Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
Im new to flipping houses and Im looking to open a LLC and flip the house before the bank actually get the all work together before closing. So my buyer can sign the paperwork at closing...How can I do this? By the way im in New York.
Investor · Salt Lake City, UT · Member since 2013 · 138 posts · 21 votes
13y
I only know of two ways to get around this: 1) You can create a land trust and put the offer in via the land trust(you may want to google this or search the BP forums) 2) You can add your end buyer on to your LLC and then disaffiliate yourself from the LLC. I was involved in a short sale deal and in order to get around the deed restriction, the wholesaler added me to their LLC and then they just kicked themselves off the LLC.
Investor · Salt Lake City, UT · Member since 2013 · 138 posts · 21 votes
13y
You are wanting to flip the house before you close on it? If you are talking about assigning the contract, that will not be possible. You cannot assign a contract on a REO. You would have to add your buyer to your LLC.
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
I talking about a REO after I get an offer accepted under my LLC name with my proof of funds and copy of deposit check...How do I sell the property to my end buyer and close...Im trying to flip a REO using the LLC Method
Investor · Salt Lake City, UT · Member since 2013 · 138 posts · 21 votes
13y
I only know of two ways to get around this: 1) You can create a land trust and put the offer in via the land trust(you may want to google this or search the BP forums) 2) You can add your end buyer on to your LLC and then disaffiliate yourself from the LLC. I was involved in a short sale deal and in order to get around the deed restriction, the wholesaler added me to their LLC and then they just kicked themselves off the LLC.
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
So that will get around deed restrictions and title seasoning as well as seasoning the funds?...so if I wholesale the Reo as worded in the second option there will be no problems or Transactional funding, Title insurance,mortgage pre approval ect.?...Wat Steps am I missing to fully close...THANK FOR THE HELP!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Michael, this post belongs in the wholesaling forum, as that is what you are trying to do. To wholesale an REO using the LLC method, you form the entity, make your offer in the name of that entity, open bank account in that entity name, show your Proof of Funds in that entity name, and get a signed contract. Then you heed to send in the earnest money deposit. Once you do, you need to send the deal out to your buyers list and find the buyer. On closing day, your buyer funds the escrow to close the transaction and you in return sell/transfer the ownership of the LLC to your buyer. In NY, an attorney does closings and you should have your attorney draft all the docs to transfer the entity as well as structure your entity.
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
Thanks Will your answer was very informative the only question I have left is will this method prevent title seasoning, seasong of funds, mortgage pre approval or Transactional funding..will any of these apply to or affect the deal from moving smoothly...IM HIGHLY THANKFUL FOR ALL REPLIES
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
One of the advantages of using the LLC method is that title goes from seller to buyer and you and your wholesale buyer are one, in essence as title only goes from seller to LLC, thus, a second title transfer does not take place avoiding two tittle transfers within a very short period of time.
That said, if you buy an REO or SS, and their is a deed restriction, it matters not if you take title in an entity or your name.
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
Thanks I really needed to know that...Im trying to get my first deal going and the coach i paid for feels as though the 2 thousand bucks I gave him wasnt enough to coach me thru a deal...I LEARNED MORE OFF GOOGLE...Once again thanks for all your replies..So I dont need transactional funding for this deal or anything Just the Earnest Money and the LLC?......i dont want any unexpected paper work or LAWS to pop up and affect my deal due to lack of guidence..
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
13y
You're going to need to prove that you have the funds if you're making a cash offer -- that means you need a bank statement showing the funds in your LLC's name. If you don't have the cash, you'll need a pre-approval letter from a lender in your LLC's name. That said, most lenders will not loan to an LLC.
Personally, I wouldn't recommend starting your investing career by wholesaling REOs. Buying REOs is tough. Wholesaling is tough. Wholesaling REOs is very tough.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
I have to agree, why start out needing to borrow or with low money and deal with REOs? I suggest you look for a different strategy, especially starting out. :)
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
13y
Michael Rivera Welcome to Bigger Pockets.. I usually don't establish an entity until my offer to bank is accepted. Making offers on bank owned properties and dealing with R.E agents, I don't recommend for someone just starting out in the flipping arena. Maybe start out with private sellers. I see your from Brooklyn, that's where I was born and raised.
Is there a benefit to anyone involved to wholesale an REO? They're listed right on the MLS for anyone to see. Maybe I'm wrong, but I would assume any investor with some experience would have access to the MLS so why would they not just make the offer directly? Am I missing something?
Arktavious, that was basically my point. I don't see the benefit to buy from a wholesaler vs buying directly from the bank. Finding the leads seems to be the hardest part. With REO's, you don't have to find it. It's on the MLS for everyone to see.
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
13y
Carl Schmitt However, If a wholesaler is a real player and has a relationship with R.E agent for being a closer, sometimes they may get a call from agent before property is even listed, but the agent is benefiting twice... This is the only exception. A deal is a deal... no matter who has the contract. I believe the best deals are the one's that only you know about, and its up to you to let the world know about it when your ready. jmo..
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
Thanks for all the feed back!...Its all very useful!...The Home is worth for sale for 150k And worth 280k-340k ARV...every other house next to it is worth close to 400k...If I ran all the ground work and presented the deal on a silver platter for the buyer to just sign and buy STILL CHEAP...With out dealing with the extra BS in certain sense it will become a FSBO after I lock up the deal and prepare to sell...Isnt That the purpose of a wholesaler To eliminate the head ache for the end buyer and get them cheap houses?...Its not impossible as long as its possible im willing to try! THANKS AGAIN
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
13y
Michael Rivera Yes.. A Wholesaler must deliver deal to Invester buyer at or below MAO, So in order to do that you must have property under contract way below MAO. The hard part is finding GREAT deals..
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Originally posted by Arktavious Sally:
Michael Rivera Yes.. A Wholesaler must deliver deal to Invester buyer at or below MAO, So in order to do that you must have property under contract way below MAO. The hard part is finding GREAT deals..
MAO standing for Maximum Allowable Offer and the wholesale profit you need means you need to get a deal for a price even below what a rehab flipper or buy and holder will pay (their MAO).
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
Thanks guys...Im gonna the listing agent for the home its for sale for 150k and the comps show between 280k and 340k...A home across the street is selling for over 400k..I feel its a good deal right in my own back yard...Should I try and go for it?
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
13y
Michael Rivera It all depends on the repairs the property needs. This is the wholesale formula that I use in my area ARV x 60% - Repairs = MAO - WP = Offer price. Your perceentage will vary depending on your area, but its usually no more than 70%.
Property Manager · Brooklyn, NY · Member since 2013 · 66 posts · 7 votes
13y
Thanks a lot Arktavious...I dont think the house needs much more than cosmetics on the count of a friend of going in there before...I think itll be a gud deal for anyone I mean its over 100k off average price