Hi, I’ve been busy putting some deals together. I have done 6 Deals total, 2 already this year and one waiting to close, but I still need to learn more.
Someone suggested to me that the REO market might be an opportunity.
I have a partner that is willing to provide Verification of Funds and a down payment for interesting REO properties in my area.
I’ve heard that there is usually a holding period (60 days?) with REO’s, but I’ve also hear about buying the properties in the name of an LLC and then wholesaling the LLC with the property as an asset of the company to my end buyer in a double close.
I live in Northern NJ, does anyone have any experience in the process or even right in my area?
I’m running thin on Wholesale Deals and don’t want to lose my momentum on turning properties.
Any help or suggestions would be great.
Congratulations on your 6 deals! The REO market can be a great place to buy homes to wholesale, however depending on where you are you may need to write dozens and potentially dozens of contract offers in order to get one (1) excepted.
Having a partner capable of furnishing you verification of funds and potential down payments is great, except as a wholesaler you should mostly be selling property by either assignments or by double closing! The only time most wholesalers are forced to buy the property is bidding at the court house steps for foreclosures or bidding and buying at auction.
You need to advertise (free) to create a buyers list for investors and for end buyers, create multiple ads in multiple platforms and build a list and then buy what your buyers want!!!
Buy property in you and your partners name (Or LLC name) and make sure the contract provides you the right of assignment and does not have wording prohibiting assignments, and find yourself a good transactional funding lender for “Double Closings”.
Make sure you also build and use a list of “End Buyers” those people looking for an owner occupied home to purchase. I used to do 60 to 70% of my wholesaling business to owner occupied buyers and I always put those buyers in the property for at least 10% below FMV after all fees and cost’s.
You see there are 6,000,000 residential transactions every year and investors typically are involved in about 2,000,000 of those transactions so the other 4,000,000 transactions are typically seller, agent / buyer, agent and this market is actually the largest untouched pool of potential buyers for investors.
If you are buying a REO from a bank you will need to cash the bank out before you can wholesale.
Actually Real Estate Seller you can contract any REO (Bank Owned Property) and can either assign or double close to your buyer! You do not need to physically take legal ownership to buy low / sell high! Now a short sale requires the buyer to actually close in there name and hold for a period of time!
What I was saying is buying from a bank the bank will choose a title/escrow and someone will need to come with the funds to pay the bank unless the wholesaler has a end buyer line up.
Thanks for the info.
The attorney that I use for my Wholesale deals does the “Double Close” for me with the end buyers funds, I haven’t had to bring any cash to the closing table on any of my deals.
I have a list of “End Buyers” that are buying my deals now and asking for more since I seem to be coming up with some good properties at great prices for them.
My partner is in place for my offer process, Ver. of Funds and down payment and my lawyer can do the double close, but do I need to buy the houses in an LLC and sell the company with the house as the assett of that company to my end buyer or will the banks let me just do the double close without seasoning? Or does that just apply to Short Sales?
I love you guys. Thanks Again. Dave
I guess it will work as long as the end buyer don’t care or know you are using their funds to buy and then resell to them. Most escrow/title will not let you used the end buyers money to closed the first deal.
Yes, my attorney is set up to do the A to B, B to C closing for me and there haven’t been any problems.
How do I structure the LLC with my partner and what name do I use for the LLC to fund the account to show my proof of funds.
I think I know how all the transactions will work, but I need a little help on the structure of the entity.
Thanks Again. Dave
Try checking with different escrows if possible and analyze.
As with many other issues, everybody says it’s great.
I’ve yet to see anyone actually accomplish it.
Most banks financing to an LLC want a personal guarantee. This will muck up your plan to “just sell the LLC.”
Thanks for the advise to look out for the bank wanting to put the kabash on the LLC to end buyer.
I’ll try to figure it out and I’ll post to let everyone know how it’s developing.