How You Reall Flip A Property In LESS Then 72 Hours
I hate to be negative but that post was a waste of my time so for those of you who also wasted your time I wanted to give you the real deal.
Bottom line is you need to find good deals. I certainly can't go into every single method of doing so in this post but I'll give an example of my latest deal.
Two days ago I found a bank owned REO that was listed on the MLS for $79,900. It is in a neighborhood that I have done numerous deals so I know it well. I know the neighborhood is hot and that values are on the rise. Immediately I knew that I could get more then $150k for the house fixed up, I checked further and found many $160k comps.
I made a full price "all cash, as-is" offer. The bank accepted my offer the next day. I was having lunch with a couple of students who attended my last boot camp when I got the call that I had my offer accepted. I had never seen the home yet, but I had one of my other students who is wholesaling deals drive by the home for me to give me an idea of what I was dealing with.
He told me that the home was gutted inside but that it had new windows, and the electrical and plumbing looked new. So I figured that it was a home that a rehabber couldn't finish.
I knew based off of the type of home that I could probably finish it off for $30k or less so I was comfortable with my offer.
So when I got the call, my students decided to go out and see the home with me. One of them offered me $90k for the home right then and there. I didn't sell it to him yet because I wanted him to do his own due diligence and not to just take my word for the values. I was being honest with him, but I strongly advise everyone to do their own due diligence when buying homes.
I'm not concerned about turning a deal away because the home is a great deal and I can wholesale it many times over. I believe that I can rehab it and sell it for $169,900 which would be a nice pay day as well.
But the key is that the deal is a good deal. If you can't wholesale in a matter of days, or at least in less then a week, you have to take a hard look at your numbers. A good deal is very easy to move.
If I didn't have someone eating lunch with me, I know who the buyers are in my area for those types of homes and I would have started calling them if my decision was to wholesale. They would have bought within 24 hours.
I'll be happy to answer questions to fill in any holes. There are no "hidden" things that I can't disclose.
[addsig]
Steve,
i live in md too. What neighborhood was it ? What site do you use for searching MLS ?
thanks
Tori
Hey Steve:
On the MLS, are REO properties flagged?
How do you identify them as REO?
Thnx,
JQ
JQ,
That depends upon the MLS system. They are all different. In some systems it is flagged in a drop down window, in some systems it is flagged in the remarks.
On some systems you can search the remarks, and in others you can't search them.
So it comes down to knowing the MLS system in the area where you live. Some are still in a book format and are not computerized at all.
[addsig]
Steve,
Good Post. Do you normally assign your contract, double close, callapse close, or what? Also, is this normally decided by your buyer, or by you?
Thanks,
Jace
Jace,
First I always decide. The key to succeeding in wholesaling is controlling your deal. If you let the buyer call the shots you will have a lot of deals fall apart.
In any event, I'll do assingments, double closes, assigning LLC's etc... I'll use whatever method works best for the situation. They all have a time and place when they are useful.
[addsig]
Yes igloo great question.
Steve, I have read that with REOs, one can only double-close to wholesale or re-assign a land trust? Is that the similiar to selling off your LLC?
Thanks.[ Edited by ddhamilt on Date 12/10/2003 ]
No, there is another option which I have written about. I'm not sure if that article is on this site. If not I'll have to get it over ASAP. It's called "how to assign a non-assignable contract".
I make my offer in the name of an LLC. Example would be the one I just did. The address of the property is xxxx Forest Garden Rd. I made my offer as Forest Garden, LLC.
Instead of assigning the contract to my new buyer, I'll create the LLC and assign the LLC to the. Then the contract has not been assigned, the buyer remains the same. It's just that someone else owns the LLC which has the contract to purchase.
Blessings,
Steve
[addsig]
Hi Tori,
I just access the MLS through my realtor.
The neighborhood was Woodlawn.
[addsig]
Do the banks in your area ask for proof of funds for REO with cash offers. If so how do you do this with a new LLC, or don't they care as long as they see the proof of funds no matter where that money is?
TBARBER
Yes, the banks do ask for proof of funds, and I give it to them via a bank statement or a prequal letter.
Proof of funds, they really don't care whose name is on the account. At least they have never asked me.
My prequal letter says that Steve Cook and any of his entities is approved for a loan.
[addsig]
Steve, i didn't know you could assign a LLC. Do you believe it will be easy to understand for a buyer to own the LLC?
I'm afraid that situation will scare the buyer if not understood properly...
Steve, So what is the process you use to assign/sell your LLC which has the the contract to purchase the home?
And also when you sign the contract do you use :
Your Company Name LLC , Member
after signing your name?
When searching in an MLS and you want to know if the property is an REO. In the area of ownership or in the remarks section the Realtor will normaly insert the statement Bank Owned or Lender Owned and a few clutches put in Institutionaly www.Owned.I always parallel my searches by going into a Tax Report also on the MLS and that gives me the name, rank and serial number of the Owner now of Record. If I need more I go to a Iprofile search.
Investigatively Lucius
Steve,
I'm just wondering why you didn't put the property in a land trust and THEN transfer it privately to your LLC?
Dear Steve,
Hi, a couple of small questions.
On Property A, an REO a true Doggy, had a structual problem, wanted to fall down the hill on which it was built.
Trying to move forward in time, improving on the normal conduit agency procedure that I usualy follow, formed up an LLC called Flowering Tulip. I then qualified it for offer, made the offer to the REO Officer and after bitter bikering they accepted my offer. I then sold Flowering Tulip to the ultimate Buyer and the whole deal started to spill out into the alley.
The Buyer, new owner(100% stock owner) got into a fight with the REO Officer because he wanted to take title to the property in his own name with a deed from Flowering Tulip. Seems he could not close in the name of the corporation as it no longer qualified for a loan when it was transfered from my loving hands. The strange thing was that Mr. Klutz the Buyer could qualify for the loan on his own upon making application.
It got so hostile that the whole deal was about to fly out of the window, cause now the Title Co. stuck its head in and wanted the new Buyer to diagram the whole transaction. This caused by a new Arb Officer who thought a Spanish Land Grant was some kind of a Sexual Arouser.
Anyway I went to the bank and after a tearful session on my hands and knees they gave me a cashiers for the full purchase amount plus closing costs and I tendered in thru the Escrow Officer who was in tears, all my fault of course. So it was solved. I then had the Klutzy buyer make his proper downpayment and I obtained financing for him and we all went on our lawful occasions. Of course I had an additional cost added on for the new escrow numbers involved.
My question oh knowledgable one, other then my really screwing up. Is it not better for us normal folk just to do "Conduit Agency" aka Double Escrow?
Slightly Challenged Lucius
In some cases the buyers do not understand it and it can scare them off. If this is the case, back off immediately do a double close and then once you develop a level of trust with the buyer, you can pitch the LLC thing again. It's always worked out for me on the next deal if it didn't work out the first time.
Quote:
On 2003-12-15 20:07, Codythebest wrote:
Steve, i didn't know you could assign a LLC. Do you believe it will be easy to understand for a buyer to own the LLC?
I'm afraid that situation will scare the buyer if not understood properly...
[addsig]
When I assing my contracts I use a one page agreement called a "substitution of member" agreement. It is a very basic assignment form which basically says that I assign all of my rights, title and interest in the LLC to my buyer. It also states that the LLC owns a contract to purchase the subject property.
When I sign documents I do sign as a member of the LLC.
Quote:
On 2003-12-15 20:32, HouseBuyerGuy wrote:
Steve, So what is the process you use to assign/sell your LLC which has the the contract to purchase the home?
And also when you sign the contract do you use :
Your Company Name LLC , Member
after signing your name?
[addsig]
I just don't use landtrusts, besides that would be an extra step for me. In any event you can use land trusts instead of LLC's if you like.
Quote:
On 2003-12-15 21:07, LynLinz wrote:
Steve,
I'm just wondering why you didn't put the property in a land trust and THEN transfer it privately to your LLC?
[addsig]
In some cases a double escrow is going to be better, however in my course I teach you to control the "whole" process. I don't just assing the LLC and allow my buyers to go do what they want. I mandate that they use my lenders, lenders that I know are going to come through for them, lenders who I know the LLC won't be an issue with, lenders who I know are going to get me to my pay day.
In addition to that, I don't allow the assignment of LLC to take place until the day of settlement when I get my funds in full.
If you control the entire process, you won't experience what you experienced on your deals. What you experienced can and will happen time and time again when you leave it up to other people to make sure the deal gets done.
Quote:
On 2003-12-15 21:17, Lufos wrote:
Dear Steve,
Hi, a couple of small questions.
On Property A, an REO a true Doggy, had a structual problem, wanted to fall down the hill on which it was built.
Trying to move forward in time, improving on the normal conduit agency procedure that I usualy follow, formed up an LLC called Flowering Tulip. I then qualified it for offer, made the offer to the REO Officer and after bitter bikering they accepted my offer. I then sold Flowering Tulip to the ultimate Buyer and the whole deal started to spill out into the alley.
The Buyer, new owner(100% stock owner) got into a fight with the REO Officer because he wanted to take title to the property in his own name with a deed from Flowering Tulip. Seems he could not close in the name of the corporation as it no longer qualified for a loan when it was transfered from my loving hands. The strange thing was that Mr. Klutz the Buyer could qualify for the loan on his own upon making application.
It got so hostile that the whole deal was about to fly out of the window, cause now the Title Co. stuck its head in and wanted the new Buyer to diagram the whole transaction. This caused by a new Arb Officer who thought a Spanish Land Grant was some kind of a Sexual Arouser.
Anyway I went to the bank and after a tearful session on my hands and knees they gave me a cashiers for the full purchase amount plus closing costs and I tendered in thru the Escrow Officer who was in tears, all my fault of course. So it was solved. I then had the Klutzy buyer make his proper downpayment and I obtained financing for him and we all went on our lawful occasions. Of course I had an additional cost added on for the new escrow numbers involved.
My question oh knowledgable one, other then my really screwing up. Is it not better for us normal folk just to do "Conduit Agency" aka Double Escrow?
Slightly Challenged Lucius <IMG SRC="images/forum/smilies/icon_cool.gif">
[addsig]
Quote:
On 2003-12-10 14:19, SteveCook wrote:
I hate to be negative but that post was a waste of my time so for those of you who also wasted your time I wanted to give you the real deal.
Bottom line is you need to find good deals. I certainly can't go into every single method of doing so in this post but I'll give an example of my latest deal.
Two days ago I found a bank owned REO that was listed on the MLS for $79,900. It is in a neighborhood that I have done numerous deals so I know it well. I know the neighborhood is hot and that values are on the rise. Immediately I knew that I could get more then $150k for the house fixed up, I checked further and found many $160k comps.
I made a full price "all cash, as-is" offer. The bank accepted my offer the next day. I was having lunch with a couple of students who attended my last boot camp when I got the call that I had my offer accepted. I had never seen the home yet, but I had one of my other students who is wholesaling deals drive by the home for me to give me an idea of what I was dealing with.
He told me that the home was gutted inside but that it had new windows, and the electrical and plumbing looked new. So I figured that it was a home that a rehabber couldn't finish.
I knew based off of the type of home that I could probably finish it off for $30k or less so I was comfortable with my offer.
So when I got the call, my students decided to go out and see the home with me. One of them offered me $90k for the home right then and there. I didn't sell it to him yet because I wanted him to do his own due diligence and not to just take my word for the values. I was being honest with him, but I strongly advise everyone to do their own due diligence when buying homes.
I'm not concerned about turning a deal away because the home is a great deal and I can wholesale it many times over. I believe that I can rehab it and sell it for $169,900 which would be a nice pay day as well.
But the key is that the deal is a good deal. If you can't wholesale in a matter of days, or at least in less then a week, you have to take a hard look at your numbers. A good deal is very easy to move.
If I didn't have someone eating lunch with me, I know who the buyers are in my area for those types of homes and I would have started calling them if my decision was to wholesale. They would have bought within 24 hours.
I'll be happy to answer questions to fill in any holes. There are no "hidden" things that I can't disclose.
Hey Mr. Cook, nothing personal. But I just respondig how can i flip or sell the property in 72 hours. Here is the answer...i let you look how i sell them..
****Must Reach Freshman Investor status before posting URL's***
Thank you, and sorry for misunderstood.
[addsig]
Quote:
On 2003-12-16 14:51, riki wrote:
Quote:
On 2003-12-10 14:19, SteveCook wrote:
I hate to be negative but that post was a waste of my time so for those of you who also wasted your time I wanted to give you the real deal.
Bottom line is you need to find good deals. I certainly can't go into every single method of doing so in this post but I'll give an example of my latest deal.
Two days ago I found a bank owned REO that was listed on the MLS for $79,900. It is in a neighborhood that I have done numerous deals so I know it well. I know the neighborhood is hot and that values are on the rise. Immediately I knew that I could get more then $150k for the house fixed up, I checked further and found many $160k comps.
I made a full price "all cash, as-is" offer. The bank accepted my offer the next day. I was having lunch with a couple of students who attended my last boot camp when I got the call that I had my offer accepted. I had never seen the home yet, but I had one of my other students who is wholesaling deals drive by the home for me to give me an idea of what I was dealing with.
He told me that the home was gutted inside but that it had new windows, and the electrical and plumbing looked new. So I figured that it was a home that a rehabber couldn't finish.
I knew based off of the type of home that I could probably finish it off for $30k or less so I was comfortable with my offer.
So when I got the call, my students decided to go out and see the home with me. One of them offered me $90k for the home right then and there. I didn't sell it to him yet because I wanted him to do his own due diligence and not to just take my word for the values. I was being honest with him, but I strongly advise everyone to do their own due diligence when buying homes.
I'm not concerned about turning a deal away because the home is a great deal and I can wholesale it many times over. I believe that I can rehab it and sell it for $169,900 which would be a nice pay day as well.
But the key is that the deal is a good deal. If you can't wholesale in a matter of days, or at least in less then a week, you have to take a hard look at your numbers. A good deal is very easy to move.
If I didn't have someone eating lunch with me, I know who the buyers are in my area for those types of homes and I would have started calling them if my decision was to wholesale. They would have bought within 24 hours.
I'll be happy to answer questions to fill in any holes. There are no "hidden" things that I can't disclose.
Hey Mr. Cook, nothing personal. But I just respondig how can i flip or sell the property in 72 hours. Here is the answer...i let you look how i sell them..
****Must Reach Freshman Investor status before posting URL's***
Thank you, and sorry for misunderstood.
wellthey dont let me show the address yet..
Hey Steve,
My market is hot as well and I have three offers on properties right now that REO, thing is, REOs are usually 80% of the FMV (asking price).
The offers I made last week, one was asking 78K (value 98K, low value) I offered 70K and still got shot down and the property had been sitting a year!
The other two had only been sitting a couple of months, I'm just curious as to exactly what you do to get good REO deals? Do you just lowball most of your offers or what?
Thanks,
Dee
Dee,
MOST of the REO's in my area are close to market value as well, but occasionally one goes cheap. The ones in pretty good shape go for top dollar. You have to get the junkers.
But making 3 offers at a time is a hard way to go. I have to make many more offers then that. I make 20-30 offers at a time to get 1-2 on occasion.
Also, depending upon whether or not you have any contingencies in your offer will make a difference.
I find it really hard to believe that an offer of $70k on a home that is listed for $78k and has been on the market for a year wouldn't get some attention from the bank. Unless you offered no deposit, put "and/or assigns", or an inspection clause that turned them off, they would almost always look at that.
[addsig]
Well they looked at it, but decided to go with another offer. I put down the 1000 earnest money, no assignable clauses, no inspection request.
When you say the "junkers," what neighborhoods do you primarily target? Do you target the same neighborhoods as with the REOs that go for top dollar?
On average, how often do you get properties?
Thanks again Steve.
Mr. Cook, I am looking for more information wholesaling homes strictly to investors. My strategy is to pursue homes where I can assign the contract to another investor or on a sweet deal opt to sub2. Since I'm still a college student, I thought this would be an excellent way to get my feet wet in the business. Does your course work for those that want to deal with investors only or venture sub2 occassionally?
Steve, I am also interested in exactly what is the process to assign your LLC to your end buyer, seeing that banks don't let you assign the purchase agreement you sign with them on their REO property.
My Wholesaling for Quick Cash course is geared toward teaching you how to become a full service Wholesaler. It teachers you how to sell to investors and to control the process so that you can make sure you get paid.
Blessings,
Steve
Quote:
On 2004-01-20 12:23, sbc wrote:
Mr. Cook, I am looking for more information wholesaling homes strictly to investors. My strategy is to pursue homes where I can assign the contract to another investor or on a sweet deal opt to sub2. Since I'm still a college student, I thought this would be an excellent way to get my feet wet in the business. Does your course work for those that want to deal with investors only or venture sub2 occassionally?
Using and LLC to assing your contracts is a very simple process. You have to make your offers in the name of an LLC. YOu then create the LLC. And the LLC can be assigned just like a contract can. The assignment form is much like that of assigning a contract. The only extra things that you have to do is have your buyer become the resident agent and to change the address of the LLC so that the mail will go to your new buyer. It's very simple.
Blessings,
Steve
Quote:
On 2004-01-20 18:46, CGOODEN wrote:
Steve, I am also interested in exactly what is the process to assign your LLC to your end buyer, seeing that banks don't let you assign the purchase agreement you sign with them on their REO property.
Is there a way that I can assign the LLC so that the profit that I am making on the wholesale is not disclosed?? This is the only problem I have w/ assignments.
[addsig]
I'm no pro or even a rookie on wholesaling - I'm a rental kinda guy myself, but I know one thing is true: NEVER DO BUSINESS ON A CON.
The only advantage I see to consealing the original value from the new buyer is so they don't feel bad about buying it for too much money. Professionals don't care. If their own numbers work, and they can make the deal work for them, or if they are buying the house to live in it, or if they simply have more to put down on it than you, which would bring in a better NOI, then they will go for it. If they find out the details, and back out, they're a one-time-deal anyway, and you probably want a different buyer anyway. If the price seems to high for them and makes the uneasy, work with them to understand their financing, and make their deal work well, then they would feel that your services alone are worth the assignment fee, which is usually $3000 upto 15%. It may get pretty sizeable for you on 300,000k+ properties, but to them it makes very little difference.
Keep your game straight and honest. If I've learned one thing, is that this REI game is so full of options that you don't really need to cheat in it to win.
Quote:
On 2004-10-28 14:04, shamund wrote:
Is there a way that I can assign the LLC so that the profit that I am making on the wholesale is not disclosed?? This is the only problem I have w/ assignments.