Advice on REO property as 1st investment

Hi, I appreciate any and all advice and opinions.

I am a beginning investor…I have been looking at several REO properties and am meeting with the Realtor in a couple days. I am looking for input on the following topics:
1)Any experiences on investing in REO properties
2) Can I assign a purchase contract to another investor (or wholesale) with a REO property?
3)If I can’t assign the contract, would a double close be permitted for a REO property, so I can buy it and immediately resell the property?
4)Is there a rule of thumb for a minimum percent under market value to achieve for the purchase price?
5)Estimation of total closing costs.

Thanks for your help…I really appreciate it!

Good luck to all of you!

Jonny Cash

In my experience, you can’t assign it. Most (if not all) state that in their addendum. Since they are going to require you to show that you are pre-approved with a lender (usually when you make the initial offer), it just makes sense that you can’t assign the contract to someone that may or may not be financially qualified. Your lender can give you an estimate on the closing costs. Good luck.

Thanks for your help! You said I will need a pre-approved letter from a lender, can this be a private money lender, or does it have to be a conventional lender? Thanks again!

I don’t have any experience with private money lenders and REO properties, so I can’t answer that. Sorry.

A pre-approval letter from a hard money lender will be sufficient for proof of funds. I once work with an REO in an assignment. They don’t like it and its difficult to pull off but it can be done. When we tried to “switch the names on the contract” the bank wanted the contract withdrawn and resubmited.

You said you had done an assignment with an REO property…did you pull it off, or did they kill the deal? If it was successful, how did you get it approved by the bank? Thanks for your advice!

We had to withdraw the contract and resubmit with a new name. We did buy the property. I would not recomend trying to assign a REO. We might have lost e.$. I forget.

JohnyCash: You mentioned in your 1st post that you were meeting with a Realtor. Did you ever meet?
Alot of your questions should have been asked and answered by your Realtor.

Is your Realtor experienced in investment properties?
Are you looking for commercial or residential REO’s?

Good luck!

I am meeting with the realtor on Tuesday. If you are acting as a wholesaler, but can’t assign an REO property, in what way can I turn the property to an investor and still make my cut?

I am looking for residential REO properties to answer the other question. Thanks again!

Jonny Cash

Why not just buy it yourself and then flip it to an investor?
Or why not just have the investor purchase up front and give you a “commission” or “finders fee”?

I agree. If you have a reliable and trustful person you would assign it to, then just have that person submit it and pay you.