Getting Reos Under Contract and Closed with other peoples' money

Longwood, FL · Member since 2014 · 55 posts · 16 votes

After much research on MLS as recent licensed agent in Florida, I'm attracted to REO wholesaling. As a past landlord and late in life, I need to generate income fast but can't afford expensive marketing. I'm a member of a local REIA and friendly with quite a few cash buyers who want me to provide them deals. Since the REO agents require both larger Earnest Money Deposits and Proof of Funds with every offer, I'm overwhelmed and under funded. How can I overcome these obstacles and fill the requests of my buyers?

I'm grateful for your suggestions,

Dan Nolan

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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@Daniel Nolan

find an equity partner split profits with them.... IE hey I need you to put up 50k in assorted EM and have an account that says you have 500k in it... We are going to make 5k flipping to these folks I know I will split the fee with you ...you do the work they put up the dough and creds..

Be advised that some wholesalers doing this have been turned into the FLA real Estate division for doing transactions that require a license and it appears the state is prosecuting them.. Same in Ohio... Something to think about and guard against.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Daniel Nolan
find an equity partner split profits with them.... IE hey I need you to put up 50k in assorted EM and have an account that says you have 500k in it... We are going to make 5k flipping to these folks I know I will split the fee with you ...you do the work they put up the dough and creds..
Be advised that some wholesalers doing this have been turned into the FLA real Estate division for doing transactions that require a license and it appears the state is prosecuting them.. Same in Ohio... Something to think about and guard against.
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Daniel Nolan
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Longwood, FL · Member since 2014 · 55 posts · 16 votes
11y
Thank you Jay!
So does the equity partner's name appear on the contract along with Proof of Funds?  Should there be a joint venture partnership agreement of some sort?
I appreciate your precaution about unlicensed activity.  In my area the notable wholesalers are registered realtors, as am I. I think there's common concern that
without a license, if you wholesale more than 5 transactions in a year  you can be labeled as" dealer status" - subject to higher income taxes without the benefit of write offs. Unfortunately, Its unlicensed "bird dogs" who have to be wary- the state of Florida will go after them. Thanks for bringing this up!
Again, thank you Jay for your sage advise. I look forward to reading your posts.
Dan Nolan
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Daniel Nolan
contract will have to be in your money mans name then you do a service or fee agreement with them or a JV what ever you like.. Even a handshake works in my world.. If someone fubared me on one deal that would be the last and since I have ownership of the asset I am not worried about that aspect.. But you could do one for free that would be worse case scenario. But I like you am a little old school and handshake deals are as important to me as anything and has served me well over the years..
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Dell Schlabach
Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
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See if I understand what you are attempting to do. You are a realtor, instead of just getting paid a comission for finding the deals, you want to get contracts on them and get paid realtor comissions, plus a "wholesale markup/fee"?
I am not a realtor but we buy most of our properties, reos from the mls and we wholesale a lot of them to cash buyers/rehabbers. I write the offers in our company name, as soon as we get a contract I contact a couple a rehabber looking for a deal, write up a purchase agreement at our agreed upon price.
We have a set up similar to what @Jay Hinrichs suggested.
I have a couple "money guys" who will fund the deal short term while title transfers to the new buyer, if I dont have the cash available. I pay 400.00 per 100,000 borrowed per week, with a minimum of 1,500 to the lender per deal.
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Dell Schlabach
Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
11y
@Daniel Nolan
re: proof of funds, we do a lot of rehabbing as well so we have a lot of money going through our account...I take pictures of it at its high point every month to use as proof of funds. I have also used proof of funds letters from a private lender, basically a letter on his letterhead stating BenchMark has available "$200,000?" to purchase real estate, a copy of my lenders bank statement attached to the pof letter.
Although technically that would be a preapproval letter and not a proof of funds, Ive never had them denied.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Dell Schlabach
I do the same with the checking account snap shot.. My goal is to have zero In my checking account that means my funds are out working... your paying 20% for the short term funds that's a good deal for you and fair for the investor...
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