BiggerPockets

Hey Guy's and Gal's I am new to this REO flip niche can anyone give me basic step by step advice on what to do from start to finish. I am looking for the easiest and simple method scince this will be my first REO flip then I will go on to more advanced ways without using outside money.

This is what I know so far....

1.Build a list of cash buying investors
2.Find a REO broker or agent and have them feed you porperties.
3.Once a good deal is found put the property under contract with a EMD of about $1K?

Here is the point where it gets fuzzy for me. Do I? How do I tie-up the property to keep the investor from going around me. End buyer aor NCND greement or....

A. use transitional funding for the A-B to secure the property (first closing purchased from the bank) then have the investor pay cash to the TF at the B-C closing for the price I have set, pay them back the principle plus points and get my check from the title company for the profit.

B. Use a hard money lender. (sounds like it would go down the same way but be more expensive)

C. Land trust: Sounds complicated but I wouldn't have to pay any TF or HM fee's

Help!

Whats the best way to do this step by step.
Please be specific.

Thanks for your help.

You prevent your buyer from circumventing you by getting the properties under contract. Write a purchase contract with the listing agent and give them the earnest money they request. Once accepted by the bank, offer it to your buyers. You will need to use transactional funds to double close. You will also have short inspection periods (typically about a week). So be sure the property works for your buyers before putting it under contract.

There is lots of discussion about this topic in the wholesaling forum.

I think you are confusing FHA and Fannie Mae. JScott is correct, and there are many threads already on BP regarding flipping Fannie Mae REOs

One key point missed in the OG post is in order to get a contract locked up on an REO, you must show proof of funds and an approval letter from a transactional funder will most likely not get it done. OG poster also mentioned progressing into more advanced ways without outside money. That is not a more advanced way, it is actually more simply when you have your own cash.

Chris, I believe you are missing something. The OG poster is attempting to become a wholeslaer and as such, the value is the locating and contracting of an REO which is a value to another rehab investor.

Chris got a vote from me. I have said it many times before, the wholesalers I meet are trying to sell me stuff I have already turned down. Stuff I found on the MLS my self. I don't have anything against the concept. I just need to see some value in what you are doing.
Don

I've seen the addendum J is referring to several times. I never saw anything about being able to sell after performing work.

I've also never been able to negotiate the clause away. Some of you are probably better negotiators than myself though.

That said...

On about 1/3 of the properties, I'm able to negotiate the clause away (it's not easy, and I generally need some strong leverage). On about 1/3 of the properties, they completely forget (or choose not to) check the box that activates that clause. And on about 1/3 of the properties, I'm stuck with it and can't negotiate it away.

On this particular one, it appears they didn't check the box...yay! :D

Marc,
I would consider your services to be value added. If you are giving good rehab estimates, comps, and screening the properties, this would be a valuable service.
I consider Will's deal from last weekend to be a value added proposal.
What I have seen in Ft Wayne is an investor buys a property from the MLS (I have been outbid on a few of them) and then puts the property back on Craigslist without any work, estimates, comps or anything. Just marking the property up hoping someone else will pay more than they did. I do not consider this to be a value added proposition.
I hope that makes sense because it was not my intent to offend or start a disagreement.

(Will, I have great respect for what you do on BP so please don't take this as argumentative.)

J - I agree with what you stated, but again, on the cases where you agreed to the stipulation, it was your choice, you didn't have to. You can get these removed, although not very easily and you can get them overlooked as well. In the circumstance where you sign on the dotted line with the stipulation, then of course you are dead in the water with anything over 20% more inside of the timeframe.