before the auction date, or reinstate it. Strategy #3 SELL ON TERMS Get the deed subject to. Reinstate the loan using buyer s down payment or private money. Lease option it, or sell it using high-yield wrap devices. Copyright Marko Rubel & Turn-key Systems, Inc. Page 27 of 147

29 Strategy # 4 RENT OUT Get the deed subject to and reinstate it using private money, or payoff the existing loan using partner s credit. Rent it out for future appreciation and as a tax shelter. Strategy #5 SHORT SALE Negotiate with the lien holders, lower payoffs. Sell via simultaneous closing using transactional funding. Consider the short sale niche P-J-L. Strategy #6 BUYING JUNIOR LOANS - BACK DOOR APPROACH Buy a junior trust deed (or mortgage) at a discount. Reinstate the first and foreclose yourself. Get a deed in lieu and apply strategy #2, #3 or #4 above. The above strategies will be discussed in more detail in Chapter V after we cover the instruments and the foreclosure process in the next chapter. NOTE: The strategies in #2 - #4 are based on the same acquisition strategy called Reinstatement, whereby you re getting the deed subject to the existing loan, which you will reinstate bring current by sending the back payments and curing the default. You will learn more on this subject in the Chapter V. Tip: Watch the video module #2 for examples of our coaching students who are creating massive profits using these strategies!! Copyright Marko Rubel & Turn-key Systems, Inc. Page 28 of 147

30 IV. REAL ESTATE INSTRUMENTS & FORECLOSURE PROCESS This may be a boring chapter, but it is a VERY IMPORTANT chapter for your overall success as a real estate investor. Therefore, study it thoroughly. A. Definitions: What is Foreclosure? Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a piece of real property due to the owner's default on its promissory note. When the process is complete, it is typically said that "the lender has foreclosed its mortgage or lien." The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. Legal process by which a mortgagor of real property is deprived of his interest in that property due to failure to comply with terms and conditions of the mortgage. The forced sale of property pledged as security for a debt that is in default. Copyright Marko Rubel & Turn-key Systems, Inc. Page 29 of 147

31 B. Promissory Note A promissory note is a contract detailing the terms of a promise by one party (the maker) to pay a sum of money to the other (the payee). The obligation may arise from the repayment of a loan or from another form of debt. For example, in the sale of a property, the purchase price might be a combination of an immediate cash payment and one or more promissory notes for the balance. The terms of a note typically include the principal amount, the interest rate if any, and the maturity date. Sometimes there will be provisions concerning the payee's rights in the event of a default, which may include foreclosure of the maker's interest. For loans between individuals, writing and signing a promissory note is often considered a good idea for tax and recordkeeping reasons. A promissory note differs from an IOU in that the latter is a simple acknowledgement of the existence of a debt owed, whereas a promissory note, as its name implies, contains an affirmative undertaking to pay the amount stated. You Can Sell a Note! A promissory note that meets certain conditions is a negotiable instrument governed by Article 3 of the Uniform Commercial Code. Copyright Marko Rubel & Turn-key Systems, Inc. Page 30 of 147

32 C. Security Instruments Used: Mortgage & Deed of Trust Over half of the states in the United States use mortgages as security instruments. The other states use a deed of trust, which serves the same purpose, but with a few important differences. Let s define each of these two important documents used in the foreclosure process. MORTGAGE: What is a Mortgage? Most of us are accustomed to calling our home loan a mortgage, but that isn't an accurate definition of the term. A mortgage is not a loan, and it is not something that the lender gives you. It is a security instrument that you give to the lender, a document that protects the lender's interests in your property. There are two parties to a mortgage: the mortgagor the borrower, and the mortgagee - the lender A mortgage document creates a lien on the property, which serves as a lender's security for the debt. The lien is recorded in public records, at your county courthouse. Even if your loan is secured by a mortgage, you still have full title to the property. No one else has rights of ownership. A mortgage gives the lender the right to sell the secured property to recover funds if you do not pay the debt. Copyright Marko Rubel & Turn-key Systems, Inc. Page 31 of 147

33 When a mortgage is used for security, foreclosure must usually progress through the court system. That type of foreclosure is called a judicial foreclosure. DEED OF TRUST: What is a Deed of Trust? A deed of trust serves the same purpose, but with a few important differences. A deed of trust is a special kind of deed that is recorded in public records, where it tells everyone that there is a lien on property. Since deed of trust contains a power-of-sale provision, the deed of trust lender can sell the property at a trustee s sale without prior review by court. That process is called a nonjudicial foreclosure. A deed of trust involves three parties. The borrower who is the trustor, the lender is the beneficiary, and a third party is the trustee. A trustee is someone who holds temporary (but not full) title until the lien is paid. The trustee should be a neutral third party, someone who won't favor either you or the lender if problems crop up. In some states, attorneys act as trustees, and in others, title insurance companies often provide the service. The trustee cannot take your property for no reason--documents are in place to protect against that. The deed of trust is cancelled when the debt is paid. Copyright Marko Rubel & Turn-key Systems, Inc. Page 32 of 147

34 D. Foreclosure Process The differences between a mortgage and a deed of trust affect home buyers only when foreclosure is an issue, because the trustee has the power to sell the house when loan becomes delinquent. The lender must give the trustee proof of the delinquency and ask the trustee to initiate foreclosure proceedings. The trustee must progress as allowed by law and as dictated in your deed of trust, but the process bypasses the court system, making it a much faster and cheaper way for the lender to foreclose. This type of foreclosure is called a nonjudicial foreclosure. * * * So to summarize. the foreclosure procedure will depend on the state and on the security instrument used. In some states, the procedure is lengthy, costly and requires a legal process - Judicial Foreclosure. That is mostly the case in the Mortgage states. In the deed of trust states, the procedure allows the lenders to proceed more rapidly and foreclose without going through a long legal process Non-judicial Foreclosure, also called Power of Sale. Some states permit both, but it is a common practice to exclusively use one method or the other. A complete state-by-state list of foreclosure proceedings is below. The laws change constantly, so you need to verify the information given below for your particular state. This is for illustration purposes, only. Copyright Marko Rubel & Turn-key Systems, Inc. Page 33 of 147

35 STATE Security Instrument Foreclosure Type Initial Step # of Months Redemption Deficiency ALABAMA Mortgage Non-judicial Publication 1 12 months Allowed ALASKA Trust Deed Non-judicial ARIZONA Trust Deed Non-judicial Notice of Default Notice of Sale 3 None Allowed 3 None Allowed ARKANSAS Mortgage Judicial Complaint 4 None Allowed CALIFORNIA Trust Deed Non-judicial COLORADO Trust Deed Non-judicial Notice of Default Notice of Default 4 None Prohibited 2 75 Days Allowed CONNECTICUT Mortgage Strict Complaint 5 None Allowed DELAWARE Mortgage Judicial Complaint 3 None Allowed DIST. OF COL. Trust Deed Non-judicial Notice of Default 2 None Allowed FLORIDA Mortgage Judicial Complaint 5 None Allowed GEORGIA Security Deed Non-judicial Publication 2 None Allowed HAWAII Mortgage Non-judicial Publication 3 None Allowed IDAHO Trust Deed Non-judicial Notice of Default 5 None Allowed ILLINOIS Mortgage Judicial Complaint 7 None Allowed INDIANA Mortgage Judicial Complaint 5 3 months Allowed IOWA Mortgage Judicial Petition 5 6 months Allowed KANSAS Mortgage Judicial Complaint months Allowed KENTUCKY Mortgage Judicial Complaint 6 None Allowed LOUISIANA Mortgage Exec.Process Petition 2 None Allowed MAINE Mortgage Judicial Complaint 6 None Allowed MARYLAND Trust Deed Non-judicial Notice 2 None Allowed MASSACHUSETTS Mortgage Judicial Complaint 3 None Allowed Copyright Marko Rubel & Turn-key Systems, Inc. Page 34 of 147

36 MICHIGAN Mortgage Non-judicial Publication 2 6 months Allowed MINNESOTA Mortgage Non-judicial Publication 2 6 months Prohibited MISSISSIPPI Trust Deed Non-judicial Publication 2 None Prohibited MISSOURI Trust Deed Non-judicial Publication 2 None Allowed MONTANA Trust Deed Non-judicial Notice 5 None Prohibited NEBRASKA Mortgage Judicial Petition 5 None Allowed NEVADA Trust Deed Non-judicial Notice of Default 4 None Allowed NEW HAMPSHIRE Mortgage Non-judicial Notice of Sale 2 None Allowed STATE Security Instrument Foreclosure Type Initial Step # of Months Redemption Deficiency NEW JERSEY Mortgage Judicial Complaint 3 10 Days Allowed NEW MEXICO Mortgage Judicial Complaint 4 None Allowed NEW YORK Mortgage Judicial Complaint 4 None Allowed NORTH CAROLINA Trust Deed Non-judicial Notice Hearing 2 None Allowed NORTH DAKOTA Mortgage Judicial Complaint 3 60 days Prohibited OHIO Mortgage Judicial Complaint 5 None Allowed OKLAHOMA Mortgage Judicial Complaint 4 None Allowed OREGON Trust Deed Non-judicial Notice of Default 5 None Allowed PENNSYLVANIA Mortgage Judicial Complaint 3 None Allowed RHODE ISLAND Mortgage Non-judicial Publication 2 None Allowed SOUTH CAROLINA Mortgage Judicial Complaint 6 None Allowed SOUTH DAKOTA Mortgage Judicial Complaint days Allowed TENNESSEE Trust Deed Non-judicial Publication 2 None Allowed TEXAS Trust Deed Non-judicial Publication 2 None Allowed UTAH Trust Deed Non-judicial Notice of Default 4 None Allowed Copyright Marko Rubel & Turn-key Systems, Inc. Page 35 of 147

37 VERMONT Mortgage Judicial Complaint 7 None Allowed VIRGINIA Trust Deed Non-judicial Publication 2 None Allowed WASHINGTON Trust Deed Non-judicial Notice of Default 4 None Allowed WEST VIRGINIA Trust Deed Non-judicial Publication 2 None Prohibited WISCONSIN Mortgage Judicial Complaint Varies None Allowed WYOMING Mortgage Non-judicial Publication 2 3 months Allowed As you can see from the table above, there are three types of foreclosures: Judicial Foreclosure Non-Judicial Foreclosure Strict Foreclosure Let s review each of them in more details Judicial Foreclosure Judicial Foreclosure is most-often used in mortgage states. A mortgage requires interaction between two parties, the mortgagor (the borrower) and the mortgagee (the lender). When the borrower defaults, the lender must foreclose judicially by filing a lawsuit to foreclose. Like all lawsuits, a judicial foreclosure starts with a legal notice (a summons) that s served upon the borrower. If the borrower doesn t file an answer to the lawsuit, the lender gets a judgment by default. Up to this point, the borrower has a right to reinstate the obligation the reinstatement right ends at the point of the court decree. At that point, the lender will need to advertise a notice of sale in the newspaper for several weeks. If the total amount due is not paid by the sale date Copyright Marko Rubel & Turn-key Systems, Inc. Page 36 of 147

38 a public sale is held on the courthouse steps. The whole process can easily take the lender anywhere from three months to a year or more. Tip: You need to know precisely how the above works in your area so you can target the homeowners at a time when the probability of response is the highest. Further complicating the situation is the borrower s right of redemption in many states. (This will be explained below). Non-Judicial Foreclosure Non-Judicial Foreclosure is also called a Deed of Trust Foreclosure, and it allows the lender to foreclose without going through a lawsuit. As a rule, lenders tend to prefer deeds of trust over mortgages because the foreclosure process on a deed of trust is more expeditious and less costly than on a mortgage. By Deed of Trust as security document, bare legal title is held by the Trustee designated in the Deed of Trust, in order to control the property during the period of the obligation. When the borrower defaults, foreclosure is sought through the Trustee s Sale. The foreclosure process starts with the lender serving a Notice of Default. The trustee must then advertise the property for a minimum period of time (varies from state to state) in the legal section of the local newspaper. After this time, the property is sold at auction. Copyright Marko Rubel & Turn-key Systems, Inc. Page 37 of 147

39 Strict Foreclosure A few states permit this type of foreclosure which does not require a sale. This foreclosure process is very fast. The process requires the court hearing, but it moves very quickly through the courts. When the proceeding is started, the borrower has a short time to pay what is owed. Once that date passes, title reverts to the lender without the need for a sale. E. Deficiency Judgment If the proceeds from the sale are insufficient to satisfy the amount owed to the lender, the lender may be entitled to a deficiency judgment against the borrower. For example, if the highest bid at the foreclosure sale is equal to or higher than the opening bid, that bidder gets the property, and there is no deficiency related to the foreclosing lien. But if that bid is not much higher than the opening bid, and there are other liens existing on the property, those liens will not be satisfied. And if those liens are junior to the foreclosing lien, they will then get expunged deleted from that property. However, any lien holder unsuccessful at recovering the amount owed can take a legal action against the borrower and anyone else that guaranteed or incurred the debt. That individual is still personally liable for that debt, so the lender can pursue litigation in an effort to seek judgment against him/her. This generally doesn t happen, since it is unlikely that the borrower who just went through a Copyright Marko Rubel & Turn-key Systems, Inc. Page 38 of 147

40 foreclosure will have any assets to collect. Plus, the borrower is likely to file for Chapter 7 bankruptcy, and that will discharge his/her responsibility to satisfy any deficiencies or debts. The lenders understand that, and know the collection process can be extremely lengthy and costly, with no assurance of financial recovery, so it is a good business practice for them to not pursue it. NOTE: In the case of a short sale, the lender still has a right to pursue the deficiency judgment, but for the reasons stated above they usually don t. In the case of buying a discounted note, the lender has no right to deficiency recovery. F. Redemption Rights As you can see in the above table, some states give a borrower the right to redeem the property back, after the sale. The borrower would pay the whole amount owed, and would get title to the property back. The redemption period vary from state to state. Tip: It is important to know that if you get the deed from the owner after the sale, but within the redemption period, you also have the right to redeem the property. G. Reinstating the Loan Many states permit the borrower to reinstate to cure the loan before the date of sale. The reinstatement involves catching up on the missed payments plus any attorney s fees. Some states specify the certain time before the sale date Copyright Marko Rubel & Turn-key Systems, Inc. Page 39 of 147

41 that the lender must accept the reinstatement. If so, it is usually five days prior to the sale date. In that case, if you wanted to reinstate a loan e.g. three days prior to the sale, the lender may not accept the reinstatement and require the payment in full. If you were planning on buying the property by taking over the existing loans and reinstating them, this would certainly hinder your plan. Again, you need to know the rules in your state. In California, the reinstatement period ends on the day prior to five business days before the trustee s sale date. After that day and until the trustee completes the bidding, the owner has right of redemption by paying the loan in full. H. Forbearance Agreement A forbearance agreement is a fancy word for a payment plan. When a property owner is in arrears, the bank may agree to accept part of the arrearages now, and the balance in a specified payment plan. A forbearance agreement that is adhered to will stop the foreclosure preceding. If a homeowner misses one payment during this repayment period, the bank will usually resume the foreclosure suit where it left off, and no further payments will be accepted. Tip: When buying subject to you may negotiate the forbearance with the lender, so it will take less out of pocket cash to stop the foreclosure. Copyright Marko Rubel & Turn-key Systems, Inc. Page 40 of 147

42 I. Discounting Liens Discounting liens is a real estate investor s lingo referring to buying or paying off liens for less than their face value. That means that a lien holder will accept less than the amount owed to him. Accepting less, or discounting, in certain situations may make economical sense to them. For example, under the threat of foreclosure sale, lien holders are generally willing to accept less than the face value if there s not much equity in the property. Since there s not much equity, they may get wiped out at the sale by a senior lien (e.g. first mortgage) and lose everything. So it may make sense for them to take a discount, since something is better than nothing. How large of a discount a lien holder will accept will depend on their equity position in that property and on their internal circumstances that may be absolutely unknown to us. Many times a lien holder will take a discount even if there s no pending foreclosure on that property, because accepting the discount may make more financial sense than waiting, or going through the cost of collecting on it. The above conversation applies to any liens (e.g. Mechanic s Liens, 1 st, 2 nd or 3 rd Loans, etc.) and judgments. Exceptions are the IRS Lien and the Property Taxes Lien, and we ll briefly discuss them below. Tip: Discounting junior loans, liens and/or judgments offers a tremendous opportunity to create massive equities and it can not be overlooked as your tool in the real estate investing business. It is not unheard of that you can discount the seconds and thirds to 5 or 10% of their face value. Copyright Marko Rubel & Turn-key Systems, Inc. Page 41 of 147

43 J. Important Liens Below are the two very common liens, but they are somehow specific and need special attention. Real Property Tax Lien it is important to know that Real Estate Property Taxes are never wiped out by a foreclosure sale. You need to be aware of this, and make sure that you know the exact amount owed or delinquent. If you are buying a property before the foreclosure sale by taking over the existing loan and then reinstating it, you need to figure in the amount of property tax that s owed. The fact that the property taxes are not wiped out by the foreclosure sale is also important if you re planning on buying a junior loan and foreclosing on the property yourself. Doing that, you will wipe out any loans or liens junior to the one you bought, but you won t get rid of the property taxes. Keep this in mind! Here s another important point if your county sells tax certificates, and an investor bought one on the property of interest and paid the taxes, the research may not show any delinquent taxes. However, they are there and still remain as a lien payable sometime in the future. Federal Tax Lien it s a lien recorded by the IRS for the unpaid income taxes. If you remember, the unpaid taxes or IRS problems were one of the common causes of the motivated sellers. This lien gets wiped out at the foreclosure sale, but the IRS has 120 days after the sale to redeem the property by paying the successful high bidder the amount bid, plus reasonable interest. However, this generally does not happen. Copyright Marko Rubel & Turn-key Systems, Inc. Page 42 of 147

44 Since you ll mostly be buying properties in pre-foreclosure, that is prior to the foreclosure sale, you don t need to worry about the redemption period. For you, it ll be more important to know that the IRS lien can be negotiated and discounted. The IRS is very negotiable! In some cases, they would even release the lien from a property good for you, but not from the person/the seller. L. Local Rules & Statutes The Foreclosure Process has its own rules. The most important point to remember is that they are LOCAL. No two regions in our country are exactly the same. You need to do your research and find out the rules in your own backyard. Before you start looking for that foreclosure list, you need to know the rules. You ll need to know the timetable of the foreclosure process, in order to determine when a list is too old. For example, if a list gives you defaults a week old, that list would be OK if the foreclosure process in your area is 3 or more months. If you re in a state with a foreclosure process of only a few weeks, that list is a way too old. You will always try to get the freshest list as possible, but sometimes you won t have a choice, so you need to know what s acceptable and what s not. So the first step is to research the rules in your area. Are you in a trust deed state (like California) or in a mortgage state (like Florida)? If you looked up the table in the previous chapter you would know the answer to this question! Copyright Marko Rubel & Turn-key Systems, Inc. Page 43 of 147

45 Where are deeds recorded? Where can you learn about notices of default or lispendis? Do you know the deadlines and legalities? In the above example, you realized that knowing the foreclosure deadlines will help you choose the right list. In return, having a good list will increase the rate of response and make your business more successful. What about legalities? How important are they? It is absolutely crucial for you to know the foreclosure rules and laws in your area. Knowing them will help you in your search for the motivated seller and in your hunt for a great purchase, but equally important knowing the rules will keep you out of trouble! Here s an example, so you can realize how important it is. Let s say you re in California and you met a seller who is willing to give you (sign over) the deed. Would you take it? If you do, the seller can come back and void the transaction within two years from that date because you violated the California Civil Code and that s the remedy. Furthermore, you will be liable for any damages to the seller. If you didn t know this rule, you d be headed for an unpleasant surprise Here s more from that Code Let s say you met with a seller and you only got the Purchase and Sale Agreement signed. Next morning, you research the title and complete your due diligence, and in the afternoon you meet the seller to get the deed. STOP! You are again in violation of the Code. The Code says that you need to give a seller that is in foreclosure the Notice of Cancellation which gives the seller the Copyright Marko Rubel & Turn-key Systems, Inc. Page 44 of 147

46 unconditional right to cancel the contract within the 5 business days. Only after that time expires are you allowed to get the deed. Here s the excerpt out of a section of the California Code that tells you what happens if you don t follow the above rules: Any person who commits any violation described in Section shall be punished by a fine of not more than twenty five thousand dollars ($25,000), by imprisonment in the county jail for not more that one year, or in the state prison, or by both that fine and imprisonment for each violation. These penalties are cumulative to any other remedies of penalties provided by law. This is serious! You must know the rules and legalities for your state! The owners in foreclosure are in fact vulnerable, and in many cases subject to fraud, deception and unfair dealings by dishonest investors. Therefore there are different laws in place that govern the dealings with owners in foreclosure. You should know and follow the rules to be on the right side of the law. Take action and learn the rules!! Here are some places where you can start looking for knowledge: Real Estate Investment Clubs ask in your local investment club where to find more info about the process, as well as which list providers they recommend. Copyright Marko Rubel & Turn-key Systems, Inc. Page 45 of 147

47 Foreclosure List Providers some of providers offer manuals or a few hour seminars to their subscribers. Online search for your state statutes addressing foreclosures or mortgage defaults (see below). Public Library you can find a lot of books that describe the process. Law Library at the County Courthouse the librarian there can help you find what you re looking for. Courthouse, Recorder s Office or Department of Real Estate - may have pamphlets that summarize laws and procedures of interest to you. Title Companies may have the same kind of pamphlets, or some of them even offer short foreclosure courses. Trustees you can even call a trustee off of a foreclosure notice and ask where to find information on the foreclosure process. You may say that you re an investor and you may have a few notes that you will need to foreclose on in the near future. They will want you to use them as trustee in your foreclosure, so they may be more helpful. The truth is, if you stay in this business for a few years, you will have notes that you will need to foreclose on for various reasons. Copyright Marko Rubel & Turn-key Systems, Inc. Page 46 of 147

48 Wherever you start, make sure you find the information and you put an effort to read and memorize the rules. You must become an expert on the foreclosure laws in your state! State Statutes Govern Foreclosures Foreclosures are governed by the federal law and the state statutes. Below you will find the web links to the United States Code, and to the each of the 50 State Statutes. Note: Some of the links below may change over time as many websites reorganize their directories. In most cases the new link will be provided at the old web address. You can always find the website yourself by searching the Internet using: your state + foreclosure statute. For example, if you re in Alabama, you would type Alabama Foreclosure Statute in Google. You can also substitute word statute with law, or code since in some states those laws are referred to as codes. As a result of your search you will get many websites, but you should look for the.org or.gov websites since those are the government websites. Tip: Here s a commercial website that lists foreclosure laws for all states: Tip: If one of the web pages at the links below has moved, you can try going to the Home page of that website by using only first part of that web address. Here are the individual links: Copyright Marko Rubel & Turn-key Systems, Inc. Page 47 of 147

49 Federal Law Alabama Alaska Arizona Arkansas: d=blr:code California: Colorado: Connecticut: Delaware: Copyright Marko Rubel & Turn-key Systems, Inc. Page 48 of 147

50 District of Columbia: Florida: Georgia: ar=1999 Hawaii: Idaho: Illinois: Indiana: Iowa: Copyright Marko Rubel & Turn-key Systems, Inc. Page 49 of 147

51 Kansas: Kentucky: Louisiana: Maine: Maryland: Massachusetts: Michigan: Minnesota: Mississippi: Missouri: Copyright Marko Rubel & Turn-key Systems, Inc. Page 50 of 147

52 Montana: Nebraska: Nevada: New Hampshire: New Jersey: hhits=on&infobase=statutes.nfo&softpage=toc_frame_pg42 New Mexico: New York: North Carolina: Copyright Marko Rubel & Turn-key Systems, Inc. Page 51 of 147

53 North Dakota: Ohio: Oklahoma: Oregon: Pennsylvania: Rhode Island: South Carolina: South Dakota: e=statute&txtstatute=43 Copyright Marko Rubel & Turn-key Systems, Inc. Page 52 of 147

54 Tennessee: Texas: Utah: Vermont: Virginia: Washington: %20%20%20TITLE/rcw%20%2064%20%20%20TITLE.htm West Virginia: Wisconsin: Wyoming: Copyright Marko Rubel & Turn-key Systems, Inc. Page 53 of 147

55 M. Example: California Statute California Statute Addressing Purchasing Homes In Foreclosure If you live in some other state than California, your state statute may or may not be as complex, but I advise you to glance over the underlined paragraphs. This will help you realize what to look for when reading your own state s statute. CALIFORNIA CIVIL CODE SECTION (a) The Legislature finds and declares that homeowners whose residences are in foreclosure have been subjected to fraud, deception, and unfair dealing by home equity purchasers. The recent rapid escalation of home values, particularly in the urban areas, has resulted in a significant increase in home equities which are usually the greatest financial asset held by the homeowners of this state. During the time period between the commencement of foreclosure proceedings and the scheduled foreclosure sale date, homeowners in financial distress, especially the poor, elderly, and financially unsophisticated, are vulnerable to the importunities of equity purchasers who induce homeowners to sell their homes for a small fraction of their fair market values through the use of schemes which often involve oral and written misrepresentations, deceit, intimidation, and other unreasonable commercial practices. (b) The Legislature declares that it is the express policy of the state to preserve and guard the precious asset of home equity, and the social as well as the economic value of homeownership. (c) The Legislature further finds that equity purchasers have a significant impact upon the economy and well-being of this state and its local communities, and therefore the provisions of this chapter are necessary to promote the public welfare. (d) The intent and purposes of this chapter are the following: Copyright Marko Rubel & Turn-key Systems, Inc. Page 54 of 147

56 (1) To provide each homeowner with information necessary to make an informed and intelligent decision regarding the sale of his or her home to an equity purchaser; to require that the sales agreement be expressed in writing; to safeguard the public against deceit and financial hardship; to insure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure; to prohibit representations that tend to mislead; to prohibit or restrict unfair contract terms; to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers; and to preserve and protect home equities for the homeowners of this state. (2) This chapter shall be liberally construed to effectuate this intent and to achieve these purposes The following definitions apply to this chapter: (a) "Equity purchaser" means any person who acquires title to any residence in foreclosure, except a person who acquires such title as follows: (1) For the purpose of using such property as a personal residence. (2) By a deed in lieu of foreclosure of any voluntary lien or encumbrance of record. (3) By a deed from a trustee acting under the power of sale contained in a deed of trust or mortgage at a foreclosure sale conducted pursuant to Article 1 (commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of Division 3. (4) At any sale of property authorized by statute. (5) By order or judgment of any court. (6) From a spouse, blood relative, or blood relative of a spouse. (b) "Residence in foreclosure" and "residential real property in foreclosure" means residential real property consisting of one- to four-family dwelling units, one of which the owner occupies as his or her principal place of residence, and against which there is an outstanding notice of default, recorded pursuant to Article 1 (commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of Division 3. (c) "Equity seller" means any seller of a residence in foreclosure. (d) "Business day" means any calendar day except Sunday, or the Copyright Marko Rubel & Turn-key Systems, Inc. Page 55 of 147

57 following business holidays: New Year's Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, and Christmas Day. (e) "Contract" means any offer or any contract, agreement, or arrangement, or any term thereof, between an equity purchaser and equity seller incident to the sale of a residence in foreclosure. (f) "Property owner" means the record title owner of the residential real property in foreclosure at the time the notice of default was recorded Every contract shall be written in letters of a size equal to 10-point bold type, in the same language principally used by the equity purchaser and equity seller to negotiate the sale of the residence in foreclosure and shall be fully completed and signed and dated by the equity seller and equity purchaser prior to the execution of any instrument of conveyance of the residence in foreclosure Every contract shall contain the entire agreement of the parties and shall include the following terms: (a) The name, business address, and the telephone number of the equity purchaser. (b) The address of the residence in foreclosure. (c) The total consideration to be given by the equity purchaser in connection with or incident to the sale. (d) A complete description of the terms of payment or other consideration including, but not limited to, any services of any nature which the equity purchaser represents he will perform for the equity seller before or after the sale. (e) The time at which possession is to be transferred to the equity purchaser. (f) The terms of any rental agreement. (g) A notice of cancellation as provided in subdivision (b) of Section (h) The following notice in at least 14-point boldface type, if the contract is printed or in capital letters if the contract is typed, and completed with the name of the equity purchaser, immediately above the statement required by Section (a): "NOTICE REQUIRED BY CALIFORNIA LAW Copyright Marko Rubel & Turn-key Systems, Inc. Page 56 of 147

58 Until your right to cancel this contract has ended, (Name) or anyone working for (Name) CANNOT ask you to sign or have you sign any deed or any other document." The contract required by this section shall survive delivery of any instrument of conveyance of the residence in foreclosure, and shall have no effect on persons other than the parties to the contract (a) In addition to any other right of rescission, the equity seller has the right to cancel any contract with an equity purchaser until midnight of the fifth business day following the day on which the equity seller signs a contract that complies with this chapter or until 8 a.m. on the day scheduled for the sale of the property pursuant to a power of sale conferred in a deed of trust, whichever occurs first. (b) Cancellation occurs when the equity seller personally delivers written notice of cancellation to the address specified in the contract or sends a telegram indicating cancellation to that address. (c) A notice of cancellation given by the equity seller need not take the particular form as provided with the contract and, however expressed, is effective if it indicates the intention of the equity seller not to be bound by the contract (a) The contract shall contain in immediate proximity to the space reserved for the equity seller's signature a conspicuous statement in a size equal to at least 12-point bold type, if the contract is printed or in capital letters if the contract is typed, as follows: "You may cancel this contract for the sale of your house without any penalty or obligation at any time before. (Date and time of day) See the attached notice of cancellation form for an explanation of Copyright Marko Rubel & Turn-key Systems, Inc. Page 57 of 147

59 this right." The equity purchaser shall accurately enter the date and time of day on which the rescission right ends. (b) The contract shall be accompanied by a completed form in duplicate, captioned "notice of cancellation" in a size equal to 12-point bold type, if the contract is printed or in capital letters if the contract is typed, followed by a space in which the equity purchaser shall enter the date on which the equity seller executes any contract. This form shall be attached to the contract, shall be easily detachable, and shall contain in type of at least 10-point, if the contract is printed or in capital letters if the contract is typed, the following statement written in the same language as used in the contract: "NOTICE OF CANCELLATION (Enter date contract signed) You may cancel this contract for the sale of your house, without any penalty or obligation, at any time before. (Enter date and time of day) To cancel this transaction, personally deliver a signed and dated copy of this cancellation notice, or send a telegram to, (Name of purchaser) at (Street address of purchaser's place of business) NOT LATER THAN. (Enter date and time of day) I hereby cancel this transaction. (Date) " (Seller's signature) (c) The equity purchaser shall provide the equity seller with a Copyright Marko Rubel & Turn-key Systems, Inc. Page 58 of 147

60 copy of the contract and the attached notice of cancellation. (d) Until the equity purchaser has complied with this section, the equity seller may cancel the contract (a) The contract as required by Sections , , and , shall be provided and completed in conformity with those sections by the equity purchaser. (b) Until the time within which the equity seller may cancel the transaction has fully elapsed, the equity purchaser shall not do any of the following: (1) Accept from any equity seller an execution of, or induce any equity seller to execute, any instrument of conveyance of any interest in the residence in foreclosure. (2) Record with the county recorder any document, including, but not limited to, any instrument of conveyance, signed by the equity seller. (3) Transfer or encumber or purport to transfer or encumber any interest in the residence in foreclosure to any third party, provided no grant of any interest or encumbrance shall be defeated or affected as against a bona fide purchaser or encumbrancer for value and without notice of a violation of this chapter, and knowledge on the part of any such person or entity that the property was "residential real property in foreclosure" shall not constitute notice of a violation of this chapter. This section shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure. (4) Pay the equity seller any consideration. (c) Within 10 days following receipt of a notice of cancellation given in accordance with Sections and , the equity purchaser shall return without condition any original contract and any other documents signed by the equity seller. (d) An equity purchaser shall make no untrue or misleading statements regarding the value of the residence in foreclosure, the amount of proceeds the equity seller will receive after a foreclosure sale, any contract term, the equity seller's rights or obligations incident to or arising out of the sale transaction, the nature of any document which the equity purchaser induces the equity seller to Copyright Marko Rubel & Turn-key Systems, Inc. Page 59 of 147

61 sign, or any other untrue or misleading statement concerning the sale of the residence in foreclosure to the equity purchaser. (e) Whenever any equity purchaser purports to hold title as a result of any transaction in which the equity seller grants the residence in foreclosure by any instrument which purports to be an absolute conveyance and reserves or is given by the equity purchaser an option to repurchase such residence, the equity purchaser shall not cause any encumbrance or encumbrances to be placed on such property or grant any interest in such property to any other person without the written consent of the equity seller. Nothing in this subdivision shall preclude the application of paragraph (3) of subdivision (b) An equity seller may bring an action for the recovery of damages or other equitable relief against an equity purchaser for a violation of any subdivision of Section or Section The equity seller shall recover actual damages plus reasonable attorneys' fees and costs. In addition, the court may award exemplary damages or equitable relief, or both, if the court deems such award proper, but in any event shall award exemplary damages in an amount not less than three times the equity seller's actual damages for any violation of paragraph (3) of subdivision (b) of Section or Section ; or the court may award a civil penalty of up to two thousand five hundred dollars ($2,500), but it may not award both exemplary damages and a civil penalty. Any action brought pursuant to this section shall be commenced within four years after the date of the alleged violation Any equity purchaser who violates any subdivision of Section or who engages in any practice which would operate as a fraud or deceit upon an equity seller shall, upon conviction, be punished by a fine of not more than twenty-five thousand dollars ($25,000), by imprisonment in the county jail for not more than one year, or in the state prison, or by both that fine and imprisonment for each violation The provisions of this chapter are not exclusive and are in addition to any other requirements, rights, remedies, and penalties provided by law. Copyright Marko Rubel & Turn-key Systems, Inc. Page 60 of 147

62 Any waiver of the provisions of this chapter shall be void and unenforceable as contrary to the public policy If any provision of this chapter, or if any application thereof to any person or circumstance is held unconstitutional, the remainder of this chapter and the application of its provisions to other persons and circumstances shall not be affected thereby In any transaction in which an equity seller purports to grant a residence in foreclosure to an equity purchaser by any instrument which appears to be an absolute conveyance and reserves to himself or herself or is given by the equity purchaser an option to repurchase, such transaction shall create a presumption affecting the burden of proof, which may be overcome by clear and convincing evidence to the contrary that the transaction is a loan transaction, and the purported absolute conveyance is a mortgage; however, such presumption shall not apply to a bona fide purchaser or encumbrancer for value without notice of a violation of this chapter, and knowledge on the part of any such person or entity that the property was "residential real property in foreclosure" shall not constitute notice of a violation of this chapter. This section shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure It is unlawful for any person to initiate, enter into, negotiate, or consummate any transaction involving residential real property in foreclosure, as defined in Section , if such person, by the terms of such transaction, takes unconscionable advantage of the property owner in foreclosure (a) In any transaction involving residential real property in foreclosure, as defined in Section , which is in violation of Section is voidable and the transaction may be rescinded by the property owner within two years of the date of the recordation of the conveyance of the residential real property in foreclosure. Copyright Marko Rubel & Turn-key Systems, Inc. Page 61 of 147

63 (b) Such rescission shall be effected by giving written notice as provided in Section 1691 to the equity purchaser and his successor in interest, if the successor is not a bona fide purchaser or encumbrancer for value as set forth in subdivision (c), and by recording such notice with the county recorder of the county in which the property is located, within two years of the date of the recordation of the conveyance to the equity purchaser. The notice of rescission shall contain the names of the property owner and the name of the equity purchaser in addition to any successor in interest holding record title to the real property and shall particularly describe such real property. The equity purchaser and his successor in interest if the successor is not a bona fide purchaser or encumbrancer for value as set forth in subdivision (c), shall have 20 days after the delivery of the notice in which to reconvey title to the property free and clear of encumbrances created subsequent to the rescinded transaction. Upon failure to reconvey title within such time, the rescinding party may bring an action to enforce the rescission and for cancellation of the deed. (c) The provisions of this section shall not affect the interest of a bona fide purchaser or encumbrancer for value if such purchase or encumbrance occurred prior to the recordation of the notice of rescission pursuant to subdivision (b). Knowledge that the property was residential real property in foreclosure shall not impair the status of such persons or entities as bona fide purchasers or encumbrancers for value. This subdivision shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of the residential real property in foreclosure. (d) In any action brought to enforce a rescission pursuant to this section, the prevailing party shall be entitled to costs and reasonable attorneys fees. (e) The remedies provided by this section shall be in addition to any other remedies provided by law (a) An equity purchaser is liable for all damages resulting from any statement made or act committed by the equity purchaser's representative in any manner connected with the equity purchaser's acquisition of a residence in foreclosure, receipt of any Copyright Marko Rubel & Turn-key Systems, Inc. Page 62 of 147

64 consideration or property from or on behalf of the equity seller, or the performance of any act prohibited by this chapter. (b) "Representative" for the purposes of this section means a person who in any manner solicits, induces, or causes any property owner to transfer title or solicits any member of the property owner' s family or household to induce or cause any property owner to transfer title to the residence in foreclosure to the equity purchaser (a) Any provision of a contract which attempts or purports to limit the liability of the equity purchaser under Section shall be void and shall at the option of the equity seller render the equity purchase contract void. The equity purchaser shall be liable to the equity seller for all damages proximately caused by that provision. Any provision in a contract which attempts or purports to require arbitration of any dispute arising under this chapter shall be void at the option of the equity seller only upon grounds as exist for the revocation of any contract. (b) This section shall apply to any contract entered into on or after January 1, (a) Any representative, as defined in subdivision (b) of Section , deemed to be the agent or employee, or both the agent and the employee of the equity purchaser shall be required to provide both of the following: (1) Written proof to the equity seller that the representative has a valid current California Real Estate Sales License and that the representative is bonded by an admitted surety insurer in an amount equal to twice the fair market value of the real property which is the subject of the contract. (2) A statement in writing, under penalty of perjury, that the representative has a valid current California Real Estate Sales License, is bonded by an admitted surety insurer in an amount equal to at least twice the value of the real property which is the subject of the contract and has complied with paragraph (1). The written statement required by this paragraph shall be provided to all parties to the contract prior to the transfer of any interest in the real property which is the subject of the contract. (b) The failure to comply with subdivision (a) shall at the option of the equity seller render the equity purchase contract void and Copyright Marko Rubel & Turn-key Systems, Inc. Page 63 of 147

65 the equity purchaser shall be liable to the equity seller for all damages proximately caused by the failure to comply. SUMMARY: Here are some important points you need to remember if you buy houses in foreclosure in California, based on the above statute (California Civil Code Section 1695): The Home Equity Purchase Contract law defined by the above statute applies to you only when you're dealing with a seller in foreclosure, meaning a seller that already had Notice of Default filled on them. In other words, if a seller is behind on a few payments but the Notice of Default hasn t been filled yet, you do not need to worry about the above statute. All Equity Purchase contracts are subject to a cooling off period during which time the seller may cancel the contract by giving notice of cancellation by delivery of written notice or by sending a telegram. Notice of Cancellation must be part of the Equity Purchase Contract, and the copies must be left with the seller. This cancellation period extends to the earlier of: > the 5 th business day following the day on which the seller signs an Equity Purchase Contract that complies with the law. Copyright Marko Rubel & Turn-key Systems, Inc. Page 64 of 147

66 > or 8:00 am on the day scheduled for the sale of the property at a Trustee s Sale Auction. According to d Saturday counts as a business day as well, unless is one of the holidays specified in the same paragraph. Note: If the sale is postponed after the Equity Purchase Contract is signed, the cancellation period is NOT extended. The period still expires on the date scheduled for the sale whether or not the sale is postponed. Note: The statute permits the cancellation period to expire ONLY if the contract complies with law. For example, if the contract failed to include the address of the residence in foreclosure (or any other requirement imposed by section ), the cancellation period would never expire. Paragraph e tells you to specify the exact date & time the possession of the property will be transferred that means, always execute the Holdover Occupancy Agreement if seller is staying in the house, or specify that he is moving before closing in the original agreement. Remember, you need to specify the time as well! No Consideration Rule according to the statute, not only that the seller has right to cancel the contract during the cancellation period, but you as a buyer can NOT do any of the following during the cancellation period: > Accept an execution of, or induce any equity seller to execute, an instrument of conveyance of any interest in the residence in foreclosure. Copyright Marko Rubel & Turn-key Systems, Inc. Page 65 of 147

67 > Can not record any document signed by the seller. > Can not pay the equity seller any consideration. > Can not put a deed in escrow, or record a memorandum of the Equity Purchase Agreement. NOTE: The statute does NOT prohibit opening of an escrow. You can also deposit any good faith deposit in the escrow, as long as it is fully refundable to you until expiration of the cancellation period. By c., you are required to give a copy of the purchase contract with the attached notice of cancellation to the homeowner. Now, let s say you followed the rule and gave the homeowner the copy. However that homeowner turned to be a bad guy and after you solved his problem he gets an ambulance chaser attorney and claims that he wasn t able to exercise his right to cancel because you didn t provide him with the copies! Now, do you want to spend thousands of dollars to argue in court, or would it be easier to have a simple page that states that they received the copies! It can be as simple as having them sign a piece of paper stating something like this: Today on (date) we signed the Purchase Agreement to sell our house to Bob Buyer. Bob Buyer has thoroughly informed us about our right to cancel this agreement within the next 5 business days (as specified in the said agreement), and further he has provided us with the copies of the Purchase Agreement we signed, and the Notice to Cancel. We have it all in our possession. Copyright Marko Rubel & Turn-key Systems, Inc. Page 66 of 147

68 After the deal closes, the seller has a 2-year right of rescission. However, the seller would need to prove that the sales agreement was unconscionable. If you are approaching California foreclosures from a Foreclosure Consultant angle, make sure you consult the Civil Code, Section Tip: Document everything when dealing with sellers in foreclosure. You re the best guy/gal in the world when solving their problem, but once the burden is off, you may become that evil person who took advantage of them. Tip: Always get a testimonial from the seller it is the best marketing tool, plus it further proves your case of being a good guy! Tip: To obtain more information or legal documents specific to California, go to: Copyright Marko Rubel & Turn-key Systems, Inc. Page 67 of 147

69 V. PRE-FORECLOSURE INVESTING STRATEGIES Pre-foreclosure investing is when you buy directly from the homeowner after the foreclosure process started, but before the auction: There are 5 ways to profit in this pre-foreclosure period. Copyright Marko Rubel & Turn-key Systems, Inc. Page 68 of 147

70 A. The 5 Ways to Profit There are 5 different ways you can with a property in pre-foreclosure process: 1. ACQUIRE AN INTEREST - WHOLESALING Control a property by acquiring equitable interest via a Purchase Contract, or an Option Agreement. You do not have the legal title (ownership) to the property, and you will profit by selling your position in that contract. You need to keep in mind that your activities are still subject to the foreclosure threat and its time line. 2. ACQUIRE OWNERSHIP BY BRINGING THE LOAN CURRENT - REINSTATEMENT You can buy a property in foreclosure by taking over the existing debt on the property ( subject-to purchase), and stopping the foreclosure process by curing the loan(s) using cash. You become a legal owner via deed. The earlier in the foreclosure process you get involved, the less cash will be needed to reinstate the loans. The source of cash will be discussed in the next section. Your exit strategy will vary from an outright sale (flip or retail), owner financing sale, to even keeping it as a rental. The exit strategy will depend on the source of cash used for reinstatement and holding costs, type of the underlying loan, type and price range of the property, etc. Copyright Marko Rubel & Turn-key Systems, Inc. Page 69 of 147

71 3. ACQUIRE OWNERSHIP BY PAYING OFF THE LOAN You can get a full ownership via deed (get the legal title) by paying off the existing loan, like in a conventional purchase. As soon as the new loan (institutional, hard-money, private) pays of the loan in foreclosure, the foreclosure threat and the time pressure caused by it disappears. Your exit strategy will depend on the type of the loan used to pay off the existing loan (i.e. if the new loan is a short term, the owner financing or rent strategy does not apply). 4. ACQUIRE OWNERSHIP WITHOUT STOPING THE FORECLOSURE PROCESS You can get the ownership to the property (get the deed) without paying of or reinstating the existing loans, subject to the foreclosure threat and its time line. It s very important that the seller understands the risk and your plan, and agrees to it in writing. You will be disclosing to the seller up front that the only way the foreclosure will be avoided is if you find a buyer who can cure it prior to the foreclosure sale, or if you can get the lender(s) and other lien holders to work with you, accept the lower payoff (discount or short sale) and give you enough time to arrange the financing. Your exit strategies will vary depending on the amount of a discount you get, and the way you raise cash. Copyright Marko Rubel & Turn-key Systems, Inc. Page 70 of 147

72 5. ACQUIRE OWNERSHIP VIA DEED IN LIEU This is a back-door approach. To avoid having foreclosure on their credit, the borrower may make an arrangement with the lender to voluntarily deed the property back to them. That process is called Deed-in-Lieu of Foreclosure. You may try to be that lender! If you focus your effort on buying junior liens, you will be stepping in the junior lenders shoes with the right to start foreclosure yourself. You can approach the borrower with the Deed-in-Lieu proposal once you have initiated the foreclosure. This is a great back-door approach you would be reinstating the senior loan(s) and getting the property subject to those loans. Your exit strategies will vary depending on the amount of a discount you got when you purchased that junior lien, on the way you raised cash to pay for it and to pay for reinstatement of the senior liens, your holding costs, and the type of existing financing taken over, etc. This strategy is discussed in our live 4-day trainings! Copyright Marko Rubel & Turn-key Systems, Inc. Page 71 of 147

73 B. The 5 Most Common Deal Structures As discussed earlier, there are 5 most common deal structures in pre-foreclosure arena. Strategies #2 - #4 are based on you owning the property. You can do that by paying cash or using the acquisition strategy called Reinstatement, whereby you re getting the deed subject to the existing loan, which you will reinstate bring current by sending the back payments and curing the default. NOTE: You can always pay of the foreclosing loan with cash, or by getting a new loan yourself. Both these ways are risky and therefore we ll discuss the reinstatement method only. Let s cover each of these strategies in more details. Copyright Marko Rubel & Turn-key Systems, Inc. Page 72 of 147

74 1. Wholesale Method Wholesale is when you find the great deal, put it under contract and assign the contract for immediate CASH - have a buyer step into your shoes at closing. Wholesaling is the process of quickly flipping a property to another investor for a small assignment fee. The investor you flip the house to will then typically rehab the house if needed, and then retail it to an end buyer. Just like anything in life, there are pluses and minuses to everything, and wholesaling and retailing is no exception! When you retail a house to an end buyer you stand to make the most profit, but you also take on the most risk. Even though your profit potential is much smaller with wholesaling then when you retail a property, there are several distinct advantages. The first advantage of wholesaling is speed. Retailing a house can take several months from start to finish. By the time you start rehabbing a property to the time you finally close with your end buyer, many, many months may have passed. Whereas a wholesaler may have completed several transactions during that same time period. The second advantage to wholesaling is that no cash is required. It doesn t cost anything to sign a purchase and sale agreement with a seller and that contract can easily be flipped to another investor for a quick $5,000+ dollars. A true no money down deal! Copyright Marko Rubel & Turn-key Systems, Inc. Page 73 of 147

75 Another advantage to wholesaling properties is the limited knowledge requirement. With a little basic training, almost anyone can learn to make offers and get a property under contract for a decent price. It s much harder to learn the ins and outs of retailing a house from start to finish. The disadvantage to wholesaling is that you need to find a property really cheap, in order to leave enough profit in the deal for your investor buyer. This takes more marketing and more time to find the deals that fit the wholesaling parameters. Another disadvantage is that when dealing with properties in foreclosure, you are subject to the foreclosure auction deadline. This means that you need to find a buyer who will close and pay of the lender before the auction date. That being said, wholesaling is a strategy that should be in every investor arsenal and it should be part of your overall game, but NOT the only game. My advice is not to focus on wholesaling alone because it is leveraging only 1 out of the 5 components of building wealth in Real Estate (principal pay-down, cash flow, appreciation, depreciation) that we covered in the video Module #1. If you remember, my Niche2Wealth business model discussed earlier is the fastest way to wealth in Real Estate. You will be dealing with only pretty houses, and when a fixer comes your way, you ll wholesale it. Copyright Marko Rubel & Turn-key Systems, Inc. Page 74 of 147

76 How do you wholesale a property? The first thing you need to do is tie up a property. This can be done with a Purchase and Sale Contract, an option or a deed. Once you have the property tied up, you need to find a buyer. Your profit is the difference of the price you negotiated with the seller (including other terms of the deal with seller) and the price buyer is paying to you (including terms of your deal with buyer). Your profit comes in a form of an Assignment Fee or as profit proceeds in case of Double Closing. The following diagram illustrates this process: You must contract a property way below market to allow for your investor-buyer to make a profit. Copyright Marko Rubel & Turn-key Systems, Inc. Page 75 of 147

77 TARGET EQUITY: 70% of value (IF NOT REPAIRS NEEDED). Go for lower if in soft market! Typical Assignment Fee is $5,000 to $10,000 on a $200,000 home. There are many ways to build your buyers list. You should use all of the methods described in the video Module #5. The more buyers you have, the faster and more profitably you ll sell your houses. CAUTION: Your buyer must close as specified on the contract or the property may be lost in foreclosure. Always take the assignment fee upfront and limit your liability with the seller. Wholesaling in 6 Easy Steps: 1. Create a Buyers List 2. Advertise to Find Sellers EARLY in the Foreclosure process 3. Negotiate & get PSA signed 4. Advertise for Buyers or blast the list 5. Sign Assignment Agr. & get Assignment Deposit 6. Close & let the buyer reinstate or payoff The above steps are discussed in more details in the video Module #5. The Assignment Agreement is included in your forms section. As said above, your targeted purchase price is 70% of the Fair Market Value (after repaired value), minus repairs, minus your profit. Copyright Marko Rubel & Turn-key Systems, Inc. Page 76 of 147

78 End Note: The wholesaling sounds easy, but in reality it is quite difficult to find a deal way below market and get it under contract with a few weasel closes to allow yourself to get out if your buyer can t perform. Side Note: Using Options you can use options to accomplish almost the same thing (with a few advantages), however due to time constraint imposed by foreclosure, it s much easier to get sellers to sign a Purchase Contract, than to negotiate an option deal. 2. Reinstatement Method This strategy is actually one buying strategy with 3 different selling strategies. You will be buying the property subject to the existing loan(s) and then you will reinstate the loan that s in default. You could buy the property by getting a new loan but you don t need to take such a risk if you master the subject to way. TARGET EQUITY: 80% of value (target pretty houses, no projects). Go for lower whenever possible and especially if in a soft market! Once the foreclosure is stopped, you can sell it a few different ways: 1) Sell Retail to a retail buyer who gets his own loan and cashes you out. This method is preferred if you have a lot of money locked in the deal. However, this is not the most profitable way. Copyright Marko Rubel & Turn-key Systems, Inc. Page 77 of 147

79 2) Sell Using Owner Financing be the bank! Use Wraps and strategies covered in the advanced Niche2Wealth Business-inthe-Box course. This is the most profitable way! 3) Rent it out for future appreciation and tax shelter. Tip: Study The 5 Best Strategies To Sell Any Property In Today s Economy course for more on which exit strategy is appropriate to choose based on the 3 components of your Decision Triangle described in that course. The course is available in your membership area. You can carry-back a note to facilitate the outright sale and increase the profits (higher selling price, interest, prepayment, etc.). With an outright sale, always ask the buyer for loan approval: CLA (Certificate of Lender s Approval) or LSR (Loan Status Report). Your exit strategy depends on the source of your CASH investment. If the house needs a lot of work, you can bypass the rehab by flipping it to another investor. You can make more money on this type of a flip because you already own it, plus you can pass the subject to financing to your investor make sure you retain the control! Copyright Marko Rubel & Turn-key Systems, Inc. Page 78 of 147

80 How does the Reinstatement work? This is a straight subject to purchase that has been around for decades. In state of HI and NH, this method is against their foreclosure statute. However, you can use the same method if the seller is behind on payments but not in foreclosure yet. So make sure you study this method! Again, get the legal advice and don t listen to gurus and naysayers who don t understand this method and tell you that this method is illegal. This is in fact the most powerful way to purchase properties! Reinstatement in 6 Easy Steps: Copyright Marko Rubel & Turn-key Systems, Inc. Page 79 of 147

81 1. Advertise to find motivated Sellers 2. Negotiate and get PSA signed 3. Contact Foreclosure Company/Trustee to get Reinstatement & Deadline 4. Decide if you want it! (home inspect. and title search) 5. Close 6. Reinstate the loan The most important thing is to not put any money in the deal before you own it, and before you know that you want it based on the home inspection and the result of the title search. I always try to get the ownership of the property first, and then I verify everything else. If all is up to my satisfaction, then I reinstate the loan to stop foreclosure and at the end give any money to the seller if that s what we agreed. Deal Example: Here s a typical reinstatement deal example: WORTH: $350,000 1 st Loan Balance: 6.5% + $7,000 to reinstate PURCHASE PRICE: $270,000 (loan + reinstatement + 3k to owner) Borrowed funds: $15,000 (reinstatement, owners proceeds, and 3 payments) As you can see from the above numbers, we purchased the property at 77% of the FMV. After we reinstated the loan to stop foreclosure, we could have sold it Copyright Marko Rubel & Turn-key Systems, Inc. Page 80 of 147

82 outright, but since the $15,000 came from a private lender who agreed to extend that loan to us for 3-5 years, we decided to sell it on Owner Financing in order to MAXIMIZE the profit. Sold Niche2Wealth Way: Type of Sale: Owner Financing Wrap SELLING PRICE: $350,000 Down payment Received: $25,000 Wrap loan: 8.9% PROFIT: $10,000 up-front profit (because of the private loan we kept all 25k) $948/mo. CASH FLOW for the next 5 years $67,000 Back-end Profit TOTAL PROFIT in 5 years: $134, As you can see from the above example, there is a lot of money to be made using the reinstatement method in combination with our Niche2Wealth selling strategy. Your goal should be to get this business going with this course, and then as soon as you are ready for the next step, call our office and see how you can apply for our coaching program or how you can attend our live event. There are more specifics to this process than I can t fit in this course, and that you can t absorb at this point, but eventually your goal should be to learn more because as you realize the profit potential of this business is huge! Copyright Marko Rubel & Turn-key Systems, Inc. Page 81 of 147

83 Tip: Watch the case study that you received as a bonus with this course, or that s in the membership area to see how our coaching students create huge profits using this method! 3. Short Sale Method Why Banks Do Them A short sale is the sale of a property, with the consent of the lender, for less than what is owed on it. You may be wondering why would any lender agree to sell a property for less than what is owed on it? They would agree if what they got from the short sale is more than (or equal to) what they would have ended up with if they went through the foreclosure process, got the house back, fixed the house, and covered the cost of selling it as an REO. As you can already determine from the above, a short sale is not of interest to a lender who is in a good LTV (loan-to-value) position, because in this position they will get paid off completely at the foreclosure sale. So, there s no benefit for them to take less and agree to a short payoff. It s all about math! Where is the opportunity for you? In any market at a given time, you will find properties where the owner owes more, or close to, what the property is worth. In other words, you will find properties where the owner is overleveraged. Now, if you do not know how to perform a short sale and negotiate a lower payoff with the lender, you will probably pass on the property (because there s little or no equity). Copyright Marko Rubel & Turn-key Systems, Inc. Page 82 of 147

84 However, if you know the short sale process and you re successful in getting the bank to accept a lower payoff, you might create substantial equity and make a lot of profit with a property that you would have otherwise passed on. Here s an example of the above: FMV (fair-market-value) = $250,000 Loan Balance (including back payments) = $240,000 Other Liens = none; Repairs = none LTV (loan-to-value) = 96% This deal has practically no equity, and with the cost involved in selling it, you would end up losing money. However, if you get a lender to work with you, this deal may become a money making deal. Let s say you get a lender to agree to accept $180,000 for their $240,000 loan. That equates to: FMV (fair-market-value) = $250,000 Loan Balance (including back payments) = $190,000 Other Liens = none Repairs = none New LTV (loan-to-value) = 72% Now, you could have a deal that will make you anywhere from $25,000 and more, depending on your exit strategy. Copyright Marko Rubel & Turn-key Systems, Inc. Page 83 of 147

85 Lender s Short Sale Package - What is it? It is a list of requirements that the lender needs in order to consider a short payoff. Such a list varies from lender to lender, but it usually requires the following: Signed hardship letter explaining what caused the seller to fall behind on their mortgage payments. Copies of the last pay stub for each borrower on the mortgage. In most cases it needs to also include proof of additional income such as: Social Security, pension, disability, child support, and alimony or rental income (include a copy of the lease agreement or written letter from the tenant confirming the amount of rents paid). If the seller is self-employed, a copy of their year-to-date profit and loss statement, along with a copy of their business license. Completed financial form provided by the lender. Copy of the seller s last bank statements for all accounts, including 401k and IRAs. Statement identifying any liens or judgments on the property. Copy of last year s tax returns. Copy of the listing agreement. Copy of the purchase and sale contract. Copyright Marko Rubel & Turn-key Systems, Inc. Page 84 of 147

86 Copy of the estimated net sheet, including closings costs and realtor s commission. Copy of pre-qualification for the buyers. Keep in mind the above list may vary depending on the lender. Once you receive the list of requirements, you need to go line by line and prepare the requested documents. For many of the documents you will need the seller s cooperation, so you need to make sure that you always leave your seller in a friendly way after you ve obtained all the signatures on their Deed Package. Tip: We use Short Sale Xcelerator to automate the short sale process. This software tool is a stand-alone system, or it works together with ProfitGrabber system. Many parts of the short sale package are created with it in a few clicks. How to Get Short Sale Package The first step after you get the control of the property is to contact the lenders and find out their requirements for accepting an offer that is below the loan balance owed to them. Most Lenders phone numbers to their customer service can be found on the front or back of a mortgage statement. In some cases, where the home owner is in Foreclosure or Bankruptcy, the Lender has mailed the homeowner letters Copyright Marko Rubel & Turn-key Systems, Inc. Page 85 of 147

87 regarding Workout programs or payment options. These letters might have different Toll Free # s. These numbers bypass customer service and can get you to the appropriate servicing center quicker. The Process of a Successful Short Sale the 7 Easy Steps 1. Market To Find Motivated Sellers this is where everything starts! You will not be marketing specifically to look for properties with no equity. Those leads will just come in as a byproduct of your marketing effort to your foreclosure list (list of defaults). There will be some leads with low equity, a few with high equity, and many with no equity. This ratio will vary depending upon the type of real estate market you re in. 2. Control the Property & Get the Authorization to Release The short sale process is a very consuming one, so you need to have full control of the property you do this by having a Purchase & Sale Agreement, or an Option Agreement signed. In some cases, you can even get the deed. As a third party, you also need the Authorization to Release so that the lender may release the private party s information (seller s information) to you. Also it is very important to get all the disclosures signed at the onset of the transaction, whereby you re not making any promises. Copyright Marko Rubel & Turn-key Systems, Inc. Page 86 of 147

88 3. Get the Short Sale Requirements Once you have control of the property, contact the lender and get what they need to have in order to consider the short sale of that property the Short Sale Package. Once you have the list of requirements, you will work with the seller to complete them. You will then submit the completed package with an offer to purchase. 4. Submit an Offer with a Completed Short Sale Package You will need the cooperation of the homeowner in order to complete the Short Sale Package. Once you have all the requirements completed, you will fax the completed package to your contact in the lending institution s Loss Mitigation department. In this package, you will also include the Purchase & Sale Agreement, the Net Proceeds Sheet or HUD1, etc. If you have not already started the selling process, now is a good time to start. We usually list our properties hoping to get an offer, a back up offer, and we collect the interested parties contact info for future follow up. 5. Broker s Price Opinion (BPO) A lender needs to know what the property s Fair Market Value is in order to determine their equity position and what is best for them. Obviously, they will not trust what you tell them the property is worth they will get an independent opinion of its value. In most cases, they will not have an official appraisal, but rather an estimate (BPO) from a real estate agent that handles their repossessed properties for that area. Copyright Marko Rubel & Turn-key Systems, Inc. Page 87 of 147

89 Try to meet the BPO agent at the property in order to ensure he estimates the value to your benefit. 6. Negotiate with the Bank Follow up with the bank 72 hours after the BPO and start the negotiation process. Remember, you need to be very nice to the loss mitigator on the other side, but at the same time be very firm. Try to build the case and present why the offer you re making is good for the lender. 7. Close When you get an approval that s acceptable to you, you need to proceed to arrange the closing as soon as possible. You should always attempt to extend the approval date. The type of closing you will be doing depends on your exit strategy, which could be a flip, or a complete pay off. Please watch the video Module #5 for more on the short sale flip via simultaneous closing. WARNING: Make sure your seller understands that you are NOT guaranteeing anything and that if you re unable to get the desired discount, the property will end up in foreclosure. Now, it is not only enough for them to understand that, you also need to get it in writing by having them sign the Short Sale disclosure. (Do not ever rely upon a seller s memory sometimes it s a short term memory especially after the burden goes away). Copyright Marko Rubel & Turn-key Systems, Inc. Page 88 of 147

90 Summary & Useful Tips: Try SHORT SELLING the existing loans if a deal does not have the targeted equity, which is 80% for a reinstate strategy or 70% for a Cash Buy or a Flip. Get the lender s contact info from the homeowner, call their Loss Mitigation Department and ask for the Short Sale Package. You need to have the account information and Authorization to Release signed by the borrower. You ll have the seller sign a few blank Purchase Agreements you can use in your negotiations with the lender. In addition you will get the Deed and all accompanying disclosures signed make sure you disclose the possibility of a deficiency judgment and tax consequences to the seller and they agree to it in writing. Follow the instructions and complete the SS Package with the following in mind - your goal is to sell the lender on taking a short payoff. You will do that by showing the lender why the property is worth less - by presenting your case. Use Lower COMPS! Lenders are not damn they will accept the discount only if you can show them how they will net more by dealing with you than repossessing the property. Copyright Marko Rubel & Turn-key Systems, Inc. Page 89 of 147

91 Banks will do their own value assessment Broker s Price Opinion (BPO). Your goal is for that BPO to come in as low as possible you must influence the BPO lower BPO means bigger discount! Therefore, make sure the lender orders the BPO with your contact information (so you can be there)! In some states with a short foreclosure time table, you need to use some strategies to get lender to postpone the sale: - fax the proof of funds to lender with the purchase agreement - offer to pay one month interest to extend the sale - tell them that owner may consider bankruptcy - some states give the title holder right to postpone the sale just for asking California 24hr, New Jersey 24 days. Short Sale is a very time consuming process use in combination with other strategies described in this course to profit faster. Line up the cash or a buyer if the approval looks like it s going through. I recommend that you keep a written record of each time you call, fax, or the Lender for each of your Short Sale Transactions. This will be easy if you use our Short Sale Xcelerator system. The updated forms are in the membership area. Copyright Marko Rubel & Turn-key Systems, Inc. Page 90 of 147

92 4. Advanced Business Resources The overleveraged properties will be our reality for many years to come, so learning this part of investing is highly recommended. I have an extensive course called 7 Steps to Profit with Short Sales that explains this subject in a lot more details. This is an inexpensive course that you can get by calling my office. It will also be given to you as a part of your membership in MentorMeMarko.com. There are also some advanced methods where you can profit faster and easier by discounting only junior loans, and reinstating the 1 st loan. This strategy is called P-J-L which stands for paying of junior liens. I covered that strategy in details in our advanced foreclosure course called Foreclosure Investing Explained. Copyright Marko Rubel & Turn-key Systems, Inc. Page 91 of 147

93 Examples of Short Sale approval letters, the HUD settlement statements etc. is given in the advanced course Foreclosure Investing Explained. We have done hundreds of short sales and were able to automate the process to eliminate a lot of hassles associated with it. The software system that we use to automate short sale investing is called Short Sale Xcelerator and you can learn more about it by calling our office. However, I suggest you invest in ProfitGrabber system because it contains the Short Sale Xcelerator as an additional module, but it does everything else you need as an investor. This is an extensive suite of tools that I will discuss at one of our live webinars. Copyright Marko Rubel & Turn-key Systems, Inc. Page 92 of 147

94 VI. MARKETING HOW TO FIND DEALS A. Generating Hot Leads The Big Picture Knowing the foreclosure rules and the law in your area is important. Having the negotiation skills and ability to run business is necessary as well. However, nothing happens unless you have LEADS!! Lack of leads creates lack of deals, which has a terrible consequence lack of profits, which puts you out of business! So, the most important skill in our real estate investing business is MARKETING! The following statement is a golden rule of success in our business, make sure you type it on a card and have it in front of you to look at it every day. Money In Real Estate Is In Marketing Your Business, Not In Doing It! Most of your competition will never understand that the marketing aspect of this business is more important than any other part of it. That is the very same reason why I have spent several hundred thousands of dollars developing the marketing software called ProfitGrabber. Nowadays, with so many investors looking for same deals, one needs a sophisticated tool to automate many of the marketing chores we need to do every day, and rise above competition! Copyright Marko Rubel & Turn-key Systems, Inc. Page 93 of 147

95 Nothing can happen in your business unless you re getting a steady stream of leads, have a good system that will sift, sort, and pre-qualify those leads so you only deal with qualified prospects, and have an excellent follow-up system that converts your prospect to customers! All of these become easy with the help of ProfitGrabber! For more information on how to automate your business for more profits and more free time, go to * * * You are offering an invaluable service that the sellers in foreclosure should know about. You have the ability to help them save their equity, credit history and self-respect. If you let them know about your service, at some point during their foreclosure process SOME of these distressed owners will need and want your help. Your goal is to develop the high-response marketing and get as many sellers calling you as you can handle and make huge profits along the way! Copyright Marko Rubel & Turn-key Systems, Inc. Page 94 of 147

96 B. Shotgun & Targeted Approach to Marketing As in any type of marketing, there is a shotgun approach targeting the whole population without knowing who is in default and who is not. And there s a targeted approach, focusing directly on people in default only. We use both approaches, however the targeted approach is more effective. Now, the level of your success is directly proportional to your knowledge of effectiveness of each of your marketing efforts and components. The key is in tracking! You will never be able to develop highly successful business without knowing which marketing effort is a waste of money, and which gives you great return. You need to know how to effectively use your marketing budget. When setting up and planning your marketing, you need to start with TRACKING in mind. It will be harder if not impossible to try to implement effective tracking once your marketing is designed and produced. 1. Shotgun Approach Yellow Page Ads & Newspaper Ads Bandit Signs Truck or Car Signs 2. Targeted Approach Direct Mail Door-knocking Outbound Calling Copyright Marko Rubel & Turn-key Systems, Inc. Page 95 of 147

97 C. Bandit Signs This is the easiest shotgun method to implement. Your signs should have a clear, short and concise message - people seeing your signs are usually driving by and have a split second to see it. Make your signs stand out by using bright or fluorescent yellow or orange colors! Use Coroplast material in 18 x 24 or 24 x 24 size. Check your local ordinances to stay out of trouble. Get someone else to put those signs up. Examples: Copyright Marko Rubel & Turn-key Systems, Inc. Page 96 of 147

98 D. Direct Mail Targeted approach is my favorite and it brings in the most leads and the best quality of leads. It does require the know how! With our targeted approach we are using three strategies: Direct Mail; Outbound Calling; and Doorknocking. In this course we ll focus on Direct Mail. Direct Mail is the MOST POWERFUL marketing method available to real estate investors! A carefully designed Direct Mail program will be effective and easy to execute once all the mail pieces are created and the mailing schedule has been developed. The ProfitGrabber will manage your mailings in a super efficient way, allowing you to concentrate only on Evaluating Leads and Constructing Deals. That is where you need to spend your time on, once the marketing is in place. Tip: Make sure you attend Systematize for Success webinar that explains how to automate your business for maximum profit in minimum time, using ProfitGrabber Pro software, and other tools. The 3 Direct Mail Challenges We need to be aware of our prospects characteristics, and design our marketing pieces with having that in mind. On the next page you will learn about our 3 Direct Mail challenges - getting their attention, getting them to read our message, and getting them to act on it. Copyright Marko Rubel & Turn-key Systems, Inc. Page 97 of 147

99 Getting the homeowner s attention our mail needs to stand out between all the other mail they are getting. We need to do whatever we can to break through their habit of ignoring advertising. We ll accomplish this by using: Multiple Mailings & Variety of Form. Multiple Mailings we need to mail more than once to get noticed, plus you need to mail more than once because motivation is a function of time. It changes drastically with time... an interested seller can become a desperate seller over night... and that is when you want him/her to have your phone number handy... It is a simple rule higher the frequency of your mailing, better the response you get. Variety of Form we ll use different types of mailing pieces for different personality types. Some people are photographic type and are used to getting their information accompanied by pictures we ll use postcards with pictures and a lot of colors and illustrations. Others are detail oriented and we ll appeal to those with our letters. Some are not well educated and hate reading, so we ll use simple postcards for them. Some prefer to hear the information, so we ll send them an audio CD. In addition, we ll alter the vehicle carrying the message so it won t be easily recognized and automatically rejected we ll use different colors and sizes of envelopes, different sizes and looks of postcards, etc. Getting our mailing piece read when designing our mailing piece, we need to keep the characteristics of our prospect in mind. Our prospect is distressed and we need to have a catchy look and attention getting headline. Our prospect is a procrastinator, so we need an easy to read and respond to Copyright Marko Rubel & Turn-key Systems, Inc. Page 98 of 147

100 message. That is, we need to have a short message with a simple and uncluttered look, and non-threatening way to respond. Our prospect is suspicious, so we want to use as many testimonials as we can and provide as much proof as possible. In addition, don t use high-pressure sales tactics! Getting the homeowner to act on it your response mechanism offered should be easy to act on and non-threatening. That s the reason that our 24 hours recorded message produces much better response than a direct number. Remember, many of those people don t want to talk to anyone. The money you will be making in foreclosure investing, and in Real Estate investing in general, will increase with the effectiveness of your mailings! Here are the steps needed in order to plan our Direct Mail campaign: a. Get the list of people in default and filter out bad prospects b. Decide on the type of mailing pieces used c. Decide on number and frequency of your mailings (timetable, budget) d. Create your powerful marketing pieces (letters, flyers, postcards) e. Put a system in place that s easy to execute f. Skip Trace undeliverable (returned) mail Let s discuss each of the above steps Copyright Marko Rubel & Turn-key Systems, Inc. Page 99 of 147

101 E. Steps to Plan Your Direct Mail Campaign a. Get the list of people in default & filter out bad prospects How to get the list of people in default (that is the list of people that had Notice of Default, Notice of Sale, or Lis Pendens recorded) is covered in the following chapter. To filter out bad records use the ProfitGrabber s Import Filter feature (if you don t have ProfitGrabber, you can use Microsoft Excel for some of the filtering). You don t want to be wasting your marketing dollars by mailing to everyone on the list. The filter criteria will depend on the market you re in, the type of real estate investing business you re interested in, the data offered on your list, the minimum equity spread, etc. Remember, your goal is to mail many times to the same people, therefore getting rid of prospects having properties that are not of interest to you will help you save your marketing dollars. b. Decide on the TYPE of mailing pieces used As we discussed above, we ll use variety of forms we ll use postcards, letters and audio CD mailings. It is combination, the mix that gives your system super power. Let s briefly cover each of these mailing pieces Copyright Marko Rubel & Turn-key Systems, Inc. Page 100 of 147

102 Using Postcards in your marketing: Must be part of your direct mail marketing mix! Does not need to be opened to be read - the major advantage over letters! Be careful how you use word foreclosure on them. Remember, those homeowners are embarrassed about their situation and there s no need for you to embarrass them even more in front of the mail-man, their kids or their neighbors! People keep postcards! Cheaper than letters and quick to get out! Attention-getting headline is the key! Attention-getting size enhances responses! Bigger is better! You can use ProfitGrabber s BARCODED mailing label so you can SKIP- TRACE the returned mail. Bright, fluorescent, or four-color postcards stand out! Tip: you can get high-response postcards already designed and tested when you log into MentorMeMarko.com and click on Get Marketing tab. Copyright Marko Rubel & Turn-key Systems, Inc. Page 101 of 147

103 Using Letters in your marketing: Should be short and easy to read! Plenty of room to build credibility! Challenge is getting it open always use a First Class live stamp! Do NOT use mailing labels! Use hand-addressed envelopes! Add a personal touch with a custom Return Label! Use Envelopes that increase chances of getting it opened (air-mail, express, etc.)! Use odd sizes to pique curiosity! Use C-fold to hide the printed text inside! Writing a good sales letter is an art use professional copywriters! Tip: You can get high-response LETTERS as part of your ProfitGrabber Pro system. Call my office for details. Copyright Marko Rubel & Turn-key Systems, Inc. Page 102 of 147

104 c. Decide on the number and frequency of your mailings This is strictly related to foreclosure time-table defined by your State Statute. This is another reason why understanding the foreclosure process in your state is crucial for your success! To plan the frequency of your mailings you need to consider the following: the foreclosure time-table in your area the fact that more frequent mailings will produce better result the fact that the highest response is at the beginning and towards the end of a foreclosure process (the ratio is around 30/20/50 30% of people will panic as soon as they get the notice; 20% will sell during the foreclosure period; and large group will procrastinate and make the decision in the last quarter of the foreclosure time line). Plan your mailing accordingly. your marketing budget For example, in our area the foreclosure time table is 90 days. If you take out the last few days and the few days after the notice is filed, which is time needed for you to get the list, you have 10 to 11 weeks left. We mail the 10 times, which is basically every week. Our mailings are combination of postcards and letters, and the 2-3 weeks prior to the foreclosure auction date, we sent the Audio CD. Also, we send the audio CD to anyone who orders it by listening to our 24 hr. recorded message. In early days, when we were limited on marketing budget, we were mailing 2 times early in the foreclosure process, and 4 times at the late stage. Copyright Marko Rubel & Turn-key Systems, Inc. Page 103 of 147

105 Note: If you re in one of the states with very SHORT time frame (like Texas or Georgia 21 days), the frequency of your mailings will be different. You will be mailing every day of the first week, and after that you will resort to Outbound Calling and Door-knocking strategy. If you are in a state with a judicial foreclosure process lasting 6 months or longer, you will need to plan your marketing according to that time line. Tip: In some states there are certain documents that get recorded 30 days prior to the foreclosure auction sale. It pays to understand the local foreclosure law and know the name of those documents. Then you can get the list of those or research it yourself, and come up with the hot prospects that are 30 days away! This is important to know because it will save you a lot of money many of the people you will be mailing towards the later stage of their foreclosure process have cured or sold their houses, so you ll be wasting a lot of marketing dollars there. If you new the document mentioned above, you could zero in only on those who are still in the game. Such a document is called Notice of Trustee Sale in California (21 days prior to sale), and Summary Final Judgment in Judicial Foreclosure states like Florida and many others. Copyright Marko Rubel & Turn-key Systems, Inc. Page 104 of 147

106 d. Create your powerful marketing pieces To create your powerful marketing pieces, use the ideas presented in my live seminar and the ideas you will get by observing what your competition is doing, then change your marketing accordingly you want to be noticed. If you keep doing what everybody else is doing, you ll get the same result they are getting, and that is a mediocre one at best. To find out what your competition is mailing, once you make a friend with a homeowner, ask them to save the mail they get for you. Then you analyze it and tweak your approach to stand out. NOTE: Check out the membership area Get Marketing tab. You will find ready-to-use mailing pieces already designed for you!! e. Put a system in place that s easy to execute Use tickler folders to manage your mailings, or if you are serious investor who understands the benefit of automation and technology, I strongly advise you to invest in ProfitGrabber! I wasn t able to track and properly manage all of this without automation, and that is the only reason that ProfitGrabber was born! So, I know you need it! Go to for more info. You system to manage your mailings has to be easy to execute, so it can easily be delegated to your assistant. If you re using ProfitGrabber to manage your mailings, you will create an Activity that will consist of a series of Tasks, each task being a separate mailing. Copyright Marko Rubel & Turn-key Systems, Inc. Page 105 of 147

107 Creating the foreclosure specific Activity in ProfitGrabber will not take you more than 5 minutes, once your foreclosure marketing planning was done. Once you ve created and saved your Activity, you can use that same Activity every time when you process the foreclosure list (which is weekly if your foreclosure is a few months or daily if you are in a short timetable state). f. Skip Trace undeliverable (returned) mail Processing the return mail is a goldmine! If you re consistently doing it, it will make you a lot of money! It s all about making that extra step that most investors will not make! Fish in a pond where nobody fishes, and you will catch a BIG FISH! When you send out your mail, a certain percentage of it will come back as undeliverable. Why? Because that homeowner has moved and didn t leave the forwarding address. The house is vacant! Most of your competition will stop at this point - they will not try to find those homeowners that have moved. That is great it creates less competition for us savvy investors! You, as a savvy investor, will send those undeliverable addresses to a skiptracing service and let them find the new-existing address. The harder is for the skip tracer to find them, the better chances YOU have to get the great deal! Once you get the addresses back, you will be mailing to the new addresses. Copyright Marko Rubel & Turn-key Systems, Inc. Page 106 of 147

108 Over the years of dealing with homeowners in foreclosure, I realized that those homeowners are emotionally detached and they had already moved out and couldn t care less about that home. However, some of them will not care about it at all so it will be impossible to do anything with them, others will not care about the home will care about their credit so they will do whatever you ask them to, and you ll be able to put the deal together. Anything you offer them is better than what they are going to get if they do nothing! Skip tracing process it is important that you use the ProfitGrabber s patented barcoding feature to track the returned mail. Once the mail comes back, you can use the supplied scanner to scan them into ProfitGrabber and them to the skip tracing service you opened an account with. Once they process the records they will be sending them back and you ll be able to update your mailing schedules within the ProfitGrabber with the new addresses. Then, all you need to do is mail to them again to catch up on their schedule, so to speak. Here are some skip tracing services: Copyright Marko Rubel & Turn-key Systems, Inc. Page 107 of 147

109 F. How to Find Those in Foreclosure There are a few different ways you can find defaulting property owners: Read your local Legal Publications this is not the most practical way, since it takes too much work to sort through them and put them in your computer. In addition, the information provided is really short and it is not merged with some other databases to give you the mailing address or the owner name. Get the list from a Title Company you may get the list for free just by calling a local title company. They may even give you mailing labels for free. However, the list they have is usually a few weeks old and sometimes incomplete. You may ask them where they get the list from and if possible you can subscribe directly to that source. Research the public records Yourself this will definitely get you the most accurate and the freshest list since you can research it the same date the notices are recorded. You will need to visit the local courthouse every day the notices of default or Lis Pendens are filled (recorded) and jot down the needed information. Depending on the area, the notices will be recorded each and every day, or maybe only once a week. This research can even be done from your own office if the recorded documents are available online. This is definitely not the best use of your time and if you can t afford to hire someone to do this, then you should look for a list provider. If you decide to hire someone, this is what you need to have them write down from the each notice: the tax parcel number, the address, the owner s name, the foreclosing lien amount, Copyright Marko Rubel & Turn-key Systems, Inc. Page 108 of 147

110 the date of sale, and depending on the area you may want to write down the trustee s sale # or the default notice #. Once you have this data in electronic format, you would import it into your ProfitGrabber software and schedule your mailings. Researching the defaults this way will give you the time advantage in front of your competition and you will definitely get a complete list that is not cherry picked. However, this very time consuming task may not be necessary, as you can buy a list from a provider. Subscribe to a list provider if you can find a good quality list provider this is far the most economical option. With most list providers, once you subscribe, you can choose if you want the list ed to you, on a floppy, faxed, or you can even get the mailing labels. Since you own the powerful software, you will need to get the list in electronic format, so ing is usually the best. Once you have your list, you can import it into the software. Where to find a list provider? Earlier in this chapter we talked about different places where you can look for the foreclosure information and learn the foreclosure rules in your area (recorder s office, real estate investment clubs, etc.). Those same sources may recommend a list provider. Your best bet is to find it from other investors in the area. Most larger towns will have a few list providers that gather the notices from the court house and compile them and then sell them to investors, real estate agents, mortgage brokers, etc. You need to get a sample list for a few sources and compare the data available. You should go with the list that has the newest data and the most complete data. Copyright Marko Rubel & Turn-key Systems, Inc. Page 109 of 147

111 G. What to look for on the list? You will want to see on your list all or most of the information listed below. They are listed by priority with the last being the lowest in priority: Current Owner borrower may not be the owner! Property Address with City and ZIP Foreclosure Sale Date Tax Parcel Number Use Code or Property Type you don t want to mail to condos Foreclosing Lien Amount Estimated Value this is very important (many lists don t have it, but some do! Try to find one that does!) Tax Assessed Value when the Estimated Value is not available Original Borrower Deed of Trust (or Mortgage) Recording Date and Instrument Number Property Characteristics (Year Built, Square Footage, pool, etc.) Last Sale Date Trustee s Name and Phone # Loan Type, Etc. Besides the available information, you want to find the list that is not too old. What is a list that is too old? The answer will depend on the foreclosure timetable that is unique to your area, but keep in mind the fresher the list, the better the result. Copyright Marko Rubel & Turn-key Systems, Inc. Page 110 of 147

112 If the foreclosure process in your area is short, let s say a few weeks from the recording of the notice of default to the foreclosure sale, then you need a list that is not more than 1 or 2 days old. Preferably, you need it the same day the notice is filled. This may be one of the few reasons where it may make sense to pay someone to research it just for you. The homeowners who have only a few weeks before they lose their home tend to react quicker and make a decision earlier. When a homeowner has 3, 6 or 9 months before the sale, he/she has more options and more hopes, and generally doesn t make a decision in the first few days after receiving the notice. If that describes the foreclosure timetable in your area, a list that is a week old may be just fine. But don t settle for a week old list, unless that s the only option. Even in a case like that where the foreclosure process lasts months, you may still have an edge over your competition if you get the list and contact the owner the same day. Here is why once the foreclosure notice is recorded and becomes public, there will be thousands of investors trying to contact the homeowner by knocking on their door, or mailing ton of letters to them. So your attempt may get lost in the crowd. Plus, once pursued by so many, the homeowner s attitude changes and it s harder to get their attention and to deal with them. Copyright Marko Rubel & Turn-key Systems, Inc. Page 111 of 147

113 If you do pursue the defaults the same day that they re recorded, keep in mind that most likely the owner will not know that the foreclosure has been filled, since the trustee must usually record the notice before mailing it. So it s possible that you may knock on their door before the mail arrives. You will obviously have the choice of bringing up the bad news or not, and that will depend on if you need it in your negotiations or if you don t. Tip: Here s something else Let s say that in your state the foreclosure process is a lengthy one, 3 months or more. When you initially start mailing to foreclosures, are you going to start mailing only to the new default notices? If you have not mailed to the foreclosure lists before, you can start with a month or more old defaults, since they are still waiting on their sale date. So don t subscribe only for the list from today on, consider getting the data from the last month or even prior to that - depending on the length of the process in your area. Copyright Marko Rubel & Turn-key Systems, Inc. Page 112 of 147

114 VII. MARKETING HOW TO CONVERT DEALS Your first step is generating prospects getting a foreclosure seller interested in your service and calling you. Steps outlined in the previous chapter accomplish that step. Once you start getting calls, your goal will be to transition a prospect into a customer. That is, get a seller who called you to sell you their house. It s important to realize that once you get your phone to ring you accomplished only half of the task because getting a seller to agree and sign that purchase and sale agreement at the price acceptable to you is the most important part of the process. So let s discuss the steps you need to take in order to get consistent and predictable result that you want, right? A. Importance of Proof The CREDIBILITY is everything in our creative real estate investing business! If the seller doesn t trust you, they won t sell you their house! Period! The sellers have to trust you, plus they have to be confident that you can do what you re saying you will do stop foreclosure in time. The best way to accomplish that and create trust is to use the PROOF that you have helped other sellers in the similar situation. This is accomplished through the use of SELLERS TESTIMONIALS. Copyright Marko Rubel & Turn-key Systems, Inc. Page 113 of 147

115 Your #1 goal needs to be to always ask for a testimonial from every seller you help. There s nothing more powerful than your customers raving about your service! Tip: Always carry a small camera to the closing to be ready to take the video testimonial. You don t need a fancy camera, in fact, the smaller it is, the less threatening it will be for your sellers. I use my iphone camera. Tip: When getting a written testimonial, always get the seller to notarize it! It s a lot more powerful when notarized! Then use that testimonial in your direct mail marketing. B. The Secret Weapon I know that many of you understand the importance of testimonials, but are probably saying Marko, I know I need the testimonials, but how do I get them if I haven t done my first deal!?!?! I understand your frustration, and also remember the feeling I had early in my career when I was trying to convince the sellers and didn t have any proof. It was painful and I lost a lot of leads that I could have converted if I only had a way to show them that my service is legit. For that reason, I decided to help all of you! Copyright Marko Rubel & Turn-key Systems, Inc. Page 114 of 147

116 Since you are studying this course and have the knowledge now to help homeowners in foreclosure, I will let you use MY VERY OWN testimonials. I created an online affiliation called National Prevention Center and you can be an affiliate for your county (actually for up to 5 counties). You will have an exclusive domain/website name (URL) that is exclusive to you in your selected counties. As an affiliate, you will be able to use my video testimonials from my sellers that are part of that website. This will prove to be a tremendous help in converting deals! IMPORTANT: It is very important that you setup your counties right away because longer you wait less chance you have to lock in the counties you want! So, log into your membership area at go to NPC tab and follow simple directions to set up your website. If you are not a member yet, go to beginning of this course (pages 7-9) to get instructions on how to claim your complimentary membership. The website where you need to go to setup your membership is: Copyright Marko Rubel & Turn-key Systems, Inc. Page 115 of 147

117 C. Importance of Follow-up Another important step is to follow-up with everyone who called you! Remember the following: It is always cheaper to convert an existing prospect than go out and acquire a new one! Therefore, create a follow-up system and whenever someone calls you create a follow-up campaign to nurture that lead. Here s how I do it: 1. Always Mail SPECIAL REPORT - As soon as someone calls, I send them the appropriate Special Report with a cover letter. This makes me look professional and it differentiates me from my competition that doesn t have professional looking marketing and reports as I (you) do. You can order different kinds of reports by going into your membership area at MentorMeMarko.com and clicking on Get Marketing tab. There you will find Special Reports and Cover Letters specially tailored to motivate sellers in foreclosure, the short sale candidates, or the lease option candidates. All reports, cover letters, and business cards are branded to look professional, reputable and build trust. Copyright Marko Rubel & Turn-key Systems, Inc. Page 116 of 147

118 2. Follow-up with a Call & 2 Letters after you mail the Special Report, you need to call the homeowner and ask if they received it and if they have any questions. If they are not ready for an appointment, you need to send them a few follow up letters a week apart. Depending on the type of the lead you get, you may extend your follow up beyond the 2 letters. 3. Create a System to be Consistent you can use tickler folders, or a CRM type of contact management software to automate this follow-up process. I use ProfitGrabber Pro to manage my marketing and the follow-up process. The ProfitGrabber system has an automated way to create numerous follow up campaigns and assign them to a prospect in 2 clicks. This makes it easy to execute. All the follow-up letters are automatically personalized and tracked. Its Task Manager keeps you organized and it automates the marketing and the follow-up steps. This business is NOT get rich overnight and the only way to succeed is to be consistent! Copyright Marko Rubel & Turn-key Systems, Inc. Page 117 of 147

119 VIII. NEGOTIATIONS HOW TO GET THE DEED Your marketing is working, and the leads are coming in. Now, you need to gather enough information to sort the trash from the treasure, evaluate leads and decide on the strategy, lay the ground for sealing the deal by bringing up your credibility and set the appointment to go out and meet the seller. There are 4 stages to that process. A. The 4 stages of your sales cycle You will go through the first two stages over the phone, and the stages 3 & 4 will happen at the seller s house. Stage 1: PROSPECTING Initial Phone Prescreening Your goal is to determine if there is a possibility of doing business. This phase should be delegated. Stage 2: INTERVIEWING Set the Appointment This is when you call the seller back to determine if there is a possibility of a deal, and if it is to SET THE APPOINTMENT! Copyright Marko Rubel & Turn-key Systems, Inc. Page 118 of 147

120 Stage 3: PRESENTATION & NUMBERS TALK This stage happens at the house, and your goal is to agree on the basic terms such as the Closing Date, the Move Out Date and the Price. Don t forget your presentation folder it is very important! Stage 4: CLOSING THE SALE Get the Agreement Signed Once you and the seller have agreement on the dollar amount (previous stage), you will introduce the buying concept (cash, option, subject to, etc.) and proceed to OK the paperwork. Through each of the 4 stages you need to be selling the homeowner on doing business with you. In fact, selling the homeowner on doing business with you starts very early, at your fist contact with that homeowner. That is when they heard about you for the first time (i.e. when they got your postcard). And it continues all the way until you get that homeowner to sign the last document, transferring the property to you. You are selling them all the time & there s a lot of psychology involved that we ll cover when we get together in our live training. Tip: Use the supplied Phone Form in the stages 1 & 2 but do NOT change it. The questions on the form are strategically positioned. The phone form is on the next page and also in your membership area in the printable format. Copyright Marko Rubel & Turn-key Systems, Inc. Page 119 of 147

121 Copyright Marko Rubel & Turn-key Systems, Inc. Page 120 of 147

122 B. At the House Deal Making In 9 Steps Here is what happens at the house: 1. Let them show you the house build the rapport and write down repairs. Let them decide where to sit down (kitchen preferred) 2. Tell them about yourself your service your company using your Presentation Kit (binder). The Presentation Kit is your credibility binder where you need to put your credentials (i.e. Member of BBB); facts about the market; testimonials from other sellers. You need to plant seeds that will help you later seal the deal - when you re telling them about yourself while going over different parts of your Presentation Kit (a.k.a. credibility kit) make sure you mention the following: A) while at the part where you are talking generally about yourself/your company and how you ve helped a lot of homeowners mention this: As you can see we ve been in business for quite some time and have helped a lot of sellers as a matter of fact just this week alone I ve seen 7 homeowners in the exact same situation you are in right now and I still have 2 more to see tomorrow morning! Copyright Marko Rubel & Turn-key Systems, Inc. Page 121 of 147

123 You will use this to overcome the think it over objection later, when you want them to sign the Purchase & Sale Agreement. B) while going over testimonials, mention this in order to plant seeds and use it later to remove shopping the price syndrome: Mr. Seller, as you can see from these letters, your situation is not new to us, we are experts when it comes to helping homeowners stop foreclosure, we ve helped hundreds of people. Let me tell you we are not investors who will knock on your door in the middle of the night and offer you high price and never come through with it! Oh, how many homeowners we hear about that some investor promised the what they wanted to hear, price, timing, everything, then kept them in hope to the last minute and then he couldn t find the money poor people lost their home in foreclosure! That s why I tell people deal with professionals only! Testimonials are the key in creating credibility and closing the sellers. When I work with you personally, through my coaching program, I provide you with my Presentation Kit that has my very own seller testimonials. This way I can help you close deals faster. Contact my office if you re interested in expediting your success through personal coaching. 3. Problem first - before talking about the price or even you buying the property, you MUST have them talk about their problem! Sellers tend to be more motivated and open when they restate their situation. Copyright Marko Rubel & Turn-key Systems, Inc. Page 122 of 147

124 4. Start with small yes s - agree on the easy to agree things first, like Moving Date, Closing Date, etc. 5. Educate - use Net-Equity-Worksheet to educate the seller on Net Equity. This is a structured approach that will increase your chances of getting the seller to agree to your numbers. NOTE: The Net Equity Worksheet is not used if the seller s lowest price doesn t need to be negotiated. 6. Introduce the strategy - once agreed on numbers, lay down (in simple terms) the way you will be acquiring the ownership (Contract-Cash- Wholesale; Subject to-reinstate, Contract-Option-Short Sale, etc.). 7. Agree on the note pad first - don t take out the Purchase Agreement unless you ve agreed on everything and reinforced it by writing it on the note pad. If you do, you may scare the seller before he or she has made up their mind. 8. Handshake - after the Purchase Agreement is signed, congratulate them on taking action and doing the right thing. Be happy for them and then offer extra! 9. Throw in the Credit Repair Service to help seal the deal and prevent shopping it around, plus in return you can ask for a testimonial. Show them the Credit Repair Service s brochure! Copyright Marko Rubel & Turn-key Systems, Inc. Page 123 of 147

125 Basic Rule Build the rapport FIRST: Find mutual interests, but don t be so obvious Don t put down their property, or other people Show the respect for them (remember, he is the king in his castle!) Avoid Common Beginner Mistakes Don t hurry Be calm! Don t be too excited! It pays to be reluctant buyer! Don t fall in love with the property! There s always another house! Allow seller to sell you rather than you sell them Listen twice as much you speak! Net Equity Worksheet - Use the worksheet on the following page to project the net equity. Copyright Marko Rubel & Turn-key Systems, Inc. Page 124 of 147

126 Projected Net Equity Worksheet Conservative Sales Price of Property.. $ > LESS: EXISTING FINANCING: 1 st Loan Balance:... $ 2 nd Loan Balance:.. $ 3 rd Loan Balance:.. $ BACK PAYMENTS, PENALTIES & COSTS... $ BACK TAXES & OTHER LIENS... $ (add 10% penalty on the tax amount owed) LOAN PRE-PAYMENT PENALTIES..... $ SELLING COMMISSION (6%)..... $ HOLDING COSTS (6-8mo. of Interim PITI payments)... $ CONTRIBUTION TO BUYER S COSTS... $ (Buyer s market allowance of ~ 3%) TRANSACTIONAL EXPENSES..... $ (Closing fees ~ 2 3%) COSMETIC FIX-UP: Interior Work.... $ Outside Work.... $ Yard Work..... $ TOTAL.. $ Projected NET EQUITY Proceeds.... $ ALL AMERICAN HOMEBUYERS STATE SPCIFIC WORKSHEET 2006 Copyright Marko Rubel & Turn-key Systems, Inc. Page 125 of 147

127 IX. CLOSING THE DEAL GET THE DEED Once you have agreed on the price and terms of the sale with the homeowner, you will have them sign the Purchase & Sale Agreement. At that point you have 2 approaches to take to acquire the ownership: a) Open Escrow if you have enough time it is recommended you close with a title company, a closing attorney or an escrow company (whatever is most common in your area). b) Close Yourself if there s not enough time to close in a conventional way (i.e. the seller called you 2 days before the auction), then you need to get the deed yourself via so called kitchen table closing. WARNING: You must comply with the foreclosure statute in your state! For example, if you re buying a property in California, you can NOT get the deed before the cancelation period defined by statute has expired. As discussed in the Chapter IV, the cancelation period per California statute expires on midnight of the 5 th business day following the day on which the seller signs an Equity Purchase Contract that complies with the law; or at 8am on the day scheduled for the auction of the property, whatever sooner. Let s review the 2 ways you can close and obtain the ownership. Copyright Marko Rubel & Turn-key Systems, Inc. Page 126 of 147

128 A. The Right Way Title Company Closing Whenever there is enough time, close with a title company or a closing attorney for the following reasons: Get title insurance Let professionals deal with any bankruptcy issues Protects you from the seller claiming the sale never happened Gives more legitimacy to the whole transaction Supply a title agent with your Pro-Buyer disclosures to be signed NOTE: in some cases you will be doing Simultaneous Closing or Double Closing. The Simultaneous Closing is mostly used with Short Sale flips, while the Double Closing is mostly used in Wholesaling where an assignment is not possible, or with Sandwich Lease Options. Your steps to complete the official closings are simple. You will find the title company or a closing company, and then you ll send them the Purchase & Sale Agreement signed by all parties. They will then prepare all the documents for the closing. IMPORTANT: closing agents mostly care about protecting themselves, so makes sure you supply them with your very own disclosures that are given in this course. You need to make sure they get signed! Copyright Marko Rubel & Turn-key Systems, Inc. Page 127 of 147

129 B. The Quick Way Kitchen-table Closing Knowing how to effectively and safely close yourself is a skill that will make you a boatload of money! Many times sellers in foreclosure will wait to the last possible minute to ask for help. If you get a call a day or two before the sale, you will not have enough time to arrange the closing with the title company or a closing attorney. Do you pass on a deal like that? Sure no! These sellers will be extremely motivated and willing to give you a great discount! Therefore, you must know how to get the deed yourself and get all proper documents properly executed. The kitchen-table Closing Process: Prepare all the documents needed for closing (use ProfitGrabber s GetFormsReady Module) Arrange for an On Call Notary to meet you and ALL titleholders at the sellers house or some other convenient place (bank s conference room!). Get all the documents signed and notarized where required. Pay attention to disclosures! IMPORTANT: Voice-record the closing! Get the TITLE SEARCH done before you put any money in the deal! Get the REINSTATEMENT specifics before you commit to the deal! Copyright Marko Rubel & Turn-key Systems, Inc. Page 128 of 147

130 X. LEGAL FORMS These Legal Documents, as well as documents in the Selling Section MUST BE REVIEWED AND APPROVED by your local real estate attorney! The following pages will show you all the documents you will need to use when buying properties in pre-foreclosure. NOTE: Foreclosure Laws Are Constantly Changing So You Must Review Your Local Laws And Make Sure That You Follow Them. Provided Documents Are Example Only!! You Need To Have Them Reviewed By The Local Attorney! For easier understanding, here is the legend used while completing the docs: Seller First and Last Name: Sammy and Sally Smith Seller s vesting (how they hold the title): as tenants in common Buyer: BobB, LLC. Buyer First and Last Name: Bob Buyman Buyer s (Bob s) address: PO Box 21344, Las Vegas, NV Property Address: 123 Abc. St., Las Vegas, Nevada, Down Payment given to sellers: $2,000 Seller Carry-back Note: $8,000 payable when buyer refinances 1 st Loan Balance: 223,000; there is no 2 nd or 3 rd Loan Copyright Marko Rubel & Turn-key Systems, Inc. Page 129 of 147

131 Here s an example of the Purchase & Sale Agreement. You need to have the version that complies with the law in your state. Copyright Marko Rubel & Turn-key Systems, Inc. Page 130 of 147

132 Copyright Marko Rubel & Turn-key Systems, Inc. Page 131 of 147

133 Copyright Marko Rubel & Turn-key Systems, Inc. Page 132 of 147

134 Assignment Agreement use when WHOLESALING: Copyright Marko Rubel & Turn-key Systems, Inc. Page 133 of 147

135 Copyright Marko Rubel & Turn-key Systems, Inc. Page 134 of 147

136 Copyright Marko Rubel & Turn-key Systems, Inc. Page 135 of 147

137 NOTE: Use the DEED form that s customary in your state! This is for illustration purposes only. Each state has a different form call your local title company and they ll provide you with one. Copyright Marko Rubel & Turn-key Systems, Inc. Page 136 of 147

138 Copyright Marko Rubel & Turn-key Systems, Inc. Page 137 of 147

139 If the property has multiple loans, get this form signed for each of the loans Copyright Marko Rubel & Turn-key Systems, Inc. Page 138 of 147

140 Use this disclosure when you are not promising to make payments. In that case, you will not be using the disclosure from the previous page. See the box below (the box does not appear on the actual document). Copyright Marko Rubel & Turn-key Systems, Inc. Page 139 of 147

141 This is the most IMPORTANT disclosure when buying pre-foreclosures! Have seller read it and voice record it! Copyright Marko Rubel & Turn-key Systems, Inc. Page 140 of 147

142 Copyright Marko Rubel & Turn-key Systems, Inc. Page 141 of 147

143 This is a no-interest note: Copyright Marko Rubel & Turn-key Systems, Inc. Page 142 of 147

144 Copyright Marko Rubel & Turn-key Systems, Inc. Page 143 of 147

145 Use at your first meeting with a seller that you ll atempt to do a short sale for: Copyright Marko Rubel & Turn-key Systems, Inc. Page 144 of 147

146 Use with a Short Sale seller to get in writing all the disclosure points: Copyright Marko Rubel & Turn-key Systems, Inc. Page 145 of 147

147 XI. COURSES, SYSTEMS & RESOURCES By now, I hope you realize two things: a) Foreclosure Investing and Real Estate Investing in general has huge potential to drastically improve your life and your financial situation. b) This course is worth a lot more than you invested in, if you use it! This business is not get rich quick business, and there is a lot to learn in order to be successful. Over more than a decade of active investing, and over more than 300 deals, I created systems and acquired unique experience and knowledge that can help you make more money and improve your life. Here are a few resources that I highly recommend you take advantage of: 1. Million Dollar Foreclosure Training this is a 4-day intensive training where I cover every facet of the foreclosure business. This course covers a few hours of instructions, and at the live training I will personally spend over 35 hours going over these and other strategies in a lot more details, with appropriate exercises. Your goal should be to attend this event as soon as possible. Call my office for the first available date at Go to to hear the feedback from those who attended one of the trainings. Copyright Marko Rubel & Turn-key Systems, Inc. Page 146 of 147

148 2. ProfitGrabber PRO Automation System - this is the software system that automates all the processes you will need to do in order to be successful as a real estate investor. There are many systems cleverly advertised out there, but the most successful investors in the country use ProfitGrabber. Go to for more info. 3. Foreclosure Investing Explained Home-study Course this is an advanced course on the same subject that contains students examples and additional strategies. If you are a serious about the foreclosure niche, then this course is the continuing education for those who can not make it to the live training. 4. Personal Coaching this is for those who want to expedite their success and be successful as soon as possible. All successful people of our time had a coach at one point in their career. You too need a coach! Our coaching program is very limited and by application only. If you are serious and ready to make a commitment to yourself and your family, then call our office today to apply. I hope you enjoyed this course and I look forward hearing about your success! All the best, Copyright Marko Rubel & Turn-key Systems, Inc. Page 147 of 147