Ed Garcia talks about Bill Gatten&the PACTrust - Posted by Ed Garcia

Posted by Bill Gatten on January 22, 2001 at 13:04:55:

Ed gets it?believe me. He is one of the brightest and most knowledgeable folks on this board. He just missed that teeeensy weeeensy part of the workshop when he stepped out into the hallway for a few moments to close a hotel deal with a quite nicely dressed woman. At least that’s what I presumed it was. Actually, I could only barely overhear the words, “hotel,” “dollars?” and “…in the business.” Then there was a handshake apparently sealing the deal, and he left for a while (presumably to sign the paperwork) during the time that I was discussing how NEVER to buy properties with no equity (unless they are free, and there are other highly lucrative profit centers).

Juuussst kidding…Ed suffered through the whole thing (even my bad jokes) and merely made some assumptions that might need some tweaking on the issue of “when one might benefit from acquiring properties with no equity.”

Bill Gatten

Ed Garcia talks about Bill Gatten&the PACTrust - Posted by Ed Garcia

Posted by Ed Garcia on January 21, 2001 at 19:00:10:

Ed Garcia talks about Bill Gatten and the PACTrust

First of all I would like to thank Bill Gatten for inviting me to his workshop. Bill had invited me as a courtesy, and I must say that I appreciated it. I’ve had some curiosities about the PACTrust, and Bill has allowed me to learn and get a better understanding of an area that I knew little about. I always appreciate other ways of doing deals even though most of you know that financing is my strong point.

Before I talk about the PACTrust, I want to talk about Bill Gatten himself. The man is everything you see right here on Creonline. He’s articulate, knowledgeable, witty, has a fine command of the English language, and in many ways, a word I that don’t use often, is brilliant.
He has a wonderful wife named Gail, who complements him, and a Princess of a Mother in-law, and I do mean Princess. I guess you can tell that I like the guy. In addition to what I’ve just said, Bill has enough legal suave about trusts, to practice law.

Boy, why can’t anybody ever talk about me like this? (smile).

Now, my opinion about the PACTrust.

I see the PACTrust in a different manner than the way Bill intended me to. Bill likes to sell the fact that PACTrust circumvents the DOS ( Due on sale clause) which has never been a major concern to me or other experienced investors that I know.

The PACTrust is in my opinion an excellent way for a newbie to start out. Now before I continue, I want to make sure that you know that the PACTrust violates my personal buying method and the way that I was taught how to invest. I was always taught that you make your money on the buy. My attitude hasn’t changed even though I know that if I adapted this way of structuring deals, it would be easy to master. What I mean is, to sell it and make cash on every deal going in. You’ve got to remember in most instances, when purchasing with a PACTrust, you’re purchasing with a full price offer, and betting on the come. (future appreciated profit).

However, although it goes against how I like to structure my deals, I think it would be a good way for someone with out good credit, and no money, to get into the game. I think it is a useful way of doing deals while learning the market. I think one of the other reasons I like it for newbies, is because of Bill and his support system. Even though it seems to appear a little complicated at the beginning, Gatten and his second in command Jim Pasquini have an all-encompassing training method to guide their people through their transactions. They primarily mentor them. I won’t say any more than what I’ve said because I don’t feel that it’s fair that I give away their sizzle.

Check it out; it’s something worth looking into,

Ed Garcia

To Ed Garcia - Posted by Bud Branstetter

Posted by Bud Branstetter on January 21, 2001 at 23:08:02:


I don’t think I’m a newbie except at PACtrusts. I’ve only been doing it for 6 months now. In that time I’ve done more Pactrusts than I did new purchase loans in the last 15 years. Of course, you know my opinion of banks.

I had been doing subject to’s and lease option along with those cash deals. But once you have seen the problems, heard the discussions and experienced a few myself, you are able to recognize a better mouse trap.

No, it is not better than getting a loan(s) for more than 100% of purchase price. But, there are more deals on the SFH’s that most of us do by using owner financing.

In the sellers market there are not as many people willing to heavily discount for cash. There are many more that are willing to sell large chunks of their equity for very little. Many are willing to wait for their equity. But when you have nothing invested why wouldn’t you be willing to take the come. Back in the 80’s, after the crash I was taught, like you espouse, to make your money going in. Great advise if you have to invest cash. I have a kernel of an idea for an article comparing Pactrusts to 2nd mortgages.

Bill feels one more experience would help you see the thousand points of lights. April would be a good time in Dallas. Bill has said he was going to expand it to two days here to go into more details for the investor types like yourself.

Re: Ed Garcia & the PACTrust - Posted by Bill Gatten

Posted by Bill Gatten on January 21, 2001 at 21:25:59:


Very nice words, Ed. Thank you (and my respect is mutual). But my most appropriate comment at this point would probably be the same one I spoke to myself after meeting with Bill Bronchik a couple months ago, and finally getting his understanding tentative seal of approval: “Ahhhhhhhhh…at last?..!”

I shouldn’t add anymore here, I know: but Ed, you?ve compelled me (in all candor) to report that contrary to part of your assessment of the PT, 80% or more of the transactions we do, do in fact include 10% to 30% equity in them, and at least 5% to 10% percent in up front cash, and quite decent monthly cash flows.

The concept of acquiring property solely for future income potential is one I have never taught or subscribed to at all. If there were to be no cash flow, no equity and no up front money, I certainly wouldn?t touch it…with even YOUR quite impressive ten-foot pole.

However, if there is no equity (or even if there?s negative equity), I?m, not going to let a free property go to seed if I can get a cash flow, up-front cash and a running chance at some future profits. Existing equity doesn’t mean anything to investors in any business other than the real estate business (?because we’re spoiled). Think about it: how much equity does one have when purchasing stock, mutual funds, bonds, etc.? (Hint…rhymes with ?bun? or ?beereaux?). Should we not invest in those things, Ed?

Which is more consistently likely to increase the most in value over time, a stock certificate or a house? How much equity does a 100% borrower have in the house he just bought? Is a 100% loan (maximum leverage) not a good thing?

Why do investors buy stocks and bonds? Answer: Anticipated (but not guaranteed) yield; no loan application, no management, no repairs, no maintenance, no upkeep, no property taxes, no insurance?and no payments (?sound familiar?).

The one concept that we do agree on is that, for the experienced ?swimmers? with money and credit, acquiring property the easy way is best. Though for the cash and credit, and or/experience challenged ?non-swimmers,? who are willing to work and learn,the PT offers a chance, an opening and a quite effective life jacket, should things go wrong later. However, even for those with ?plenty? of cash and credit, isn?t NOT using it better than using it, if at all possible (or if its availability isn?t required in order to make the deal)?


Ed, if you and I buy identical properties on the same cul-de-sac and you pay $30,000 down and have payments of $1,000 per month; and I have to pay $10,000 more for my property than you did due a lack of bargaining power and credit; but mine requires no down, and payments of $1,550 per month?Whose R.O.I. is greater when we sell our identical properties for the same price five years later? Especially assuming that neither of us had negative cash flow, vacancies, management or maintenance costs over that period of time? In addition, what if cash and credit were NOT a problem for me?how many more properties could I buy than you could over the same period? Wouldn?t it be good for even the most experienced, wealthy and credit worthy investor to have a tool like this in his box (as it were)?

Ed, I think maybe one more workshop at the most, and your gonna have this PACTrust thing whipped.

Bill Gatten

If Ed doesn’t get it . . . - Posted by Ayn

Posted by Ayn on January 21, 2001 at 22:34:52:

with his decades of CRE experience, what chance does a newbie have?