BiggerPockets

As soon as you have an agreed-upon contract the EM check will be cashed. As far as the selling bank is concerned, there is no other investor. You can object to the results of the inspection, and get out of the deal that way. If you don't, and don't have any other contingency, the bank will your your earnest money.

Yes, if you want an inspection, you pay an inspector to do it. This time of year in Denver you'll also pay a "dewinterization fee", typically $250. So figure about $600 for due diligence. Its part of the cost of doing business. And, yes, I've paid that on properties I ended up not buying.

If your wholesaling with an assignment contract, your end-buyer should have to also give earnest money. In my contracts I always ask for more earnest money than I put in myself, that way, it covers some of your carrying costs and due diligence related costs.

I second Mr_Investor. As far as I know/heard, you will have to Hold the property for a few days with your private money or hard money or conventional lending and then try to sell it to your buyer investors. Sometimes you can retail it yourself to conventional buyers too (may be after rehab?).

Cheers
Ram

First, since REOs are usually listed on the MLS, you have to ask yourself how you're going to buy it cheap, and find someone else to sell it to. That's not impossible, but you need to have a plan since the property is already available for many people to consider.

You can do a double close, if you can find a title company that will do the second half of the transaction.

You can also buy the property in an LLC, then sell the LLC to your end buyer. In some places, creating an LLC is time consuming and expensive. But other places, like here in CO, its five minutes and under $100.

You CAN wholesale an REO property. You CAN NOT assign an REO contract. You would have to double close or sell your rights to the LLC.

The BEST way to wholesale an REO property is to set up a land trust. Then sell the beneficiary interest in the land trust to YOUR buyer/investor.

This way on paper it will look like your trust is buying the property. It is very , very hard to find out who the true owner of a land trust is.

If you try to sell an LLC rather than assign the contract of sale, the bank can easily find out who the owner of the LLC is. You can find that type of info online.

If you truly want to wholesale bank REO properties, talk to an attorney and find out more info on how to set up a land trust. It is far too detailed for this post.

I hope this was of some help!

Michael
Always good to bump into you. How do your buyers get funding to buy the LLC?

Jim

I am thinking that if you are intending on wholesaling the property, then you do so "AS IS" leaving the buyer/investor to do there own DD. If you feel you need to do an inspection to know around how much cost it will take to rehab, then I would grab a contractor friend for a rough est, and tell your buyer the APPROX repairs needed. But I find it easier to leave all that work to the buyer, letting them know that this is why the price is low, because there is work to be done.

Jim, that seems odd that the HML's won't allow it to be in an LLC's name. I mean as long as you still are personally guaranteeing the loan, it shouldn't make a difference to them whose name its in.

This is how most commercial loans are structured. Yes, the loan is in the company's name, but the bank will make sure that you are personally on the line for it with a personal guarantee. You have just as much liability for the loan as the company does.

Are all the HML's in your area like that?

William - to answer your question, as the lender (in this case called a transactional funder) I would charge points and a fee, that is the incentive - profit!

This is something I now do for both REO and short sale investors.