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Today I am bringing you the final post in my five part series where I have explained the various methods available to wholesale REO deals and get around the “No Assignment” clause that most banks include in their addenda.
Using a Land Trust to Wholesale
In this post I will be talking about using a Land Trust to get your REO wholesale deals to the closing table. This strategy is similar to the LLC method that I discussed in last week’s post; in both instances, you will not be selling the actual property to your end buyer, but rather, the LLC or the Land Trust which owns the contract to purchase the property.
If you decide to wholesale your deals in this manner, you will be making your offer to the bank in the name of a Land Trust (which you will create once your offer has been accepted), and signing the offer as the Trustee of the Land Trust.
Today’s article is part four in a five part series, where I will be shedding light on the various methods available to close REO wholesale deals and get around the “No-Assignment” clause that most banks include in their addenda.
This week, I will be talking about using an LLC to wholesale your REO properties to your end buyer.
Using an LLC to Wholesale
If you decide to use this method to close your REO wholesale deals, you will be making your offer to the bank in the name of an LLC, creating the LLC if/when the bank accepts your offer, and then selling your membership/ownership in the LLC to your end buyer in exchange for your wholesale fee. When using this strategy, you are not selling the actual property to your end buyer, but rather the LLC which owns the contract to purchase the property.
Want to learn how to save time and headaches when dealing with sellers? Well, the other day I was working with an investor who mentioned to me that he just couldn’t seem to close the current deal he was working on. It was a perfect subject-to deal, and the seller seemed pretty motivated, however, whenever it came time to sign the contract the seller delayed and said he needed more time to think about it. This had been going on for a month and a half.
So what did I tell this investor to do? I told him to give the seller a deadline. I told him to call the seller up and without sounding pushy, tell him the following: “Mr. Seller, this is John with ABC Realty. I just wanted to let you know that my supervisors told me we will need your decision whether or not you want to sell the house by Monday the 24th. We are looking at several properties right now and by the 24th we are going to purchase our latest batch of properties for the time being. So, please let me know by the 24th if you would like to sell your house to us. After the 24th we will be unable to assist you”.
A Deadline Works Every Time
I’ve seen too many investors spend months “playing games” with a seller trying to get them to sign a contract. They could have saved themselves a lot of hassle if they would have given the seller a deadline early on. When I have a half-motivated seller I give them a week to sign the contract. I don’t want to waste any more time with a person than a week… they’re either going to sign or not.
When choosing the area you’re going to invest in a lot of people don’t create a large enough radius around where they live. For example, one of the best ways to be successful in this business is to mail a lot of letters and postcards to highly targeted lists. And sometimes when an investor tries to order a list around their home town they might only come up with 300 names. When that happens, you need to enlarge your radius because mailing 300 names will never make you wealthy.
What is the ideal radius? Obviously, it depends on where you live. If you live in the city you might not have to go far, but if you live in the country you might have to drive for miles. Personally, the radius I use is 60 miles around my house. Why such a big radius? Because some of the best deals–the bread and butter houses–are that far away from me. And when it comes to making $5,000 to $30,000 per deal, 60 miles is nothing.
What’s worse than not getting any deals and struggling to buy houses? The answer is buying the wrong house. You see, many investors take an early exit from this business because they overpay for a property or because they don’t understand the correct formulas to use when evaluating a deal.
Today, I want to break down a deal that was emailed to me recently. It’s a single family house that another investor is trying to wholesale.
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