Flip This Wholesaler

7/10/09

I just wanted to write a quick post to reiterate the fact that my title company, (Peer Title), rocks.

Having to constantly deal with incompetence and laziness from listing agents, asset managers, and the bank’s title companies, I can’t tell you what a breath of fresh air it is to deal with a title company that doesn’t suck.

I got an email from them this morning along with the preliminary HUD for the deal that I just got under contract (that isn’t supposed to close until the 24th). The email said, “We are ready to close this deal whenever you are ready..”

They haven’t even had the contract for 48 hours, and they are ready to close. God bless them.

I’m sure the bank’s title company will do their very best to fuck everything up, but it’s still nice to know that I have Peer on my side, ready to close the deal.

Amen to that.

If you’re in the Tampa Bay area, and you need an investor-friendly title company, give Peer a call: 813.870.1614. I’ve been with them for almost 3 years, and have never once had them drop the ball. They ROCK.

And that’s all I have to say about that.

10-4, over and out.

P.S.
Have a great weekend, Blogosphere!

P.P.S.
If you have any interest in securing private money to fund your real estate deals, set aside some time this weekend to watch Patrick and Trevor’s free training videos. They are providing a TON of free, quality info, including a Q and A session that is almost 4 hours long, as well as the power point presentation that they use when approaching potential private lenders. Lots of good stuff in there…

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6/5/2009

Of all the questions I get from readers about the mechanics of structuring and completing an REO wholesale deal, the one I get asked most frequently is how to handle the closings. I thought I would post a few of the most frequently asked questions, in hopes that it would clarify the process for you…..

Here we go…

* Can you assign an REO?

99% of the time- NO. Most banks will have a clause in their addenda that prohibits you from assigning your contract. Every bank contract that I have ever signed has been non-assignable.

* My realtor told me that simultaneous closings are illegal, is this true?

I have been told that simultaneous closings (back to back closings where the funds from the second transaction are also used to fund the first transaction) are illegal, too, but I have yet to have anyone show me the law or statute that supports this as being true. I have consulted with two real estate attorneys in Tampa, and both have told me the same thing- no, simultaneous closings are NOT illegal. Many title companies will not perform simultaneous closings, as their underwriters will not insure the transactions, but this does not make them illegal.

It may be different in other locales, but in Tampa, simultaneous closings are alive and kicking.

If you have questions or concerns about the legalities of simultaneous closings, check with a real estate attorney in your area. It’s best not to take legal advice from realtors, mortgage brokers, neighbors, Aunts, Uncles, etc (or me, for that matter). Always do your own due diligence.

*How do I find an investor friendly title company in my area who will close an REO wholesale deal?

The best way to find a good title company is to ask for a referral from someone who is actively doing REO wholesale deals in your market. That is how I found mine- I sought out the wholesalers who were doing the most volume and I asked them who they were using. Peer Title was the recommendation that I was given, and I have been with them ever since.

If you grab the Yellow Pages and start cold calling random title companies and asking them if they perform simultaneous closings- be prepared for a mountain of REJECTION. Most title companies do not do them, and many do not even know what they are. Save yourself the headache, and just ask someone who is active in your market for a referral.

* I thought that the banks make you use their title company on REO deals- how are you getting around this?

OK, here is where there seems to be A LOT of confusion..

Yes, it is true that most of the banks force you to use their title companies (and most of their title companies SUCK, btw). There is no way around this that I am aware of.

The bank’s title company is in charge of doing all of the title work and preparing all of the closing documents. Once all of this is ready, and the deal is ready to close, I let the bank’s title company (or the listing agent if I am not in contact with the title company) know that I will be signing all of the documents at my attorney’s office/title company. I then request for them to email the closing documents and wiring instructions to my title company. I tell them that my title company will do a “courtesy closing” for them, which means that they will get all of the closing documents signed and collect the funds for the purchase. Once everything is signed and funded, my title company FedExes the documents back to the bank’s title company and wires them the funds from the sale.

I do not ever try and explain to the agent or the bank’s title company that I am flipping the house on the same day via simultaneous close. This will only cause confusion. All they care about is that the deal gets closed on time, and I make sure that it does.

I have closed all but 3 of my deals in this manner and have never run into a problem doing it this way.

The key here is to have an investor friendly title company on your side who is familiar with this kind of transaction. You need to line this up BEFORE you put something under contract. If you wait until after you have a deal signed to try and coordinate all of this, you are asking for trouble. Have your exit strategy lined up FIRST!

*I’ve searched and searched, and I can not find a title company in my area who will perform a simultaneous closing. Now what?

If you are unsuccessful in finding a title company who will do a simultaneous closing, you can do a double closing instead (where you will have to bring cash to the table). You can accomplish this by using transactional funding aka “flash cash” or “flash funding” to fund the transaction between you and the bank. There will be fees associated with borrowing the money, so make sure to factor that into your numbers when you are structuring your offers.

If you are looking for a transactional funding source for your REO or short sale deals, I recommend FundThisWholesaler.net.    If you need a proof of funds letter to submit with your REO or short sale offers, you can get one @ FundThisWholesaler as well.   Click here to get a free proof of funds letter.

I hope this answers some of your questions about the mechanics of closing an REO wholesale deal. If you have further questions, or would like me to clarify anything in this post, feel free to ask.

Have a great weekend!

3/10/09

Well, I’m supposed to have a closing today, but the bank’s title company, of course, is not ready. Apparently the lien search is not in yet, which is what happens when you don’t start working on a file until 2 days before closing. Who knew?

So, today my job is to harass the ever-loving shit out of them until they get so sick of hearing my voice that they do whatever is necessary to get the search done and the docs sent out. You might think this is being excessive, but if you don’t stay on top of the closer, your file will just sit and collect dust with all of the others. I also told them that I am going out of the country on Thursday (not Friday- if you tell them Friday, they won’t have it ready until Monday. If you’re lucky).

There’s a small chance that it might close today, if they get the search back early enough. My title company is ready to go (I heart Peer Title), and Lee’s buyers are ready to go. we’re just waiting on the bank…

I’ve got a whole mess of offers out there right now, and should be getting some counters back today. I’ve been staying consistent with making 3 offers/day. I try to get out and look at 3 houses first thing in the morning (after traffic dies down), then come back home and write the offers up. My goal is to look at 3 houses, make 3 offers, and run 3.5 miles by noon every day. I feel like a rock star when I do this.

That’s all I’ve got for today.

Happy Tuesday, Blogosphere!

6/26/2008

I get quite a few emails from readers asking questions about wholesaling REOs. One of these days, I will put up a FAQ section on this blog, but until then, I thought I would start posting a few of the more commonly asked questions in case there are others out there who might be wondering the same thing.

So, here we go..

Hi Steph,

My name is Frank from NJ, and I am new to wholesaling . I have some short sale , and wholesale training but still looking for the first deal. I read about your transaction on reibrain.com and was just curious. I have asked a few investors in forums about wholesaling reo’s. I have so many in my area and would really love to be able to wholesale the ones I find to be good deals. Anyway from what they have told me lenders will not approve of assignment contracts. So basically I would have to buy the house and then find an end buyer like one of my investors and do a double close . I really would rather flip the contract then put out my money first as you can understand. Can you give me any tips as to how you are assigning these reo properties without any problems from the lender? Continued good luck steph and thanks in advance.

Hi Frank,

You are correct in that (most) banks will not let you assign REOs. There are many ways to get around this, though, and still be able to wholesale them. What I am doing is using a simultaneous close. Basically, the closing between me and the bank and then between my buyer and me takes place at the same time, and both transactions are funded with my buyer’s funds, so I don’t have to come to the table with any money. Many title companies will not do this, but some will. What I would do is find the active wholesalers in your area and ask them who they are using as a title company. That is how I found mine.

You can also buy the property in an LLC or a land trust, and then sell your rights to your buyer at closing. I have never used this technique, although, this is the method my mentor, Steve Cook, teaches. Here is an article written by Steve that explains it in greater detail……

Another way is to have your buyer added on to your contract with the bank, and then after closing, give your buyer a quit claim deed in exchange for your fee. I would not recommend doing this, though, unless your buyer is someone you know and trust. I have only done it this way a few times, and it was with a buyer I have worked with several times before, and there was a mutual trust there…

Finally, as you mentioned, you can borrow the money for the first transaction, close on it with your funds, and then resell to your buyer right after the first closing (double close). There are quite a few companies who will lend money for this type of transaction. My recommendation is Fund This Wholesaler.net.  Not only can you get funding for your REO and short sale back to back flips, but you can also get a free proof of funds letter to submit with your offers.  If this is the route you are going to take, you would just have to take the extra costs into account when you are structuring your offer.

Anyway, those are the ways I know of to wholesale REOs. There are a few more hoops to jump through, but it’s really not that big of a deal once you start doing them.

Hope that helps,
Steph

6/17/2008

I think I’m going to change the name of my blog to “Days of Our Wholesaling Lives,” because I’ve got so much deal drama going on right now.

To sum up, my buyer for the deal that was supposed to close yesterday ended up not being able to come through with his financing, which I didn’t find out until this morning because he did not return my phone calls yesterday evening. So I got to spend last night staring at my ceiling wondering what was going to happen. That always makes for a good night’s sleep. I had to call the bank’s title company yesterday and come up with an excuse for why the wire was not going to be there. They were not too happy about it, but I bought another day for myself.

I called my short sale friend, Nathan, last night (who, by the way is closing on 8 deals this month, and just released his short sale course that teaches how to do the same), to vent to him about how frustrated I was that I had another buyer for this deal for more money, but I went with what I thought was the sure thing, and now I pretty much screwed myself.

He asked me if I thought I could still sell it and make money, and offered to put up the cash for it if my buyer couldn’t close, and offered to split the deal 50/50. So, that’s what I did. I just got back from dropping the cashier’s check off at my title company, and they sent the wire to the bank just in the nick of time.

I have to admit I’m scared shitless right now of not being able to sell this house when my friend’s money is on the line, but I’m pretty sure I will be getting a contract on it this evening from the same buyer that I turned down a week ago.

Also, I have another wholesaler friend who told me he would close on it himself and keep it as a rental if I can’t find another buyer.

So, I should be OK, and still make money on it.

Oh, also, the listing agent called me a little bit ago to make sure everything got closed OK, and mentioned to me that she would have “plenty more deals like that” coming up.

Nice.

That in itself is worth the headache.

I sold another deal to my buyer who is waiting on that deal that was supposed to close last week. He told me he is willing to wait for them to get their shit together, and he will take this one, too. Only problem is, this is a short sale that was just approved, but the bank is requiring the seller to sign a promissory note for the amount they are discounting the house (or something like that- I don’t do short sales), and the seller is on the fence about signing it.

It has to close by Friday, so she better make up her mind. This is a deal that another wholesaler friend of mine has under contract, so we will be splitting the profits on this one.

I’m tired. I seriously was up at 4am worrying about this stupid deal closing.

So, that’s it in a very small nutshell. There’s some more to the story, but I won’t get into it here. Let’s just say I’ve learned some valuable lessons on this one. Hopefully there won’t be more to follow.

Over and out to get a much needed cocktail…

P.S.
Peer Title in Tampa rocks.