Many real estate investors, new and old, decided to give rehabilitation projects complete and Landlording by the simplicity of great deals on wholesale to other investors.
With the market for its current investors increasingly find that they come across 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 towards the bank prevented.
The most important benefit associated with REOs is that equity can be created instantly, or to 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 whole house could sell for as little as one dollar.
In fact, there is only one disadvantage of large properties REO. Lock. When an investor gets a property owned by banks contracted always happens with additions of several pages that the offer is not transferable.
A large number of new wholesalers consider it an obstacle to online banking houses flip-owned are 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, they 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 an addendum that adds Louie is in the contract and the title. The Bank accepts and everyone present on the day of closing.
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?
To: The advantage of this method is that only one set of closing costs. This is a fairly simple and straightforward that works for most offers. Work around the restriction of the act 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 the parties in the original offer and the final buyer usually can not get a mortgage because the mortgage company will not let you be the title if lend money to another person against the house.
Method 2 - close to double simultaneous
The simultaneous double lock (also known as a simultaneous closing or closing "dry") is actually two operations. An investor buys the bank, then immediately resell to a third party in a separate transaction. It follows the Type A to B to C of transactions.
The "twist" that comes with this method is that the investor never really takes big money at stake. The funds from the buyer 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 paperwork for the care of account transactions at the time, while the first transaction (A to B) does not close until 14:00.
What really matters is that the facts recorded in the correct order when presented with the county. It is therefore important that the writing of A to B first presented to the act of B to C after registration.
Cons: It works well for those who have money to zero the time a company has a good title that is still ongoing to make this type of transaction. It even works with the final buyers to obtain 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 to obtain FHA financing. This method does not work for Fannie / Freddie entered 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 duties, registration 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 little.
The biggest obstacle to these transactions closed is the fact that title companies are less comfortable with the "dry" form close simultaneously when the investor does not provide liquidity for wholesale operation. In fact, often refuses to close these deals at all!
Method 3 - Close the double truth
Closing real marriage (also known as "wet" closing) is the same as the simultaneous closing of the investor buys the property for foreclosure and immediately resold to the final purchaser for a profit. However, the large investment in fact make their own money to fund its share 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 to job offers.
Then came the financing Flash. There is a "financing transaction" lenders give money to the same day at nearly double door ... 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 on the right side of the title most companies are willing to do business with you, if you go this way and the wrong side which claimed that the cost of additional financing flash gum on their profits.
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 make a bid on behalf of an LLC. If I were writing an offer on 123 Main Street, could put the offer to the buyer as "main Street Holdings LLC." Once the bank accepts the offer, investors quickly LLC presents its implementation procedures for ensuring that the state corresponds with the real estate contract.
Subsequently, the investor finds its ultimate purchaser and agree that the closing day of the final buyer is to purchase the entire quantity LLC's initial investment wholesale rate. Subsequently, the new owner of the LLC, the final purchaser is entitled to enter the original transaction and purchase the property.
To: The advantage of this method is that the solution in the form of additional costs of transfer taxes and / or flash rate funds that come with two double proximity methods, and for those who are concerned about protecting their name Privacy is never in the transaction.
To: The main obstacle is that the ultimate purchaser should be more or less the cash payment. The traditional mortgage banks (if the owner occupants or 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 often enough 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 capable of greater success seizure REO fire. None of these methods require the wholesaler to take cash out of their own game that 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 you win on a consistent basis controls large REO foreclosure properties.
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Brian Kurtz is a real estate investor and licensed real estate agent active in investment in the real estate market of Michigan. Your video blog showing others how to succeed in real estate investing is:
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