Flip This Wholesaler

12/15/2008

Well, I had one closing this morning (yay!), and am supposed to have another one sometime this afternoon, but not sure if that's going to happen. This is the one where I'm using my buyer's title company because the buyer doesn't have an ID, and also, the bank is using a title company in Tampa which is a new one for me. I sense impending doom with this deal. I'm just waiting for the phone call any minute now. The attorney from my title company told me this morning to give him a call if I ran into problems, so that's always good.

The other 2 are supposed to close Friday, but I doubt they will. Would be nice, but I just don't see it happening. I'm leaving early next Tuesday to freeze my ass off in St. Louis for five days, so if the other 2 don't get closed by Monday, we'll have to wait until after the holidays, which is going to piss me off, but what can you do?

My buyer from the closing this morning told me he is ready for more. That is a good thing. I've got several other investors looking for more houses, too, so I'll be making offers like a mad woman this week and hopefully will get one more deal in before the end of the year (well, not closed, but at least under contract).

I still have to do a little Christmas shopping, and I can't think of anything I'd rather not do than set foot in a mall the week before Christmas. I don't know if I can do it. Maybe I will have a bottle of wine first and then take a cab to the mall. That should dull the pain a little bit...

Offers to make- gotta run..

9/16/2008

Well, I'm back from Illinois.

The wedding was a blast, and it was great to see old friends and family, but, after 5 days of rain and gray skies (and people asking me why I'm not married yet, and not believing me when I tell them I'm incredibly happy being single), I was delighted to be back in sunny Tampa.

One of the deals I have been working on (I will refer to it as "The Deal from Hell" from now on), has continued on it's downward spiral. I had a bad feeling about this deal from the beginning, and it has turned out much worse than I had anticipated. ..

Let's see.....It all started out when I agreed to take a post-dated check from a stranger for a deposit. This was just plain stupid on my part, and I deserved to have the check bounce.......And bounce it did... So, once I found out the check was not good, I called the buyer and told them they needed to get me the deposit in cash by 10 am the next day or I was cancelling the contract. I met them in the parking lot of their bank the next morning, and, after waiting for an hour or so (It was Friday, so there were at least seven thousand people there cashing checks and doing whatever it is that people do at banks on Fridays), I finally got the cash.

Once I got the deposit- we brought the contract to the hard money lender who is supposed to fund this deal. The lady who was working our file decided to quit (or get fired- we're not sure), the next day, and then the file basically got lost for a few days, until it finally resurfaced, and then the guy who does the inspections/appraisals for this lender, had a family emergency (his Dad died), so, once again, the file just sat there for a few more days......

This brings us up to yesterday, when my buyer finally got fed up with this hard money lender, and decided to look for a new one. I was still in Illinois at the time, and got a call from my buyer telling me they found another lender, but they would only lend part of the purchase price, and they still needed to find 26k from somewhere. At this point, I had pretty much written this whole deal off, and figured that this was going to be my first REO that I was going to have to back out of. It was supposed to close today, and I had no way of lining up financing to buy it myself in that short of time period, and I knew my buyer couldn't either. I still hadn't heard from the bank's title company, though, so I figured there might be a chance that they couldn't close today (this title company sucks ass and never gets deals done on time), and we could buy ourselves some more time.

So, first thing this morning, I get a call from the new lender that my buyer had found while I was gone. Boy oh boy did this guy catch me off guard.... He basically told me, in no uncertain terms, that he was turning me in to the Florida State Attorney's office because I was committing fraud by trying to sell a property that I didn't own, and also because I have been doing simultaneous closings, which, he says, are illegal. Like I said- he totally caught me off guard, and I ended up hanging up on him after he told me that my attorney was also going to jail for doing simultaneous closings. He ended up calling me back a few hours later and letting me know that I should be expecting a call from the FL State Attorney in the next day or so, and that he had told him all about my "fraudulent activity".

GOOD TIMES.

On a lighter note- the bank's title company can't close this deal until Monday at the earliest, and the original hard money lender for this deal is most likely going to do the loan for my buyer (we'll find out tomorrow), so this nightmare just might work out. I am not holding my breath, though...

P.S.
My attorney told me I have nothing to worry about, but I am still worried.

P.P.S.
I am giving myself a raise.

7/15/2008

The deal that was supposed to close last Monday, then Wednesday, then yesterday, funded today, so it's officially closed, finally. One of the wholesalers that I met about a month ago and who I have become fast friends with, is the one who brought me the buyer on this deal, and the deal that closed Friday was one that he had under contract and I brought him the buyer.... Soooooo...... we decided to head out to the beach to celebrate closing our first 2 deals together. We had a good time....



Meet Dave.


Rain in the distance...


Peace.

Everything is on track for the two deals that are supposed to close next week. Spoke to my new buyer today (I will refer to him as McHotterson from here on out), and he is ready to close early if possible, and, since my title company is handling the closing, we should definitely be able to get it done early. He also asked me to find him another deal before the beginning of next month, which, as you can imagine, was music to my ears. Sweet, delicious music......

6/26/2007

I get quite a few emails from readers asking questions about wholesaling REOs. One of these days, I will put up a FAQ section on this blog, but until then, I thought I would start posting a few of the more commonly asked questions in case there are others out there who might be wondering the same thing.

So, here we go..

Hi Steph,

My name is Frank from NJ, and I am new to wholesaling . I have some short sale , and wholesale training but still looking for the first deal. I read about your transaction on reibrain.com and was just curious. I have asked a few investors in forums about wholesaling reo's. I have so many in my area and would really love to be able to wholesale the ones I find to be good deals. Anyway from what they have told me lenders will not approve of assignment contracts. So basically I would have to buy the house and then find an end buyer like one of my investors and do a double close . I really would rather flip the contract then put out my money first as you can understand. Can you give me any tips as to how you are assigning these reo properties without any problems from the lender? Continued good luck steph and thanks in advance.


Hi Frank,

You are correct in that (most) banks will not let you assign REOs. There are many ways to get around this, though, and still be able to wholesale them. What I am doing is using a simultaneous close. Basically, the closing between me and the bank and then between my buyer and me takes place at the same time, and both transactions are funded with my buyer's funds, so I don't have to come to the table with any money. Many title companies will not do this, but some will. What I would do is find the active wholesalers in your area and ask them who they are using as a title company. That is how I found mine.

You can also buy the property in an LLC or a land trust, and then sell your rights to your buyer at closing. I have never used this technique, although, this is the method my mentor, Steve Cook, teaches. Here is an article written by Steve that explains it in greater detail......

Another way is to have your buyer added on to your contract with the bank, and then after closing, give your buyer a quit claim deed in exchange for your fee. I would not recommend doing this, though, unless your buyer is someone you know and trust. I have only done it this way a few times, and it was with a buyer I have worked with several times before, and there was a mutual trust there...

Finally, as you mentioned, you can borrow the money for the first transaction, close on it with your funds, and then resell to your buyer right after the first closing (double close). There are quite a few companies who will lend money for this type of transaction. My recommendation is CashForMyClosing.com. They will also provide you with a free proof of funds letter to submit with your REO and short sale offers. If this is the route you are going to take, you would just have to take the extra costs into account when you are structuring your offer.

Anyway, those are the ways I know of to wholesale REOs. There are a few more hoops to jump through, but it's really not that big of a deal once you start doing them.

Hope that helps,
Steph