Investor · Dallas, TX · Member since 2008 · 33 posts · 0 votes
It seems like every time there's more and more Fannie Mae and Freddie Mac owned Properties out on the market. As I new Investor in the REO wholesaling arena I am a little confused about these types of properties. I keep hearing from different investors and gurus to stay away from such deals due to the fact that these houses come with strict deed restrictions which make them a lot harder to wholesale.
Does anybody have a different opinion about this.?
Is there away around such deed restrictions.?
Do we strictly need to stay within the 20% profit margin in order to flip such properties.?
your comments and suggestion would be greatly appreciated..!
Its possible to do with a double close and transactional funds.
But you run the risk of wasting a lot of peoples time if you don't close. Which will lead to a bad rep. For this reason its best to team up with someone who has the cash to close at least when getting started. Just my opinion.
This has been discussed before on this forum, so you might want to dig around...
But, in general, expect that for any FNMA property, you will be subject to the 90 day resale restriction, during which time you can only resell for a 20% premium to your purchase price (and no, the basis for the amount does not increase due to closing costs or repairs you pay for).
While it's possible to negotiate out of the restriction (I'm able to do it about a third of the time) and while sometimes the asset manager chooses not to include the restriction (or possibly forgets), I wouldn't base an investing strategy around the fact that you can get out of it under some circumstances.
As such, trying to wholesale FNMA properties these days is probably not the best business model...
Its possible to do with a double close and transactional funds.
But you run the risk of wasting a lot of peoples time if you don't close. Which will lead to a bad rep. For this reason its best to team up with someone who has the cash to close at least when getting started. Just my opinion.
Its possible to do with a double close and transactional funds.
Definitely true...
I think the OP was asking specifically about the fact that he'd be limited to a 20% profit (minus any associated costs) due to the FNMA deed restriction they impose on their REOs.
All that said, there are probably ways around the deed restriction as well; for example, buying the property in an LLC or trust and selling an ownership interest in the entity as opposed to selling the property directly.