Need help!!

22 Replies

Hello BP, I am brand new to this and have not closed any deals yet. However, I have extensive real estate experience with connections to both investors and properties. I have been in the real estate industry as a certified appraiser with 9 years of full time experience. I am very fortunate enough to understand the value of each property from low end to high end (ARV) and also have access to tons of great deals (mostly on the mls) especially REO properties. At the present time, I see investors in my very own areas purchasing REO properties and flipping them (after renovations) for sickening profits, money I couldn't even imagine making. Hence the reason I am extremely urgent and driven to get involved in wholesaling properties because there is enough meat on the bone for all to make money. My question is, if I have the investors and I have the properties that are great deals. What do I do next? Get an attorney to write up the contract? Get the contract from listing agent and have attorney amend it with clauses? Like I said, most of these are REO sales with some people say you cant wholesale and other people say that you can, especially with an LLC. I have investors ready with cash and properties sitting there waiting for me, What does a rookie do????

If the properties are on the MLS, find an agent to work with. He /she will take care of preparing the offer for you.

Many REO sellers will have their own addendums that you will have to sign. These generally take precedence over the purchase contract. Some will have deed restrictions that will prevent you from wholesaling the property (at least traditionally). Fannie Mae homes have a 90-day deed restriction. HUD homes have no restriction. Understand the restrictions before you get yourself into a situation you can't easily get out of.

Make sure you under the rehab costs, carrying costs, and closing costs that the rehabber will incur.  Rehabbers get really annoyed at wholesalers who bring them lousy deals because they underestimate or forget about certain costs.    

Erik Hitzelberger, Real Estate Agent in KY (#68970)

Thank You, but how do I orchestrate a deal without having to do a double closing?Investors have said that an LLC can be created to purchased the property and then have an investor purchase the LLC. In addition, I will not be using a buyer's agent as I will contact the listing agents directly. A friend of mine has been trying to purchase multiple rehab properties for over 1 year and could never land one due to competition. However, once he dropped his buyers agent and contacted a listing agent directly he was able to purchase a property (Estate Sale) as the listing agent sounded very aggressive and said she will do whatever it takes to get the deal done. It seems that agents play the game well as their commission doubles when the buyer does not use a buyers agent and contacts them directly.

If you are trying to do a simultaneous (back-to-back) close, I would contact a good local RE attorney that is familiar with the process.  Just tell the attorney exactly what you are doing.  If they can't help you, ask for a referral.  The attorney should be able to provide the proper purchase and sale contract which allows you to assign it to your investor. (Generally this is a standard contract which includes "and/or assigns" after your name as the purchaser.) There is also an contract between you and the investor for your fee.

thanks @James Wise ....Any advise on this topic. I have the REOs and the investors. Would an LLC sale be best? Do they actually work? It seems that's what they are doing in my market. Thanks

I should have mentioned that it is best to have the attorney do the closing as well rather than trying to get it done at a title company.

@Angelo Mart  When dealing with Fannie homes there is going to be a 90 day deed restriction on the properties preventing you from selling them for more than 120% (figure may not be exactly right, somewhere around there) than what you paid for them.

James Wise, Real Estate Agent in OH (#2015001161)

Yes but what about creating a land trust or an LLC to avoid deed restrictions then sell the LLC to the cash investor ?

Originally posted by @Angelo Mart:

Yes but what about creating a land trust or an LLC to avoid deed restrictions then sell the LLC to the cash investor ?

Do you have cash for these deals? If yes, just buy the property and hold it for 90 days if your dead set on doing this.  

If no, banks are not going to deal with you. A POF letter from an online company goes right in the trash.

James Wise, Real Estate Agent in OH (#2015001161)

@Angelo Mart - here's the problem that you run into with trying to do wholesale flips with REOs: While you're doing all this LLC stuff, people like me (combination investor/Realtor with lines of credit already set up), we are finding these same deals on the MLS (cause we have our own MLS access) and we are making strong cash offers with POF. And we are actually buying and closing on these deals and rehabbing them ourselves and then selling them to owner-occupants.

@Bryan L. - Well what if the property is located in dangerous neighborhood with tons of distressed sales and majority of them not being under contract? I spoke to an investor that is looking for a multi-family home in my nearest city (which there are tons of). He said he has no problem working with me (as a wholesaler) and does not care about the neighborhood as long as it is a 2-4 unit. In addition, this area has a lot of REO, Short Sales and some Estate sales on the market with no contract on them or pending contracts at the present time. NJ has the highest foreclosure rate in the country right now and I am looking to cash in on this boat before it sails. I can get a line of credit (for double closing / after 90 days) but would rather do that on another deal when I get the hang of this. I do not want to do any property rehabs...What would you do if you were in my shoes? Thanks

@Angelo Mart  What I did when I was in your shoes was to get some money and become a Realtor.  Makes it much easier to beat the competition.

Originally posted by @Angelo Mart:

He said he has no problem working with me (as a wholesaler) and does not care about the neighborhood as long as it is a 2-4 unit.

just curious as to what this investors criteria is other than 2-4 unit? Obviously that cannot be his only criteria.

James Wise, Real Estate Agent in OH (#2015001161)

@ Angelo, 

and guys plz correct me if i'm wrong ( and not on my grammar or english) but if you have these investors / cash buyers list. Me personally would start MARKETING for motviated sellers. That way your properties will be exclusive and you don't have to deal with any bank restrictions upon purchase.

@James Wise  This specific investor wanted strictly multi-family dwellings to hold for long term. This Could be for Section 8 and SRAP tenants if you are familiar with that. 

@Bryan L.  How does becoming a realtor beat the competition? 

@Bryan L. As I have mentioned earlier, I am a certified real estate appraiser with access to the MLS, tax records, deeds, flood maps, etc, etc and probably more stuff than the majority of incompetent realtors in my area. I have full knowledge of how to use the mls unlike realtors I have met that we're serving food at a restaurant full time until they decided to obtain a real estate license thinking they can get rich overnight. I scan the mls everyday for good deals and have "Cash Investors" ready to purchase. In addition, I don't need a buyers agent as I do the research myself and can call the listing agent which doubles their commission by cutting out the middle man (buyers agent) out. All I need is my attorney at this point right?

@Angelo Mart You're right. As an appraiser, you have the MLS access and the access to the houses. My advice to you - learn how to dig deep into that MLS and REALLY use it to your advantage. Like you said, most Realtors don't even know how to do this. Learn how to customize it to meet your needs. Learn how to do key word searches. Set yourself up with auto-searches and auto-emails. Learn how to find the "hidden deals" that most Realtors and investors don't know about or pursue - even though they are on the MLS.


@Bryan L.  Thanks for the input...Time to start working on this!

@Angelo Mart  

I know how frustrating the whole no transfer of title within 30-60-90-120 days can be. This is a method I used successfully numerous times to avoid that time frame. I used this method with short sales. Start an LLC with your LLC and your end buyers LLC as members. Within the operating agreement state that the LLC is to purchase only the one said property and the stated value of the property is a certain dollar amount. Then set members' shares to reflect the amount of money you are said to receive for your assignment (maybe his share will be 85% and yours 15%) Your end buyer funds the deal and then buys your share of the LLC at the same closing.

This had worked before? That's awesome news for me....Did you have your LLC in the property name? Should I have my attorney set that up?

You can use property name for LLC or anything you want. I set up my own LLC's, it's cheap and easy. But if that's not in your comfort zone - I am sure an attorney would be happy to charge you for that. Around here an attorney would charge anywhere from $350 to $1,500.00 to set up a LLC. If you do the one page application yourself, fax it w\ 24hr turnaround - $85.00