What do you have to do to flip a house when it is illegal in your state. I have herd there are ways around this. Any input would be helpfull thanx
I would talk to your broker. Mine has been in the RE business for quite a while and is very creative.
Scorpio girl what state are you in?
First, let me say that I don’t know if flipping is illegal in my state (IN).
Second, I’ve never flipped a property(I’m new to this and just now working on my first L/P).
Third, when I said my broker was “creative” I did not intend to imply that he inolves himself in illegal business transactions. Nor do I know if he does any flipping/wholesaling at all. I do know; however, his niche is L/P.
My realtor informed me I would have to sign a statement that I would not sell the property before 30 days.
I’m from Indiana and in our state, which by the way, leads the country in foreclosures, it’s still legal to sell real property for a profit. For the record, there are good “flips” and bad “flips.” A flip is bad when the APPRAISAL is non- representative of the actual value of the property. I won’t go into the many reasons inflated appraisals are bad for all, but they have created much concern in the industry. It’s a serious problem and especially for the boys over at HUD. If you’re wholesaling, as I am, be careful who orders the appraisal. You should not be the one recommending or ordering appraisals in the transaction. Typically, it makes the most sense for the end investor to order it. I know investors who have been assigning appraisals and it’s concerning. Additionally, I’m not aware of old or new fed law establishing a holding period before re-sale. Currently, HUD imposes a 90 day wait (from date of settlement to date of new offer) on FHA financed transactions. Kinda long message… sorry
Hope it helps.
I’m looking to do wholesaling in Wisconsin. Have ordered and presently looking over Vena Jones Cox course. Jury still out on her course. Seems to be lacking some substance I thought it might have . . . still going through it, however . . . so . . .
Anyway, as I understand wholesaling. The wholesaler is a bridge between seller and buyer [rehabber in most instances].
As such as long as both seller & buyer know you are acting as bridge helping seller sell the home and will be doing just that. There is no illegality in doing this.
Wholesaler is rendering a service, finding a buyer, he/she charges a fee for this service.
Thanks I will look into that info
This works Folks, if you havent read my other post. please read. I just made $ 13,000 for only 6 hours of work. And no i didnt do a labor in the house. lol
What you described above was a RE agent, not a RE wholesaler.
A wholesaler is someone who buys a property at a steep discount and sells it to another investor at discount. Buy really low, sell low.
You can wrap it any way that you want, but the wholesaler only works for the wholesaler. The only “service” that the wholesaler supplies is to the wholesaler’s pocket, which expects to be carrying $$$ from the deal.
Roger, what you are saying dont make to much sence of anything. Do you kn ow what you are talking about???
A wholesaler provides a service for everyone. Many people value the wholesaler:
- The rehabber who didn’t know how to find property on his own.
- The neighbors who know he is keeping their property value high.
- The city for helping problem houses, instead of sitting vacant & accruing liens.
- The homeowner for solving their problem, when they feel “stuck”.
Only you don’t value the wholesaler, Roger. But your argument is flawed, like saying:
“Walmart buys from China, and sells to Americans - the only one who profits is Walmart.”
You forget, Walmart spent time & money negotiating with a Chinese manufacturer - a direct benefit to the American customer who saves 50% on a product. Without Walmart there are some products America wouldn’t even have access to.
Seems a few posters came to my defense … appreciate that. Really didn’t realize that a poster would be so, let’s say negative relative to wholesale. I see wholesale as … seller has a problem, wholesaler may have solution – buyer.
Sidebar: Texas Investors Please Read - Lease Options are about to become ILLEGAL found this at flippinghomes.com for the WIIWD.
Roger … seems you don’t like wholesalers. Appears you believe they only want to feather their pockets. Why do you feel this way? Seller has a problem – selling home, wholesaler may have solution – buyer.
By connotation, appears you might have a problem with Re Agents too. So, what is your definition of RE Agent?
I sent back Vena’s course, will probably take a look at Bronchick’s course next. BTW, her course is fine, just not what I’m after. I didn’t get the “roadmap” I expected from her course.
Bronchick’s course may not provide “roadmap” either. To me a good course amongst other needed material will have more or less, “start here, and proceed to there.” Simplistic, but nonetheless, in any endeavor I’ve found myself. There are definite steps taken, from beginning, middle and end of marketing/sales process.
After reading Vena’s course, got a lot of info, but after reading the thing. Had no real idea, as to okay step one you need to do this. Granted have to know what to do once invoking step one. So curriculum should provide necessary “how to” for second step after first step and so forth until concluding deal.
What was missing was case studies. In which author puts in print a story line about the journey to the end outcome … from beginning, middle, and end result.
“Here’s the Jone’s family distressed home story, to include J’s 5-Ws, ‘who, what, when, where, and why.’” Anyway … hopefully Bronchick’s version will be better.
As for wholesaling … I’m still up in the air versus doing rehab. Finding out my immediate area may be problematic in doing either one. Sellers are fairly sophisticated around my area, when it comes to selling homes. I sense this from REI Club members, gone to two meetings. Sense this from local newspaper homes section, et cetera. Also sense this from sales in income property section in paper. CAPs are very low. Say with 10% down, income from property won’t service debt. Most with 20% down still won’t cover note.
May have to go surrounding towns to find wholesale, even decent rehab deals.
Haven’t worried too much about buyers at this point … probably should. But, feel I need to select seller condition first as in wholesale or rehab, then figure out buyer stuff.
Best case, of course is – once doing wholesale or rehab is to have buyers lined up, hard money lined up – as well as finding motivated sellers. So, please don’t misconstrue the above buyer comment.
I want sellers to come to me via marketing efforts. I don’t like idea of cold calling or pounding on doors, “Hey, talk to me about your home for sale, maybe I can help?” I want sellers already motivated, already distressed looking for a solution.
Yes, above is overstated [or not], but still I want sellers contacting me who are motivated to sell. Do enough educating in my current gig. Gets tiresome teaching someone what to do. To sometimes win one or sometimes lose one.
Want all the “educatin, postulatin, and mental masturbatin” done before hand.
Motivated – meaning they have a problem. That way … cuts to the chase. I want them to have gone through the stages of interest, attention, belief/conviction, commitment, action. Action, as in calling me. They – having gone thorough all the razzmatazz of the preceding four stages already.
Obviously, eventually would like to have cadre of buyers who will buy from me.
This got long all of the sudden, sorta thinking out load … sorry about that . . .
Funny, if I KNOW I can do this … for example rehab … have some savings and good credit line on my own, along with decent credit 756 mid-score to buy a home, fix it, and sell.
Lots to think about . . .
Appreciate posts to this threads and other threads … helps in the “processing of info” as well being thought provoking . . .
Geez people, either read the responses better or go rescue a stray cat or something, okay.
First, I AM a wholesaler, so I understand the workings pretty well, and I really do like me and most of the time, I don’t have much of a problem with me.
Second CCC, I OWN a real estate agency so I understand how they work pretty well also, AND since they make me money, I generally don’t have much of a problem with them either.
My post was in reponse to CCC’s comment about a wholesaler being a “bridge” between buyer and seller. That is incorrect. A wholesaler buys a property and resells it to another for a PROFIT. In one transaction, the wholesaler is a buyer, in the other, they are a seller. If you want to call that a “bridge” fine, but at no time should the wholesaler be trying to setup a deal between the original seller and the end buyer, or bridging a deal. THAT is what a RE agent does.
Now, Manga (cool comics, huh)
I never said that a wholesaler didn’t provide a service OR that they didn’t have value. BUT, the end goal of the wholesaler is for the wholesaler to make a PROFIT (there’s that word again). Do you really believe that Wal-mart negotiated that great deal with China just so we ungrateful Americans can buy stuff cheaper? Come on, I think that you’re smarter than that. Wal-mart buys from China because they sell it to them cheaper than American companies do, which gives ol’ Wally World more PROFIT (damn, there it is again).
Bottom line, you only provide those great “services” you listed when you, as a wholesaler, think you can make a PROFIT (enough with that already).
Let’s look at this way:
You said, you provide a service to the homeowner. Well, ONLY if you actually buy their property. If it isn’t a good deal (and I mean a really good deal because a wholesaler must be able to resell to a retailer and still make money (man, at least it was that P word, again), then I doubt that you’ll buy it. Tell me, do you think that the homeowner whom you didn’t solve their problem thinks that you provided a service?
You help the city…Well, sort of. It’s really the rehabber that helps the city, because they are the ones fixing the place up. But I’ll give it to you if you sell to a rehabber that knows what he is doing, okay?
You help the neighbors…Nope, sorry, but that one goes only to the rehabber. If it’s a dump when you buy it, it’s still a dump when you sell it to the rehabber. Well, maybe a slighter cleaner dump, but still a dump. The rehabber fixes up the property which keeps the neighborhood values high (that and the retail sell). I mean, if you really want to pursue this one, as wholesaler, you’ll be more likely to drive values DOWN. You know, buying at 50% of value, selling at 75% of value.
The rehabber… I give you this one IF you change it to ‘who doesn’t have time to find the deals.’ If you’re selling to a rehabber who doesn’t know HOW to find the deals, then you’re probably NOT doing much of anybody a service.
Forgive me for offending, stepping on toes, and/or winding up underwear. Just trying to clarify a few points. You may know, if you wish, return to wearing your rose-colored glasses.
Suit yourself. I don’t have time to argue semantics.
Seems might be a good idea to get “answers” through others threads.
Don’t mind some rhetoric, but would appreciate certain people dialing down the tone.
As for semantics … agree with C, I believe people in this thread were talking about the rehab guy being the “buyer.”
Seems some here are too rigid and meticulous – think attorneys for one. Perhaps anal retentive, as in some sort of interruption, perhaps, of this second of Freud’s four stages.
All I have to say is WOW. You guys really now how to put everything on the table. Some of these responces take me like 5 minutes to read. But Keep them comming, We may all just learn a liitle more from this. Good luck and have fun…
did u finish her book and try her techniques ?
would you recommend us to buy it ?
Going back to the original topic, flipping is legal in every state. I am an underwriter as well as an investor and there are two types of flips. Legal and illegal. An illegal flip is generally when a group of people work together to inflate value on a property and get cash for their transaction. For example, a home is purchased for $50,000. A few weeks later another buyer comes along (generallya straw buyer) and buys the house for $70,000 using an inflated appraisal. A short time later, the home is sold again for $100,000 using an inflated value. All of the time, the house has actually been worth $40,000. These flips are illegal and generally involve several conspirators. Realtors, buyers, appraisers etc.
A legal flip is what I and other investors do every day. We buy a home at a steep discount and then fix it and flip it at retail for a profit.
To clear all this mess up I will put it plain and simple. There is no such thing as an illegal flip, it’s either one or the other…
- Flipping- legal
- mortgage fraud- illegal
What you guys call an illegal flip, is not a flip at all, it’s mortgage fraud. Plain and simple. So yes, “flipping” is legal in all states. Hope this helps.
I agree with the last post. Flipping is legal. Mortgage Fraud is illegal.