Cash back at closing for buyer?? Anyone want to explain?

Bird Dogs, Wholesaling
1

I recently met an investor that is looking to buy properties from me. He know that I am working on wholesaling and get properties under contract. He is looking for doubles that cash flow. He wants to have me find him sellers that will give him cash back at closing so he can use others peoples money in his deals. He is able to arrange 20 percent down financing at a bank. Here is his email exactly…

I have enough cash to buy the property. I am not looking for owner financing. I want to set-up a 20% down loan for each one of my properties and at the close of escrow I want the seller to pay me as much cash as I can pull out from the equity of the property to do repairs pay the down payment back and to have on reserve for monthly payments. I have the cash, I plan to use opm to create an empire though. Using my cash will evaporate my capital to do these deals, which is why I want to set-up cash back deals.

How do I accomplish this? He is willing to give me money to put down earnest money deposits on properties for him. Do I just get it under contract and assign to him? Also what if the house needs work for the home to be considered livable? He wants it to go like this…

asking price- 20k
repairs- 30k
arv-90k

He wants the close on the deal and receive the 30 to repair and 20k to cash us out.

2

Rory,

If it doesn’t sound right, then it isn’t right. I would say pass on this deal and leave them alone.

3

Should I recommend him to just purchase the property from me and pay my assignment fee. Then take the deal to the bank and get a rehab or construction loan? This way he gets the money from the bank to rehab?

4

You need to flip your contracts to someone with the cash and kahones to close.

5

Sounds like mortgage fraud to me .

I get these people calling me all the time.

I tell them the same thing every time- “As long as the lender knows that you are getting cash back from the seller, then I don’t have a problem with it”. There is usually silence on the other end.

People are getting in deep sh*t for this stuff. There was a story on the front page of the Tampa Tribune the other day about a guy that is being investigated in Tampa for doing what you are describing (along those lines, anyway).

I’d stay away.

Steph

6

Definitely mortgage fraud.

There are ways to bury money into a deal without being so blatantly obvious, but I would definitely steer clear of deals like that.

The problem is that your deal might go fine, but if he keeps doing it he will get caught, then they will review all of his deals and low and behold you will turn up.

Just find another good buyer.

7

like the guys said, this constitutes mortgage fraud and you can do time for it, unless the bank knows about it. I have a feeling he is a newbie and facinated with the OPM concept.

I would pass on him completely and not bother with him. Last thing I would need is a shady person to be associated with, even if he has no clue that he is crossing a red line.