Flip This Wholesaler

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

1/05/2008

I had planned on writing a post before the end of 2007 giving a recap of my year, but never got around to it after my travel plans got messed up due to my irresponsible bloody mary drinking. I did, however, write an article that Trevor Mauch was nice enough to post on his site, The Rei Brain. It’s kind of a snap shot of my mostly crappy first year in wholesaling. Check it out if you have a spare moment.

P.S.
I had an REO agent call me yesterday and tell me that the bank is ready to dump one of their properties that I offered on a few weeks ago. It’s listed right now at $130,000, worth about $180-190k, and he said he thinks he can get them to take 90k!! I’ve got 2 of my buyers going to take a look at it this weekend and let me know what they will pay for it. I’ll keep you posted……..

Have a great weekend- make some offers!!!!