Flipping REO Properties
Hi everyone,
Thanks for your speedy response to my last post. I am really enjoying the interaction with all of you. I have a question that needs clarification. I found a property that is Real Estate Owned and I would like to know if it is possible to flip that property. If so, are there any rules or regulations when dealing with these types of properties? Thanks a million guys!!
If you buy the property in your name or company name. You can then flip the property to someone else. It is very hard to assign a bank contract, there usually is a clause against it. But you could try.
Lori
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real estate investor since 1988. I like to find creative solutions for my real estate headaches before they become problems. Most importantly, MOVEMENT DOES NOT EQUAL PRODUCTIVITY[ Edited by tinman1755 on Date 04/21/2004 ]
It’s near impossible to assign a bank contract. When you make your initial offer you will undoubtedly fill out one of the realtor’s mls contracts. Often, upon acceptance, the bank will send over it’s own contract, and it will a be a weighty tome. (Wiggle room? None. Attorney review? To what end?) Crossing out the non-assignment clause on either contract will assure rejection.
One course of action would be to buy it outright, and then immediately resell. The other would be to make the offer in the name of an LLC, and then sell your interest in the LLC. Both of these would best be accomplished with solid buyers lined up in advance, or at the very beginning. Don’t get left holding the bag, unable to close, and humiliating all involved.
The rules of the game will depend on your area. Banks want proof of funds. This may mean a pre-approval letter, or it may mean more... In my area, banks are switching to “proof of assets”, meaning an actual bank statement, in order to avoid further confusion over what they want in a “cash” offer. This may limit the strategies mentioned.
This doesn’t mean not to try. Just be prepared. Ask around and learn the local REO dialect. The only thing you want to avoid is discrediting yourself. Banks and realtors have long memories. Cash is the best tool, but reputation is our most valuable asset.
Quinn
Most of the REO's I've seen, the bank's are wanting full retail for them nowadays. I'm sure they'd take a little less, and if they've been on the market awhile, they'll come down a little more, but there's just not a whole lot of profit room in them, seems like to me.
Thanks everyone for the reply. I just wanted to get a better picture. You guys are invaluable to me.
Thanks again
The only way I have seen REO deals flipped is by doing a double close. By closing this way you will incur more costs but you just need to take those extra costs into account.
But it can be done presuming there is a profit to be made.
HTH
Larry Brusatori
Hey,
To be blunt, Banks got tired of dealing with InfoCommercial Guru students and have made the process so tight that it is impossible to do anything other than "straight" deals.
Right now I have a 38 PAGE contract (38 PAGES!!!!) for an ALL Cash deal for an REO on my desk.