What wholesale flips would you say is a lot less of a hassle? Would that be flipping properties directly from sellers, REO’s, HUD’s,or foreclosures. Explain why.
You really can’t flip HUD or REOs unless the person you are going to flip them to is already on the purchase contract. With HUD you can only buy one property every two years and they track it by social security number but I suppose you could use other partner’s to help in the contract phase. With HUD you would have to do a double closing, taking title to the property and then selling it to the new buyer; you could use transactional funding for this.
With REOs, it’s similar, the contract needs to have the end buyer as the contracts are usually not assignable. Also, be very careful as some REOs -forgot which banks or agencies (Fannie/Freddie) were trying to add restrictions that the buyer could not resell or transfer the property for 60 - 90 days! Makes no sense and it only hurts investors.
The best wholesalers find the unlisted deals directly from distressed sellers, have an existing and extensive buyers list and know how to use contracts.
Good luck!
My understanding is that there are no restrictions on how many HUD properties you can purchase in a year as an investor. The purchase limit rule only applies to owner-occupied buyers during the HUD priority period.
When a HUD first offers a home for sale, owner occupied buyers are given first priority. It is these buyers that are restricted to purchasing a property every two years. Once the priority period is over and the house hasn’t sold, bidding on the property is available to everyone, including investors with no yearly restrictions.
Also, anti-flipping restrictions apply to any property that is insured by FHA or backed by Freddie Mac or Fannie Mae. For wholesalers that are wholesaling to rehabbers that mostly use hard money, anti-flipping restrictions won’t matter. I don’t know how wholesalers, wholesaling to end buyers and rehabbers who resell the house within 90 days get around this restrictions. If anyone knows, I would love to know.
Agree in that definitely not HUD/REOs or almost anything listed on the MLS , except maybe probates. I am also not a big fan of preforeclosures because there’s too much emotional attachment and most in my area have little equity. The best are from distressed homeowners that have a “junker” as a house. If it’s vacant is much better, as you can walk as many buyers as you want. Of course this takes a lot of marketing to get done but is worth it rather than dealing with agents and banks and playing by their rules.