From Zero to Hundreds of Deals in Under Two Years with Grant Kemp | BP Podcast 70

TL;DR

Grant Kemp excels in subject-to real estate deals.

Transcript

are you looking to become a better real estate investor and hang on because you're about to experience another episode of the world's most popular real estate podcast the BiggerPockets podcast but before we get to this week's show I wanted to invite you to become part of our community bigger pockets calm the real estate investing social network the... Read More

Key Insights

• Grant Kemp specializes in subject-to real estate transactions, allowing him to acquire properties without needing upfront capital.
• Subject-to deals involve taking over the existing mortgage while the original owner remains liable to the bank.
• Grant emphasizes the importance of full disclosure to all parties involved, especially regarding the due on sale clause.
• He leverages a team of acquisition specialists to scale his business, enabling him to handle 6 to 15 deals monthly.
• Dodd-Frank regulations impact owner-financing deals, but Grant navigates these by working with licensed mortgage loan originators.
• Grant's strategy includes selling properties via wrap mortgages, which allows him to profit from the interest rate spread.
• Networking with wholesalers is a key component of his lead generation strategy, as they often discard leads that are perfect for subject-to deals.
• Grant's success is attributed to determination, learning from failures, and adapting strategies to suit market conditions.

Questions & Answers

Q: What is a subject-to real estate transaction?

A subject-to transaction involves purchasing a property while leaving the existing mortgage in the seller's name. The buyer takes over the mortgage payments but does not assume the loan. The original owner remains liable to the bank, and the due on sale clause is triggered but not necessarily enforced.

Q: How does Grant Kemp find properties for subject-to deals?

Grant primarily sources leads from wholesalers who discard leads that don't fit traditional investment criteria. He also works with other investors and acquisition specialists to identify potential subject-to deals, enabling him to scale his business and handle multiple transactions monthly.

Q: What are the risks associated with subject-to transactions?

The primary risk is the due on sale clause, which allows the bank to call the entire loan due if the property is sold. However, this is rare if payments are made on time. Proper disclosure to all parties is crucial to mitigate risks and ensure transparency in the transaction.

Q: How does Grant Kemp handle compliance with Dodd-Frank regulations?

Grant works with licensed residential mortgage loan originators (RMLOs) to ensure compliance with Dodd-Frank regulations when originating owner-financed loans. This allows him to focus on his investment strategy while adhering to legal requirements.

Q: What is a wrap mortgage, and how does it benefit Grant Kemp?

A wrap mortgage involves selling a property with an existing loan by creating a new mortgage that 'wraps' around the existing one. Grant profits from the interest rate spread between the original loan and the new mortgage, providing cash flow and upfront profit from down payments.

Q: How does Grant Kemp scale his real estate business?

Grant scales his business by leveraging a team of acquisition specialists who help identify and close subject-to deals. This team approach allows him to manage multiple transactions simultaneously, increasing his deal flow and overall profitability.

Q: What advice does Grant Kemp give to new investors?

Grant advises new investors to focus on their strengths and not be afraid to ask questions. He emphasizes the importance of taking action, learning from failures, and adapting strategies to suit market conditions. Building a strong network and leveraging partnerships are also key to success.

Q: Why is full disclosure important in subject-to transactions?

Full disclosure is vital to ensure all parties understand the terms and potential risks involved, particularly concerning the due on sale clause. Transparency builds trust between the buyer, seller, and any financial institutions involved, reducing the likelihood of legal complications.

Summary & Key Takeaways

• Grant Kemp has achieved significant success in real estate by focusing on subject-to transactions, allowing him to acquire properties with minimal upfront investment. He emphasizes full disclosure to all parties involved in the deal.

• By working with a team of acquisition specialists, Grant can handle multiple deals monthly. He also navigates Dodd-Frank regulations by collaborating with licensed mortgage loan originators for owner-financing transactions.

• Grant's approach includes selling properties through wrap mortgages, profiting from the interest rate spread. His networking with wholesalers is crucial for generating leads, as they often discard leads ideal for subject-to transactions.