Wholesaling HUDs using llc
Is there anyone who knows about or is familiar with using an llc corporation to wholesale HUD properties? Could anyone possibly tell me about the process and how it helps a wholesaler ?
I'm not sure that I understand your question(s), but I'll take a shot.
HUD accepts investor offers at varying times after the property is listed, based on the condition of the property. HUD doesn't care what an investor does with the property after they close on it. I'd strongly suggest that you not try to buy houses during the owner occupant period and then wholesale them - HUD takes a very dim view of this and has pretty steep fines they can levy if they find you out.
You'll need an agent to submit offers on hudhomestore.com. You'll only have 2 days after acceptance to get the contract package and check back to the Asset Manager, so that's not much time before your EMD is "hard." There's tricks that some people play to lengthen that time, but you're still never getting much more than a week on the outside before you're hard on EMD.
#4 All Forums Contributor
- Plymouth, MI
Ask away. We do this all the time.
Thank you for your input Sean. Joe could you explain the process to me?I am looking forward to making my first offer and this seems like a very safe a reasonable way to get started. My goal is to get started with this process as soon as possible.
@Tevin Swain what specific questions do you have? As I said, you'll need to either be a real estate agent or have a real estate agent submit the offers on hudhomestore.com for you.
this is basically double brokering. you're probably not going to find an other investor with enough of a spread after doing a double closing.
#4 All Forums Contributor
- Plymouth, MI
Originally posted by @Tevin Swain:
Thank you for your input Sean. Joe could you explain the process to me?I am looking forward to making my first offer and this seems like a very safe a reasonable way to get started. My goal is to get started with this process as soon as possible.
Sorry Tevin. I didn't know you asked for more info. You need to put the "@" in front of the name so that person knows you are looking for their reply.
Here's how it works:
1 - Establish an LLC (most states will do this online. Cost varies. Mich is only $50)
2 - Get an EIN number from the Feds site...this is free.
3 - Make your offer in the name of the LLC (they'll want to see the EIN #)
4 - If the offer is accepted, sell the LLC to the person you want to "wholesale" the deal to (this is instead of assigning the deal...since you can't assign a HUD deal), BEFORE closing. The cost of the LLC is equal to your wholesale fee.
5 - Change the Managing Partner's name from yours to the new owner's
6 - New LLC owner now closes...in the name of the LLC
The buyer and seller never change...only the owner of the LLC