Wholesaling REO's/Foreclosed Homes
Has anyone had experience wholesaling foreclosed homes? Please don't try to convince me it can not be done. It can be done and I've seen people do it. Unfortunately, I haven't been able to gather any info from those people. In NJ, you can legally wholesale a bank owned property by going under contract in the name of an LLC, and then by selling the LLC prior to closing. Land contracts are also legal vehicles to do this from what I understand. If you have done this before anywhere in the US, I'd love to hear about your greatest challenges to doing so as well as what you learned.
Thanks in advance.
-Chase
Most Popular Reply
#4 Wholesaling Contributor
- Wholesaler
- Austin TX
@Chase Colon This is absolutely possible. But because its such a pain in the you know what its only worth doing when the dollars make sense. You must create an LLC prior to putting the property under contract because the entity that goes under contract is the entity that must purchase the property. Bank will want a verifiable proof of funds, using the fake POFs or do-it-yourself cut and paste things from Google is fraud and you can be prosecuted. Dont go that route. Have the POF. Before you go under contract you want to speak with the agent representing the bank about any deed restrictions that will be placed on the property. These deed restrictions can turn a deal into a non deal. The bank can require that buyer must own property for 90+ days before property can be resold. This is ok for a property that needs an extensive rehab, but for a quick flip that can really eat into an investors' profits. You definitely want to know in advance if this will be an issue. Once you go under contract with the bank and deposit earnest money you will want to find a buyer. You will add buyer to your LLC. The buyer will then buy out your 50% interest in the LLC for the amount of your wholesale fee. This will require transparency on the amount of fee and your buyer must have no objection. Once the buyer has paid you, you sign the documents necessary to remove you from the LLC and buyer will purchase the property in the entity.
The other option is to purchase the property yourself using your funds, private money or hard money. Once you own the property you can market it to buyers and sell it with little to no headache.