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Structuring Deals #6: Hierarchy Of Control

 

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Structuring Deals No 6- Hierarchy of Control

Joe: Hey, it’s Joe. This video 6 in the structuring zero down deals series that I’m doing here. And I’ve talked about the five different zero down structures, subject to, multi-mortgage, land contract or contract for deed, lease option and assignable cash deals. And they all fit in that order in a hierarchy. And I’ve placed them in this hierarchy because it’s a hierarchy of control. You want as much control as possible when you do a deal and you want to give as little control as possible when you, you know, to the other party. So if you’re buying the property, you want to be in control as the buyer. So on a subject to you get the most control because you get the deed in your hand and you have the least control if you’re down at the bottom of the hierarchy on a cash assignable deal or a lease option. Those don’t give you much control at all. So you don’t buy on, you don’t buy that way, you would assign those to someone else. But you don’t buy that way personally. You buy with subject to. You buy when you get the deed.

Joe: You sell on lease option. You sell on assignable cash deals where you don’t give them much control. If they don’t perform, then you don’t close the deal and you can get them out of the deal quickly. If they do perform, you make your money and everybody’s happy. You have to assume that you’re the most ethical person in the room and you know that you’re going to do the right thing. So the only way that the right thing can be done in these transactions is if you’re in control. So make sure that you’re always in control of these deals whether you’re buying or selling. So you use the hierarchy of structures.

Joe: If you buy subject to, you can’t sell subject to anymore, because of the Dodd Frank laws. So you, that’s only if you’re going to keep that property. If you buy multi-mortgage, you can’t sell with a multi-mortgage either, but you can hold on to that property and it gives you the most control. If you buy on a land contract, you can’t sell subject to because you don’t have the deed. But you could sell on a land contract if it’s an assignable cash deal, you can sell on a lease option or you can sell for cash.

Joe: So it gives you, if you sell, if you buy on a land contract it still gives you a fair amount of control. If you buy on a lease option, you can’t sell it on a land contract and you can’t sell it on subject to. You can’t sell it on a multi-mortgage. But you could sell it on a lease option if that was assignable, which is the main thing that we do in the for rent method, or you could sell it for cash.

Joe: If you buy it as an assignable cash deal, you can’t sell it on a lease option, you can’t sell it on a land contract, you can’t sell it on a multi-mortgage or a subject to, but you can sell it for cash. So you have the most limited options at the bottom of the hierarchy when you’re doing that. So, try to get control of these properties where you have the most control so you have the most options to sell it. And that’ll make your life a lot easier.

Joe: Now, the next videos in this series that I’m going to do are going to be specific zero down deals and we’re going to talk about, okay, this guy wants this much money, here’s how much he owes on it, and these are all hypothetical deals. These aren’t real deals. But they’re hypothetical deals and they’re real situations that I’ve run into before and I think there’s a good variety of them here that I’m going to go through for the next eight or ten videos so you can have a pretty good understanding of what you could do in any particular situation with these kinds of deals.

Joe: All right, hope that helps and I’ll see you on the next video. Thanks.

Joe: All right, thanks a lot.

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