DFW REI Club

 Dallas/Fort Worth Real Estate Investor Club

Does Anyone Know How To Buy REOs and Flip Them to an End-Buyer?

  • 16 Sep 2009 8:28 AM
    Message # 219302
    Anonymous
    Hello,

    I'm very interested in buying REOs and flip them to end-buyers (investors). I don't know the ropes to do this, and get by the bank's requirements of no assigning a REO property.

    I have access to Transactional Funding (24 hrs) to purchase these attractive properties and I'm ready to get started within the legal parameters.

    Can anyone help me with this issue, so I can move forward on this project? I'm looking forward to the answers on this forum!

    And you can email me at mybuyerleads@yahoo.com or call 817-517-8071 bus. cell

    Thanks,

    Tony

    P.S. I'm a nationwide wholesaler in the Arlington, TX market and if anyone has a property request for the DFW market area or any other market, go to GreatREIDeals.com and enter your property-of-interest information and I will accommodate your request.
  • 18 Sep 2009 9:29 AM
    Reply # 220158 on 219302
    Have you considered doing double-closings with your buyers?
  • 19 Sep 2009 6:06 AM
    Reply # 220436 on 219302
    Anonymous
    That's exactly what I'm going to do, double-close, but the bank won't let you just assign the contract to your end-buyer at the closing table.

    Its a way to get around the bank to flip the REO to the end-buyer, I was just hoping that someone on this forum would know how.
  • 20 Sep 2009 8:22 PM
    Reply # 220872 on 219302
    Deleted user

    Tony,

    Doing a double-close probably should not be your first choice if you are a new investor. They are risky and quite expensive.

    Last month, about 50% of the deals at title companies failed to close for lack of funding. In order to use transactional funding you will have to buy the house personally, then immediately turn around and sell it - all the while hoping your buyer does not back out of the deal or lose their funding.

    A better alternative is to purchase the property in a company (i.e. an LLC) and then sell the company’s stock (and thus its assets) to your buyer. The bank never sees that.

    Good luck.

    -Greg Wilson (817) 230-4800

    BTW, if you want to learn more about Real Estate Investing, this is the kind of stuff we go over in my Successful Rehabbing class being held on Saturday, October 17th, 2009.

     

  • 21 Sep 2009 9:31 AM
    Reply # 220991 on 219302
    Deleted user
    Greg is probably right, but I have a potential short sale Im working on (my first) and I am planning on using a double close w/transactional funding.  In this last sataurday's short sale class we talked about several exit strategies.  Even though subject was short sales, the different exit strategies can still apply.  Ok, maybe not all of them, but most could.  Much of it would probably need to be checked with the title company your using and make sure they are familiar with what your wanting to do.


  • 21 Sep 2009 11:01 AM
    Reply # 221024 on 219302
    Robin Carriger (Administrator)

    Tony,

    An assignment of contract doesn't come into play with a double closing.  A double closing is, as the name suggests, two back-to-back closings.  In other words, it's two purchases.  Most title companies will require you to fully fund the first half of the transaction, but, from what I've been told, there are still some that don't require that.  As Randal said, we covered several ways to wholesale properties to other investors (and even retail buyers) in my Short Sale Class last Saturday.  If you'd like to give me a call at 817-300-1132, I'll give you a couple of ideas.

    Thanks,

    Robin

    p. s.  BTW, Greg's class is awesome!

  • 22 Sep 2009 6:51 AM
    Reply # 221301 on 219302
    Deleted user

    To all us "Nubys" out there, Neither Robin nor "his lovely wife Cindy" (huge grin) would ever say this, but if you missed their short sale class last Saturday you owe it to yourself to contact him (817.300.1132) and buy a copy of his class on CD & DVD. I think he is still brain damaged and selling them for some ridiculously low amount of money. Hurry before the Gurus find him and make him raise his prices.

    -Greg

  • 28 Sep 2009 2:27 PM
    Reply # 223680 on 219302
    Hey Tony i just attended the group, but I have been successful in assigning reo contracts from several banks and other holding institutions. The most recent was from wells fargo and Bank of America in July of 09'. I put these properties under contract and within my option period I assigned these properties to my investor buyer with few objections. Some say you have to do a double close but I have actually assigned the contract. There are some stipulations as too how to write the contract I always use my company name and always give time too back out within the inspection period. We can chat more if you are still interested of how.
  • 02 Oct 2009 9:46 AM
    Reply # 225681 on 219302
    Deleted user

    Hi Tony,

    First Off, I'm new to this forum but am impressed by the activity and level of intelligent discussions. 

    I agree with others that there are a few issues with the concept of double closings, but in some cases it makes sense.  If you do decide to go this route here are a few things to consider.

    1) They are fairly expensive and much of the hard-earned equity that you have negotiated gets paid out to people who are not directly involved.  For example, this requires two separate closings which add an extra set of closing fees including an extra Title Policy (which adds 3%+ to the expense of the closing).  Unless you have cash on hand for the first closing, you will need to pay for transactional funding which will cost at least 2% of the purchase price.  This takes a 70% deal (on a $100k house) up to 73% - 75%.  However... maybe this is ok if you have found a 60% deal (minus repairs) and have a buyer willing to pay 70% (minus repairs).

    2) I would suggest using a separate title company for the second transaction (your preferred title company).  Note... please work this arrangement out with your title company before going down this path.  The reason is this... remember that Banks almost always chose the title company for the first close and often times that title company is not willing to start working on the second closing until the first closing is complete.  This means that instead of closing the second transaction (to the buyer) on the same day, you may be looking at a week or so between closings.  This makes your transactional funding very expensive.  There are a few title companies who are willing to start title work on the second transaction even before the first transaction closes allowing you to execute both closings in the same day.  If you need a title company referral please email me a jburks@txreipartners.com

    3)  As others have mentioned, you need to be careful when putting REOs under contract if you're not certain that you can/will close.  The worst thing you can do is back out of deals with REO agents.  This is the quickest way to get "Black Listed" and not be taken seriously in the future.

    With all of this said, I sometimes use this technique considering that my business model is different from most.  I work closely with my clients, I control the private funding, property mgt, rehab and property management and have a very high level of confidence that the transaction will close and if not, I purchase the property myself.

    Another method to consider is this:  You could purchase the property yourself (using private money/hard money) and as long as your lender is ok with this, you could sell it to your investor on a wrap note which would eliminate the need for a second title policy, reduce closing fees and ensure that the transaction closes.

     

    I hope this helps,

    Johnnny Burks

    Jburks@txreipartners.com

     

    Last modified: 02 Oct 2009 9:46 AM | Deleted user

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