Wholesaling to Hedge Funds???

Question

Hello,

How would someone go about wholesaling to a hedge fund? How would you find them and what is their criteria? I know for a fact investors on BP wholesale properties to hedge funds lol To those investors, can you share some experiences and tips if you dont mind! Thanks!

J Scott · Answer

I've sold a bunch to hedge funds recently, and your two options are:

1.  Put the deals on the MLS and let the agents representing the funds (and other big investors) find you;

2.  Send the deals directly to the agents (who you can find by doing #1 above on earlier properties).

They all have different buying criteria, different contingencies, different inspection practices and requirements, and different requirements for their purchases.  For example, the last sale I did, they required that I remove the brand new stainless fridge because it didn't have an ice-maker (they didn't ask for a credit or a replacement...just that I get it out of there before closing).

Most of them are looking for 7-10 days of due diligence, so that could make double closing difficult, but I imagine they'd do it (I've never tried).

Brian Sinclair · Answer

At https://hedgefundbuyers.net they sell your deals to hedge fund buyers for you!

Wayne Brooks · Answer

REO's are on the open market, and the hedges are already looking at them.  If you're trying to wholesale REO's you need a buyer who doesn't know they're available without you.

GARY LEONARD JR · Answer

John is 100% right!  They hate assignments and unless you know someone within, they will cancel their closing altogether if an assignment is executed   You cannot get this far anyway because, like the REO’s, the initial PSA is already stated as “non assignable”   What wholesalers do in this scenario is conduct a double Close or double HUD (aka).  You cannot simply close with buyer (like all gurus say) then turn around and pay seller then transfer title to buyer- That is ILEGAL

A way around this in case you cannot get transactional funding

- Have your closing attorney draw up a Promissory not in submission to the buyer in which you will secure your equitable interest within the contract to the buyer... Why do this? Because temporarily for about an hour you will be making the buyer your lender to close out your A and B transaction between you and the seller as if you would with a REO   Once that is done, you with solidify the transfer with the buyer (B and C) and tell him thank you for funding your A and B side. The spread left in the escrow is now released  to you.

You do this same method with hedge funds

GARY LEONARD JR · Answer

Yes double closing does work- I’ve done it many of times

J Scott is also 100% correct.  You’re better off, unless you have a background as an agent like myself, to have a RE salesperson rep you and transactional funding is key

Always check their criteria. They have funky requirements that, no matter how petty they may seem, would stop a transaction dead in its tracks.  Do some research and you will be fine.  They are not judge jury and executioner- Sell yourself to them and their will know your worth.  My advice have an experience investor or Realtor guide you for the first couple of transactions.

John Jackson · Answer

Each has specifics, such as...houses newer than 93..can't back up to power lines...no retaining walls...etc.

Kenneth Germann · Answer

Double Close vs. Assignment depends on the laws in that state and who is paying the closing costs. Most wholesalers I know do assignments :)

J Scott · Answer

As Wayne Brooks said above, anything publicly listed (REOs, HUD, Homepath, etc.) has already been seen by the agents who represent the institutional buyers.

If you happen to get one of these under contract for a price below what another investor will pay (unlikely these days), you can definitely still do a double close, assuming there is no resale restriction from the seller.

That said, if you have these large institutional investors in your market, you're probably going to want to focus on off-market deals that these guys aren't finding themselves.

John A. · Answer

@ J Scott. What would you say about wholesaling HUD, Fannie Mae, etc... to hedge funds?

John A. · Answer

Would I be able to do a double close? From what I'm reading that is what most wholesalers do

Wholesaling to Hedge Funds???

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