Wholesaling To Homeowners

[Jeremy Cohen]

Hey BP,

Hope all is well & you're doing really great.

I'm looking to close my first deal here in FL. I've found a SFH here that I'd like to quick flip.

I'd planned on using a double close to flip to a first time homeowner.

I'm in a bit of a conundrum & could use your assistance. It's to my understanding that you have to have an end buyer that brings cash to closing.

Ideally, this strategy is efficient for selling to investors. If you are selling to a homeowner they would need to get a mortgage so I thought of an FHA but don't know if that would be the best option. I also thought perhaps they could utilize hard money & they could refi into a conventional loan.

What would you recommend? 

[Chris Mason]

FHA isn't going to happen, but if they can swing Fannie Mae 3% or 5% down you can "wholetail" it to them. Basically you find a transactional lender (@Shari Peterson) that will lend to you based on the end-buyers' conditional loan approval and appraisal. Once the end-buyer is approved(1), you borrow money for a few weeks and now that you own it you can sell it to an end-buyer using Fannie financing. 

(1) Technically it will never be approved at this stage because you don't own it, meaning you don't have the right to sell it. If the only issue on their loan approval is that you don't yet own it (meaning the appraisal, prelim, and contract, will all be rejected), that means you can safely take ownership. Update the appraisal, update the prelim, and finally go out of and back into contract 5 minutes later at the same table. Hey look, you just overcame the big 3 reasons that wholesalers "can't" sell to folks using Fannie financing.