FANNIE MAE REO - YOU CAN FLIP THEM IN 24 HRS!!!

85 Replies

Originally posted by Drenda Holmes:
But if you have a buyer who is using cash or hard money there is not seasoning issue right?

NO seasoning on there side, but you have the 120% rule or 90 days with FNMA...

Originally posted by Drenda Holmes:
Does that mean if it is a FNMA REO? And what is the 120% rule


Fannie Mae (FNMA) imposes the following restriction on their REO sales:

You cannot resell the property within 90 days of purchase for more than 120% of the purchase price.

Originally posted by Drenda Holmes:
Ok thanks but what I am asking is that on fannie mae properties only...not REO's from other banks.

HI Drenda,

This is only for FNMA. I havent dealt with Freddie Mac yet.
REOs from other banks you wont have those restrictions....

Originally posted by Drenda Holmes:
Daniel sorry for so many questions but how long is the inspection period usually. and I thought if the property was being sold as is there is no inspection. Or at least in some o f the listing I have seen is says inspection is only for your purpose or something like that.

And also like I said in one of my previous messages when do you start to market. Is it ok as soon as you put in the contract. Can you pitch it to someone you know may be interested without giving them the exact address. PLEASE HELP..

No worries on the ?'s thats why we are all here to help one another out so we can ALL be successful!!!

Usually the banks will give you several different options. Again, each bank is different. Some will give you 10 days, 7 days, 5 days, or 3 days. The norm is around 5-7 days inspection period.

Inspection period is for you to do your due diligence. If you dont have a partner to help you find buyers and your doing it on your own, start marketing for buyers before you put anything under contract. This way you know what areas they are looking for and there criteria (ex. price, location, beds, baths, etc.).

Now if you put a property under contract and know you have the deal before you have a fully executed contract....start marketing before they approve you to purchase. Market like crazy, road signs, investment groups, email list, etc. Dont forget to mention to your prospective buyers you are a wholesaler and you resell foreclosures. IF your honest, they will have no problems with it. Picked that up from Steph in Tampa! :D

My advise on your inspection period, try to get an executed contract with your end buyer with 3 days for them to inspect and if they are ready to buy, put 0. Lock them in. This will solidify your contract on the second transaction, so your not stressing on your first contract with the bank. This saves me time and headaches...

I hope this helps, and keep firing away on your questions!!! :mrgreen:

Thanks Daniel,

So let me make sure I understand about the part where you said try to get an executed contract with my buyer with 3 days for them to inspect the property and if they are ready to buy the give them 0 days to inspect.

So if I have an end buyer during my inspection period make sure they do theirs before mine is over and lock them into a contract so that I dont have to worry about my contract with the bank because I have my end buyer locked in.

Thanks for the Information. This is great stuff, I want to try this in my market. I actually just did a Google search for "finding fannie mae reo" and This thread came up #2 in the search results.... Way to go Everlasting! I will keep you all posted on how it works out for me here in Northeast Florida.

Originally posted by Drenda Holmes:
But if you have a buyer who is using cash or hard money there is not seasoning issue right?

Several different ways to close a deal. I like double close.
You buy with cash and your end buyer closes you with cash. :cool:

One more question though, I know you do double closing but if you do a closing with and llc and you sell you llc to the end buyer by doing another contract with them, do you get your assignment fee when you sell them the rights to the llc or do y ou have to wait until closing to get it?

Drenda -

If you do it this way, you'll close on the property in the name of your LLC (you'll have to have the funds to close).

Then you turn around and sell the LLC to the end-buyer for more than what you paid at the closing.

You keep the difference.

In this scenario, there is only one closing, and that's when you purchase the property with your LLC.

Originally posted by nationwidepi:
J Scott, now all you need to do it find away to get around the agents and your transactions will be smooth sailing!

It amazes me how often an agent will say you cant do that or it is illegal, etc. just because THEY don't understand how or that it CAN be done.
If I was a rookie or even seasoned agent, I would NEVER tell someone something like that. I would NEVER want to interfere with my ability to make more commissions!

It seems that most agents will take the path of least resistance. :mrgreen:

Originally posted by Drenda Holmes:
Ok J im still not clear though but does the end buyer go to closing instead of me or do we both go? im confused about that


No, the end buyer doesn't go to closing. You purchase the property at closing all by yourself. Once you are finished signing the closing docs, the property now belongs to that LLC you created and own.

You then meet with the end-buyer to sign the contracts and exchange funds that allow you to sell that LLC to the end-buyer.

I guess this could technically be done at the same closing table, but I don't imagine it normally would be...

(I've never actually closed a deal like this, so others probably have a better perspective)

Originally posted by J Scott:
Drenda -

If you do it this way, you'll close on the property in the name of your LLC (you'll have to have the funds to close).

Then you turn around and sell the LLC to the end-buyer for more than what you paid at the closing.

You keep the difference.

In this scenario, there is only one closing, and that's when you purchase the property with your LLC.

Drenda,

JScott said it well! Very simple explanation to understand! :mrgreen:

Originally posted by Antoine Simmons:
So Daniel

Would it be safe to say that the advantage of selling the llc would be to only go through one closing?

I would have to say it would be safe, but not sure. I have never sold an LLC before when flipping REO. I know that there are some other flippers in here that do that on a regular basis. One thing I do know, its costly to set up multiple LLC's just to flip property through. And I believe if this method continues, there will be new rules/laws implemented to stop the use of LLC flipping.

From what I have heard, not many investors are fond of using this method, but hey it works....Im just not well versed in it.

Thanks Jscott and Daniel...so do I use the same kind of contract with the buyer of my llc or should it be something simple.

Drenda, not sure how your contracts are in your state in selling an LLC. I would check with a real estate attorney! :wink:

Ok Daniel thanks , but heres the thing when you have to use transactional funding then you have to pay a fee for that correct . But to set up a llc is only cost 100.00 or less. I was just thinking that is a little less than the 2-5% fee of using transaction funding.

I am just trying to make sure I look at all my options because the double closing you have to use the banks title company but once you sign you tell them that you title company is going to to a courtesy close and that is how you can do the double closing right, without having to explain to the banks title company. Is that how you do yours?

Originally posted by Drenda Holmes:
Ok Daniel thanks , but heres the thing when you have to use transactional funding then you have to pay a fee for that correct . But to set up a llc is only cost 100.00 or less. I was just thinking that is a little less than the 2-5% fee of using transaction funding.

I am just trying to make sure I look at all my options because the double closing you have to use the banks title company but once you sign you tell them that you title company is going to to a courtesy close and that is how you can do the double closing right, without having to explain to the banks title company. Is that how you do yours?

I am sure transactional funding can work on selling LLC. Never done it before...

It looks like your trying to find the easiest way to close. Some banks are flexible in allowing you to use your title company. If they are not, you can do a courtesy closing w/ your title agent. You dont have to explain anything, just let them know you are doing a courtesy closing. :mrgreen:

Originally posted by Drenda Holmes:
Ok Daniel thanks , but heres the thing when you have to use transactional funding then you have to pay a fee for that correct . But to set up a llc is only cost 100.00 or less. I was just thinking that is a little less than the 2-5% fee of using transaction funding.


You still need the funds to close on the purchase of the property in the LLC. Whether you use your own cash or transactional funding, that's up to you, but the closing attorney is going to require that you pay for the property before they sell it to you.

Once you own (i.e., after you've paid for it), you can turn around and sell it (or the whole LLC) to the end-buyer.

I'm not sure if transactional lenders will fund this type of situation (closing in an LLC and then selling it)...so you should ask them prior to trying it...

OK thanks Daniel and Jscott, I think I am going to use the simultaneous closing method instead. I have made and offer and the LLC option is not as clear to me yet and I have to check out a couple more things.

You both have been so helpful so Im going to go out there and see what happens I will let you know how it goes. Keep me in prayer:) thanks

Drenda