Flipping questions . . . - Posted by Jas
Posted by Jas on May 26, 2005 at 13:23:12:
Just got done listening to pitch by Vena Jones Cox about her wholesaling course. Seems plausible enough.
How much effect has the new Seasoning requirements had on flipping homes?
I sense most buyers of wholesale homes will be rehab types who secure their money through less traditional means regardless of whether they buy from wholesaler or find the distressed homes themselves. Is this correct?
I’ve been trying to find a means to get started into REI, wholesaling/flipping, rehab, lease options, what have you. Won’t mess with foreclosures as a beginner, sense more risk and whole lot more “learning” required for that facet of the game. Not interested in buy & hold, I’m not a landlord type, I do know that. Nor am I at this point interested in rehabbing.
Though having not done any of this, still trying to figure out which RE aspect might be best for me. I sense the seller won’t be as peeved with the prospect of how one buys & sells the home as one poster noted in another thread. Also I don’t see any reason not to be ethical and forthcoming of how the deal will be structured. I see wholesale/flipping as a person providing a solution, acting as the bridge between seller and rehabber. Wholesale person gets a fee for finding the seller a buyer.
One area of concern I have are banks, especially short sales. Assume ARV is $60K at 70% comes to $42K. Assume $20K repairs, assume $10K profit. Means offer will be for $12K. Assume seller owes bank $30K. Will wholesaler be able to talk the bank into taking $12K? That’s one part of the equation I’m not so sure of, selling short.
Another area is double close, when contract is not assignable. Buyer brings check to Title Company. Title Company places check into Escrow. Seller is paid from Title Company Escrow account, buyer gets Title/Deed whatever. Second closing is when wholesaler gets paid what’s left in Escrow, right? Any way to avoid double closing, since would double cost of sale?
Based on what little I’ve gleaned, whether such distressed homes come from probate/estate, tired landlords, whatever. Most will be upside down as to note and street value, as in no equity, or worse.
Which begs this question … how many homes are flipped with the buyer having equity in the home?
Wouldn’t it be sort of dumb for them to wholesale it at a much reduced price with equity in the home? I “sense” [using that word a lot in the post] that most homes placed under contract will not have equity, will be distressed in condition along with distressed sellers looking to get from under. That these homes are not in sellable because of condition and so forth. So the flipper shows up and “takes it of their hands.”
Vena claims a lot of sellers go upside down, since they borrow against the house they live in to meet whatever expenses, thus being zero or negative in the home.
I do like the idea of seller coming to wholesaler based on ads, letters and such. Since they will be prescreened and motivated. Also appears buyers [rehabbers] shouldn’t be all that hard to find. Belonging to local REI Club should provide enough access to buyers.
So Vena Jones Cox or Bill Bronchick for course work?
Sort of rambled through this post. Anyhow, will appreciate your responses and insight . . .