Many real estate investors, new and old, decided to give the complete rehabilitation projects Landlording by the simplicity of big deals to other investors.
With the market for its current investors increasingly coming through hordes of motivated sellers. Unfortunately, all these potential customers tend to share one thing in common. Not have any equity! This dilemma is causing small investors to turn their efforts to support prevented.
The most important benefit associated with equity REL is that you can instantly create, or reach an agreement through negotiation or Hot Chip. Nobody said that the bank owes much to a property and can not lower the price a bit. In theory ... the house could sell for as little as one dollar.
In fact, there is only one big disadvantage of REO properties. Lock. When an investor gets a property of the banks involved again with the addition of several pages that the offer is not transferable.
A large number of new wholesalers as a barrier to the ownership of homes online banking flap is concerned, without knowing that there are four ways to overcome this bump in the road.
Method 1 - Add the contract, then quit claim
Most banks do not have a problem with the addition of an additional part of a contract, do not want the original parts removed at any time. Ivan so that investors can have a REO property under contract for $ 50 000. Ivan called owner Louie and after discussing the agreement Louie agrees to pay a total of $ 60 000 for the property.
Ivan called the bank and asked to prepare a supplement that adds Louie is in the contract and the title. The Bank accepts and everyone on the closing day.
Louie brings two certified checks. One for $ 50 000 for the purchase of the property, and $ 10 000 in the name of Ivan. All parties have to close and both Ivan and Luis then owner of the house. Louie the hands of Ivan the check and $ 10 000 Ivan sign a quitclaim deed to remove the title of the property. Simple enough, right?
A: The advantage of this method is that only one set of closing costs. This is relatively simple and works for most offers. Circumvent the restrictions of the law of 90 days that comes with many Fannie / Freddie properties.
Cons: These are the negative aspects that come with this method. This does not work for HUD properties HUD does not allow any changes to original parts supply and the final buyer usually can not get a mortgage because the mortgage company will not let you be the title if you pay money to another person against the house.
Method 2 - almost double simultaneous
The simultaneous blockade of marriage (also known as a simultaneous closing and closing "dry") is actually two operations. An investor buys the bank, immediately resell to a third party in a separate transaction. Follow the Type A to B to C transactions.
The "twist" that comes with this method is that the investor does not really much money at stake in the purchaser funds are used to finance the last two operations. This is possible because, while the closing will take place the same day, no matter where you farm, primarily for accounting purposes the company title. The second transaction (B to C) could take place at 9 am with all the papers for the Care of account transactions at a time, while the first transaction (A to B) does not close before 14: 00.
What really matters is that the events recorded in the correct order when presented with the county. It is therefore important that the writing of A to B introduced in the act B to C after registration.
Pros: Works well for those who have money to reset the time a company has a good title that is still ongoing to make this type of transaction. It even works with buyers end conventional financing, if the ultimate purchaser is to get your financing from the right lender.
Advantages: This method is not an option if the ultimate purchaser is obtaining FHA financing. This method does not work for Fannie / Freddie came in most cases because these super banks to act in place a restriction that prevents the resale of the property to a person for a total of 90 days.
In addition, all offers double-locking two types of transfer fees, fees and other closing costs that cut into your profit. Of course, you can build in the supply by reducing their offer price in order to avoid this small.
The biggest obstacle to these operations is that private companies are under the less comfortable with the "dry" form closed simultaneously when the investor does not provide liquidity for the operation of wholesale. In fact, often refuses to close these deals at all!
Method 3 - Near the double truth
Close real marriage (also known as "wet" end) is the same as the simultaneous closing of the investor buys the property from foreclosure and immediately resold to the final purchaser for a profit. However, the significant investment that is really your own money to finance its part of the transaction.
This small difference is the title company happy, but it works so well for novice investors who do not have a lot of money sitting around a job offer.
Then came the flash of funding. There is a "financing transaction" giving money to the lenders on the same day to almost double doors ... for a price. Most never do a credit check or request a property appraisal.
The advantages and disadvantages of this method are more or less the same as the simultaneous closing, except that the right of the title of most companies are willing to do business with you, if you go this route and the bad side that said the cost of financing additional flash gum benefits.
Method 4 - Sale of LLC
The latter method was popularized by Steve Cook, who said he stole the commercial real estate investors that have been used for years to avoid paying transfer taxes.
The idea is that the investor could bid on behalf of an LLC. If I were writing an offer on 123 Main Street, could put the matter to the buyer as a "main Street Holdings LLC." Once the bank accepts the offer, investors quickly LLC presents its implementation procedures for ensure that the state is the real estate contract.
Subsequently, the investor has the ultimate purchaser and agree that the closing day of the final purchaser is buying the entire amount of initial investment rate wholesale LLC. Subsequently, the new owner of the LLC, the final purchaser is entitled to enter the original transaction and purchase the property.
A: The advantage of this method is that the solution in the form of additional costs of transfer taxes and / or flash funds rate came with two methods of close double, and for those who are concerned about the protection of your name Privacy is not in the transaction.
A: The main obstacle is that the ultimate purchaser should be more or less the cash payment. The traditional mortgage banks (if the owner or occupant of investors) in the name of the company. You must purchase your own personal name for a mortgage. Other concerns are that if you do this so often that it can attract the attention of state regulators who are confused as to why they started selling LLC and 10/05 of each month.
Armed with these four options, investors across the country are able to fire REO seized more successful. None of these methods require the wholesaler to take money from their own game as the initial deposit money and do not require a credit check. One of them will work for almost any situation, if the final buyer is to pay cash or obtain financing and to take control of large coherent properties in the REO foreclosure.
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Brian Kurtz is a real estate investor and investment real estate broker active in the housing market in Michigan. Video blog showing others how to succeed in real estate investing is:
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