Wholesale Possibility
I need some advice on a wholesale opportunity:
FMV: $100K
List: $85K (but know it's a repo)
Last sold for: $95K
Minor Repairs: $10K (carpet/paint/etc)
If they accept my offer of $60K, is this a property that could be flipped to an investor. I see about $15-20K profit after closing cost. It's through an REA. If it is worth flipping, how do you get "assignment" through on a realtor?
Thanks for the help.
You won't be able to assign this deal. Almost all REO properties have a specific clause in the purchase contract or contingency section that states that this deal cannot be assigned. You will have to close on the deal before you sell. If you don't have a proof of funds letter, or a pre-qual letter that went with your offer, it's very doubtful that the bank will accept it anyway.
Now, as far as the wholesaling goes, this is not much of a wholesale candidate. Most wholesalers will offer 70% of FMV minus repair costs. In your example, that was $10K. So their target purchase price would be $60K which is your offer. No room for you to add in your wholesale profit.
Roger
Central Florida:
Rajwarrior is correct. If this is an REO property, you will need to close it in your name before you can wholesale it. If it is with just a real-estate agent, you might get away with opening escrow and then 'assigning' it to your wholesale buyer. You will have to check it out. Each case is different.
I would suggest opening up escrow and if you can 'assign' then you could close in your own name with hard-money or private money and then see if you could get $3k out of it on a wholesale basis....
Best Regards,
Jeff Adam
[addsig]
If you have the credit ,buy it and owner finance ! get full price,a profit on interest,a down payment, and a monthly income for 2 years then a profit on house!
Thanks guys! I appreciate the insight!
That's why I asked! I guess I'll keep looking!
I am learning more and more each day, and I can't wait for my first deal to be completed in a POSITIVE manner
Roger,
In this case would he be able to do a double closing with a title company? Or does that violate the "assignment" clause in the contract?
Yes, pino, you could do a double closing if the deal warrants it. However, this particular deal is not worth an assignment (in my opinion) and it definitely does not have enough money in it to pay for double closing fees.
Double closings have their own special problems that much be dealt with in order to do them successfully and legally.
Roger
If you have the deal, forget about an assign since it is a bank--but you can STILL avoid a double closing.
Do you have your buyer lined up? Or will you quickly have them after you get offer accepted?
If you get the offer accepted, then call the bank and tell them you wish to add another buyer to the contract. Can be done with an addendum. Any reason they shouldn't approve? The guy's got money, right? They're getting their money, right?
So they approve, and it's all in writing. You go to close. Immediately after close, have your partner pay you your profit in consideration for quit-claiming the deed to him.
There you go.
By the way, is your offer perhaps too high to actually leave sufficient profit for a rehabber?