Wholesale/Retail Question
I am a new investor looking to get into Wholesaling property.
I purchased three houses from a retailer/wholesaler who's clients are usually people who want rental property as a tax write off not realy willing to go into fulltime investing. Anyway the Wholesaler/Retailer offiers a "No Money Down" deal on all his homes. He actually comes to the table with the 5-10% you need to close the deal. You only finance whats left. I was wondering how he goes about doing this and still makes alot of money......hopefully someone could help me out here. The homes are usually owned by other people sometimes they are his own properties.
He gets the money back at the closing. He is probably using a bank that allows unlimited seller credit, and no source or seasoning of funds. His money is paid through a bridge loan. There must also be equtiy in the property to do this.
Lori
Very common with sub prime banks. Also with firstime homeowners with 500 credit score and above.
[addsig]
Yes Lori, it is a sub prime lender that the clients go through.....Ameriquest to be exact...You need to have at least a 580 credit score to do business with him.
The question I have is how do go about getting the bridge loan and is this a common method when Wholesaling or Retailing property?
Thanks!
I use a private investment team. They bring the money to close and the seller pays them with their proceed a set amount. It added to the HUD as a payoff. I didn't look for them, they looked for me at our local REI Meeting.
If I were you I would start there
Lori
[addsig]
KZ:
You can accomplish this a couple different ways.
-If you use a hard-money lender, they will usually lend up to 65% LTV. If he is picking up the property below 65%LTV, then the hard-money lender is giving him 100% financing. He is then passing this financing on to his "Wholesaler Buyer" assuming they have decent credit.
If you build a relationship with a hard-money lender, they will even go up to 70% LTV. You will have buyers literally lined up at your door when you have financing in place. There will be critics that ask why not do a conventional type loan? The answer is simple. Time if of the essence in this business. By the time you jump thru all the hoops that a conventional lender makes you go thru, it will turn out being a full-time job just getting the loan closed and that will be 30+ days. Your best deals will be when you offer to close in 10 days or less. A hard-money lender can accomplish this.
-Use private investors. If you establish a repore with a private investor, you can accomplish this very easily. If you trust your "Wholesale Buyer" who has a proven track record, you can pass the 100% financing on to them. What he is doing is finding deals below 70% of market value and getting 100% financing from either his hard-money lender or private investor and then passing this deal on to his "Wholesale Buyer" with financing in place and then collecting an additional 5-10% for his "Wholesale Fee."
Best Riches,
Jeffrey Adam
_________________
"The only place success comes before work
is in the dictionary."
[ Edited by JeffreyAdam on Date 04/30/2004 ]
[ Edited by JeffreyAdam on Date 04/30/2004 ][ Edited by JeffreyAdam on Date 04/30/2004 ]