Hello from Sunny Sarasota...Question...

[James Hobbs]

Hello,

I am here doing research for a client's blog as well as enhancing my own education in real estate investing. Always been intrigued with the subject, but never really did any serious investing.

Now I want to take it to a deeper level and start doing some hands-on experiencing of this thing. Think I'd like to start with bird-dogging to get the ball rolling (hopefully downhill).

My question is related to short sale flips. I've heard both sides of the issue. One RE lawyer I know of says it's no different than a wholesale flip except that instead of paying the seller's lender in full, you are paying the seller's lender with a discount.

The other side says there is a legal and ethical obligation to fully disclose to the seller and lender that you (the investor) are making a profit on this short sale...

Isn't that what RE investors do-- make a profit (hopefully)?

I can see both sides, and I have no issue with full disclosure, but is there something inherently wrong with the strategy itself, either from a legal or ethical standpoint?

Here's the technique in a 'gun shell:

1) Investor signs a contract to buy a house from a seller who is behind in payments.
2) Investor contacts seller's lender to negotiate short sale
3) Investor gets lender to approve short sale
4) Investor lines up back-end buyer
5) Investor closes with seller, paying off lender, then resells to back-end buyer in simultaneous closing for a profit.

What do you say about it?

Thanks