Real Estate Investor · Member since 2011 · 16 posts · 7 votes
Hello All,
I'm starting to hit the REO market and would like to know how some of you are accomplishing this. First I will be using transactional funding and will quickly resell it to an end buyer I'm looking to hold the property for no more then 30 days to do the flip. What are the steps you normally do from the start to finish. How do you find an end buyer,
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
15y
Traditionally Richard, transactional loans involve a simultaneous close. That is, you buy the property from the seller with borrowed money from your lender and immediately sell it to your buyer through escrow, who has received his funds and can close the same day by paying off your loan.
In principal, you actually own the house for just a few minutes. Escrow is instructed not to close on your purchase unless they have the funds in hand from your buyer. Thus, it’s a relatively low risk transaction. At worst, your buyer doesn’t get the funds and everyone simply walks away. On the other hand, you’re proposing what is probably the riskiest of all transactions.
In this case, you’ll borrow money to purchase a house without assurance you can close and you’ve promised to pay off your loan in 30 days. Either you're going to get stuck with the house and have to make payments, or your lender will.
We’re experiencing that most flips seem to take at least two buyers to the tune of around 6 weeks each. The first usually falls through. Even the smoothest deals with the most qualified buyers will take at least 30 days in this market.
I don't mean to burst your bubble, but If I were you, I’d seriously reconsider this strategy.
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
15y
Traditionally Richard, transactional loans involve a simultaneous close. That is, you buy the property from the seller with borrowed money from your lender and immediately sell it to your buyer through escrow, who has received his funds and can close the same day by paying off your loan.
In principal, you actually own the house for just a few minutes. Escrow is instructed not to close on your purchase unless they have the funds in hand from your buyer. Thus, it’s a relatively low risk transaction. At worst, your buyer doesn’t get the funds and everyone simply walks away. On the other hand, you’re proposing what is probably the riskiest of all transactions.
In this case, you’ll borrow money to purchase a house without assurance you can close and you’ve promised to pay off your loan in 30 days. Either you're going to get stuck with the house and have to make payments, or your lender will.
We’re experiencing that most flips seem to take at least two buyers to the tune of around 6 weeks each. The first usually falls through. Even the smoothest deals with the most qualified buyers will take at least 30 days in this market.
I don't mean to burst your bubble, but If I were you, I’d seriously reconsider this strategy.
Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
15y
US Bank and Bank of America both have been putting 60 day deed restrictions for cash buyers on all properties (basically prevent investors from reconvening title at all for 60 days).
That along with Fannie Maes standard deed restriction wholesaling REOs is a difficult field to enter right now.
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
15y
Never pay in advance for a loan on an REO. 60 day transactional financing seem like a loan-to-own program to me and the website Taylor inappropriately cited above requires a $299/year professional membership or a $1295 platinum membership. I’ve no idea what the difference is, but never pay in advance for a loan on an REO. Ever.
There are some legitimate commercial lenders that have up front fees, but this is not one of them.
Transactional Funder · Neptune, NJ · Member since 2011 · 187 posts · 86 votes
15y
Richard,
I am a transactional funder and TFs usually have an extended transactional funding program that can accommodate your 30 day turnaround.
HOWEVER, TFs require that end buyers have cash or a commitment from a lender already in place at the time you do the first close (AB).
Therefore, in your situation where you don't have an end buyer, this won't fit the bill.
However, an alternative would be to wholesale to an all-cash rehabber. Several of my clients have done this and used TF for the back to back closing on same day.