steps to protect your deal, real estate investor protect your deal

2 Steps to Protecting your real estate Deal from Shady-Investors

Hey, gang, this is Mike with My Real Estate DOJO and I had multiple people and students ask me: “Hey Mike, how can I protect my deal, when I am trying to wholesale a deal and shady investors won’t take it over when I send it over to my buyers or the seller won’t go around my back”.

subject to contract

Because if you are doing a double closing then there is a good chance, that some of the cash investors that you are talking to may want to go behind my back. The way that I protect my deals is that you’ve got to go a one or two extra step, when you are doing the transaction. Sometimes I don’t even take the two extra steps, because the rapport I build with the seller, I know they are not going to stab me in the back or there’s not enough equity. It takes a bit more money, well not money, but sweat equity, because it takes a little more driving around.

Sometimes it’s not worth it for me. If I am dealing with a seller with a significant amount of equity for me that I am going to protect my interest. Here is the way I am going to do it, guys. So there’s basically two extra steps you have to take. Whenever you negotiate with the seller and you are going to sign the contract, you need to actually get the contract notorized. Step number one, you have to get the contract notorized.

Now if you don’t have a contract or a subject to contract, you know, I have one that you can download. It will cost you a couple of pennies, but it is going to be a lot less expensive than going through an attorney, so you might want to check that out. So step number one, you get the contract and you have to get it notorized. What I do is I call the local notary, they come in, it costs me like $75-100 for them to notorized it.

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If you want to do it for free, then you have the seller get into their car, you get in your car, you guys down to a bank that does notary for free. That is the option two if you want to do it for free. For me, I just call the local notary, they show up at the sellers house and when we sign the paperwork, I get it notorized. Your contract needs to have the notary part on the bottom for the notary to sign. It’s not allowed for a notary to show up and they are going to put their text in for you.

Your contract needs to have that. Once I get it notorized, I let the seller know: “Once you sign this, there is no backing out of this thing, because I am going to buy this, I just payed the notary, I’ve put money in the game, I am going to buy title switches. Are you sure you want to do this?”. If they say ‘yes’, I ask them five more times, three more times making sure it’s something they want to do. Once they say they want to do this, we go ahead and get it notorized, we sign off on it. Next step is I am going to take it to the county clerks office, pay a couple hundred bucks. I think it’s 110 buck, I don’t remember.

Depends on the length of the paper that you file. The more paper it is, the more you’ve got to pay. I’ll go to the county clerks office and I’ll go ahead and give them the contract and let them put it in the public records office. What that does is it clouds the title. What that means is that if the seller tries to sell the property to another investor, that investor goes to the title company, that company is to going to provide them with the title policy, because there is a cloud on the title. Now a cloud is not a lien. Let me repeat that one more time. A cloud is not a lien. But every lien is a cloud. Let me say that again. All liens, whether it is a mechanical lien, an IRS lien, mortgage lien – whatever the type of lien it may be, there is always a cloud on the chain.

However, not all the clouds are liens. For example, the thing what I just showed you how to do, is a cloud on the contract, however is not a lien. What happens is you have shady seller or a shady investor that goes behind your back, once you send them an email, saying “Hey, look at this property” and they try to negotiate something with the seller, offering more money whatever the story may be. To the closing, the seller shows up, that shady investor shows up and the title company is not going to provide the title insurance on the deal, which means the deal is not going to close, because the investor is using hard money or is using a hard loan. The buyer has to buy the title policy.

So, at that time what is going to happen, the title company is going to call you, that’s why on the contract they have your contract number. They call you and ask if you started negotiating something. Hey, you can pay me $2000 or $3000 for damages and at that time the seller or the shady investor will have to do that, but they will want you to release that cloud, because you have invested interest in this property.

You have spent money for whatever you’ve done, title searches and you were there first. This shady individual started to go behind your back and you are protecting your interest by clouding the title, so that if the buyer wants to uncloud the title, they need to pay you some money 2 grand, 3 grand. Whatever you will let it go for. If you were going to sell it for 5 grand, maybe now you can let it go for 2 grand and sit back.

It may be worth it for you. You may want to ask for the full amount, which might not be a bad idea. So guys I just showed you two steps that you have to do when you are whole selling the property to an investor or retail buyer. You can also do that even if you are not a whole seller, you can still do that so that the seller doesn’t change their mind down the line. If you do that and the seller says, you spent a couple of grand doing the title searches, having the contract come out of there – whatever, so you have money up in there. The sellers are not going to sell you the property like they said before. No problem, I followed this.

You don’t want to sell it now, fine, 5 years down the line when they want to sell it, the same thing is going to happen. That seller is not going to be able to sell that property unless they clear up that cloud. I’m not going allow for that cloud to be cleared unless I am going to get payed for the money that I invested into the deal. Either way, I am going to get some money down the line. Now one way that this theory will not work is if that investor/buyer decides to buy the property without title policy. So that investor buys it without title policy, then at that time he doesn’t have to pay you, because he is doing a subject to. Now you can buy a property subject to with the title policy or you can buy a property subject to without title policy. If he does it with title policy, then they are going to call you. If he does it without title policy, then they are not going to call you.

The problem is going to happen again down the line, when the investor calls himself a retail buyer. Once the new title company looks down the history of the chain of the title, they are going to see the cloud, there is a possibility that it is going to come back to you. So you’re in a better positioning. Now guys, there’s nothing 100% in life. If you want something that’s 100% then only death is 100%. These things are like the seatbelt of the car. They are going to decrease your chances of getting fucked up, but they are not going to eliminate you being fucked up.

The strategy I was saying 90-98%. There is always a way to go underneath them, especially if the investor is very seasoned, you know, but end of the day, I would cut off any motherfucker that would try to screw me and not do business with them, because it is a small world and you don’t want to do business that is shady. I don’t run business shady and I don’t want business with shady people and I don’t want shady people around me and I stand by that. When you have those kind of values, don’t sweat it. There is a bunch of people that would do business with you and you’re just happy that you caught the rat and you squished it and you are not going to deal with this fucking rat anymore. Alright guys, I showed you how to protect your deal.

One thing I did leave out is whenever you file your contract at the country clerks office, everybody is going to know what you negotiated, if you did a subject to loan and you have this much, then it is going to show up on the sellers contract as this much, this is the interest rate. You are basically putting on the whole world what deal you negotiated. Now if there isn’t a shady person involved in the deal, some buyer or some seller and I go follow up my contract at the county clerks office a couple moths later, a couple year later and want to sell it to an investor or a retail buyer. If you’re smart you can go to the county clerks office, you can go and see how much I bought the property for, because I basically spell it out on the contract.

How much it is, what is the loan. The way to protect yourself and not let the whole world know what you got the contract or the deal for is to use a memorandum. Guys, basically a memorandum is like a copy of the contract without all the details or the terms. It just says that the seller is going to sell you the property and you notarized it. Now guys, if you want to download my memorandum, the one that I actually use to do this. Please post bellow in the comments and I will give the information to you. It will cost you a couple of pennies. It’s like one/one and a half page. I’ll give it to you.

Then you are there at the sellers home, not only do you need to spell out the contract, you also need to fill in the memorandum instead of going to the county clerks office and following the contract, you can actually follow up the memorandum.

That lets him know that you have the best interest in the property and however it does not disclose to the whole world what were the negotiation terms, what’s the interest rate, how much you are buying the property for, which basically lowers your ability to negotiate later with another seller, because they get to see. It’s kind of like playing poker open hand. It’s kind of like showing everybody your hand. It’s kind of harder to win that way. So gang, I am giving you some good information to protect yourself, I am giving you some good information on how to protect yourself without letting everybody know what your hand is. If you have questions, please leave them bellow. I’ll be happy to answer these questions/comments for you. If you like these videos, please like, please share. If you really like what I am doing, please support me.

You know I have seller script out there, I have a buyers script, I have flyers out there. They are all professionally made by copywriters. I have the subject to contract out there, I have the memorandum. I have the DOJO club, you have access to me, you get three hours with me for free. So if you really enjoy what I am giving you are actually going out there and getting results please support me!

I really appreciate what you are doing! Go out there and hustle and bustle.

Have a great day!

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