I am not clear if bank owned REO properties are the same as Fannie Mae properties. I know some banks list their REOs for sale but are they the same regarding Fannie Mae? And do the same rules apply for wholesaling them? Can you double close a Fannie Mae property or do you have to hold them for a certain time period before selling?
Hey @Dave McEvoy the short answer is bank owned and Fannie Mae properties are not the same. Bank owned REO are properties owned by banks. Fannie Mae properties are similar to HUD properties with some differences.
Fannie Mae properties (i.e. Fannie Mae REO properties) are sold via the HomePath program. HomePath properties have deed restrictions which typically limit that amount you can re-sell the properties for within a period of time. The typical restriction is no more than 120% of your purchase price within 90 days. So if you bought for $50,000 the most you could re-sell it for is $60,000 within the 90 day window.
I have seen some chatter about there being an additional "no-resale within 30 days" but you could probably still benefit from it by putting the property in another legal entity and then transferring the legal entity to your end buyer if you want to wholesale it.
Thanks @Marvin McTaw . Do you know typical down payment/earnest money deposits requirements? Or do they all fluctuate based on the bank? I'm interested in wholesaling them as it seems that you wouldn't necessarily have to market for them since they are right in front of you!!
@Dave McEvoy I believe as an investor, the earnest money requirements are $1000 minimum for financed offers and 10% of purchase price for all cash offers. That being said, I would contact an agent (because you can't buy them without them anyway) to see what the full rules are. In some cases, you can get certain things waived like the deed restrictions.
@Dave McEvoy as Marvin stated, Reo's and Fannie Mae are not the same thing. REO's at least in my are $500 down for a property under 50K, and $1,000 for a property under 100K. Fannie Mae properties last I knew require 10% down. They are a hassle and I would avoid trying to wholesale them. If you put a down payment down on a Fannie Mae property and can't get funding to close, you just lost your 10%. No refunds. Stick with REO's and motivated sellers. With REO's though, you CANNOT assign them like a typical wholesale deal. You need to take onwership first, then resell it to a cash buyer. You can use transactional funding, hard money, or a private investor to get the funding you need to close on it in order to resell it.