OK I thought this was the way to do things

to "lock up properties" you most likely are going to need to show some sort of proof of funds to the agent since 98% of the deals are bank owned. When your offer is accepted you end buyer will move into place and provide all the money to close the deal, but initially, you have to have proof of funds.

Kimmy2010 is right especially on REOs. A company that specializes in Transactional Funding can provide you with POF without any proof of income. You then have a 14 days inspection period where you can look for buyers and take the EMD and give it to the bank. You don't have to invest your own money as EMD in this case. Your STAR Realtor will take care of everything.

But I don't deal with REOs. I love dealing with Homeowners who are motivated to sell. I just give them the offer, put it under contract, explain that a $100 EMD is with my Title Company, look for cash buyer and done. All this are possible, if you're wholesaling/assigning that particular property. Hope this helps. Blessings to all. LA

with POFs. Banks are now getting smart about transaction funding and requiring you to show proof that the money is in an account by providing a copy of your most recent statement. How do you get around this? Find someone with money who would be willing to give you a copy of their statement with a written letter as a POF. Tell them it doesn't obligate them to anything it just gives you a foot in the door in making offers and getting them accepted.

For what you are trying to do you do not use a hard money lender!! You do not need one.
The "fool: asked you what almost any hard money lender will ask. They fund your deal when you yourself buy the property. You don't need hard money for what you are trying to do! They will of course want to see you have the funds to pay the interest costs on the loan until you sell or refi. They don't look at funding deals unless they are under contract.

Are you a success academy student? Have you read Dean's books. I don't want to offend you but, you really need to get some education. Let me try and help.

1. You can do what you are talking about, getting a property under contract and assigning it to a buyer is easiest when you work directly with distressed home owners. People in pre foreclosure, tired landlords, FSBOs, absentee owners, expired listings Etc.

2. If you are offering through an agent on REOs you WILL need proof of funds and earnest money with every offer. You can not assign an REO, you must double close using transactional funds in most cases.

3. You must know which properties to offer on when assigning of double closing. Nice houses usually don't work. You want the ugly house in a nice area. That way you can get it cheap, sell it to a rehabber and make money. Don't offer on a house that you will be competing with owner/occupant, you will lose or pay to much.

To gain some insight on how to get Proof Of Fund letters and Transactional Funds go to http://www.mdtfcam.com Learn this strategy and start making offers on REOs that will be accepted.

Michael Mangham
MD Home Acquisitions LLC

Wait a minute...you have it backwards my friend.
When you lock a property up on contract this means you are probably wanting to turn around and sell your interest in this contract to an investors for $$$$.
This is called wholesaling.

For wholesaling you do not need a HML (Hard Money Lender).
The reason for needing a HML is when you have a property in mind that you want to flip..which means you buy one in bad shape and you need funds to rehab it and quickly resell it for a much higher profit.

In this case if you use a HML to fund the rehab you would need to make payments to this person just like you would a loan or mortgage each month.

I believe most likely you are wanting to wholesale the property. Put it under contract for 60 to 120 days and bring in prospective buyers. They will buy you out of your contract and pay you cash or go to closing at a title company and then you get your wholesale fee.

Most HML won't have a clue what you mean when you say you are locking properties up. You have to speak to them in their language or quickly educate them as to what you are saying. Investors and wholesalers speak a different language. LOL!

And yes HML do require money up front in order to lend you money for the flip and purchase of a property. A lot of them check all your credentials and your cash flow to make sure you are financially worthy of making a monthly payment for a HML.

Reading these posts, and have a question. While watching the EDGE DVDs' and listening to Rina and Nathan, I get the impression that PMLs' are better.
Sissy, what you are saying, HMLs would be almost like getting approved by a bank.
We could not use HML with no money down or without a perfect credit score?
I haven't checked into any yet, but thought PMLs would be better.
I am looking at some rehabs, and in the next 4 days have appts with 3 FSBO, one is a rehab the others are very motivated, and I have a few buyers, but that doesn't mean they will like those properties. One would be a good cash flow, but I can't carry a loan yet.
So for an assignment, I will not have to worry about POF, but is it better to put EMD such as $100 to my title company, how does that make the homeowner comfortable and would I have to prove that was done.
Sandi

To start out, doing a deal using HM is not really a no money down strategy. They will check your credit history and most will expect you to make monthly interest payments. The points they charge are usually rolled into the deal at closing. Some will not cover rehab costs, some will loan on 70% of ARV. So if you get the property cheap enough the loan will cover your rehab also. They are not cheap and they will appraise the property themselves, so your numbers must be correct, they will look at your rehab estimate and determine what they will loan you.

I'll give an example of how this worked on a deal I did.
REO purchased with POF letter and $1500 earnest money. Buy price $87,000
Contractors remodel estimate: $17955
Actual ARV $160,000
Hard money 4 points and 15% interest
They will loan up to 70% of ARV= $112,000
I only needed $109,000 to cover purchase, remodel and closing costs.
They collect the points at closing. $4360
I pay monthly interest payments of $1362 until it sells or I refi in nine months (term of loan)
So here is how it works with a projected hold time of 4 months. Hopefully it will sell in 2 months adding $2724 to my bottom line.
Loan $109,000
Points $4360
Interest $5448
Commissions/closing $10,000
Total costs $128,808
Sell for $159,900
Net profit $31,092

PM is better for sure but you can't always find it and HM may be the way to save the deal. Say I got PM on this deal and at 12% interest only on the $109,000. same hold time ETC = $4360 that is a savings of $5448 PM instead of HM

Both types of lenders usually like to see up to 6 months of interest payments available to you in liquid assets before they will loan.

Your question about earnest with a homeowner directly:

The homeowner will have a signed purchase and sale agreement from you that states the terms of the deal and the amount of earnest money put down with the homeowner. You give the earnest money to the homeowner when you sign the contract. You then bring your original contract and your assignment contract
that you have with your buyer and his earnest money that he wrote out to you to the title company and set a closing date. (simplified version of this transaction)

Hope this helps,
Michael Mangham
MD Home Acquisitions LLC

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomea.com Seller site
http://www.mdhacq.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird dog, House hunter, door knocker site
http://www.mdtfcam.com Transactional fund site

Thanks for the info. I will stick with PM, and appreciate the clarification.
I'm glad we have this site, it has helped me a lot as I persue my deals.
You made it easy to understand!
Sandi

Mainly I do not go & get A HML , I Use A TDF (Transactional day Funding ) to do my Deal .

so heres what I Understand

1. Get A Property(ies) under contract
2. Find A Buyer
3. Once Deal is Final & Official with me & my Buyer Start the Process with #4
4. Send Copies Of Checks to the Real Estate Agent ( For Escow )
5. Apply for Funds with A TDF ( Transaction Day Funding ) Company
6. Send A Copies of POF Letters to Real Estate Agent
7. Get All Forms Signed Between Me & The Seller & Buyer
8. Send Paperwork to Escow Company
9. Close the Deal
10. wait for my first Check on My First Deal

Cause the Real Estate Agent All he wants is POF Letters & Copies of Written Checks to The Escow copy Via E-mail to get started , But I'm needing A Cash Buyer who can Close Quickly This is the only thing thats Needed .

Are you dealing with REO properties? Yes, you will need a realtor, POF Transactional Funding etc. But please, surround yourself with buyers first before jumping into contract.

Here is what you do to double close an REO using transactional funds

1. Get set up with your transactional funds company. They will fund your transaction and provide you with proof of funds.

2. Know your area and what the actual comps are on the property you are going to offer on.

3. Know what the rehab/remodel costs will be. You need to offer on houses that need work. Move in ready houses will go to an owner/occupant. You can't compete with them!

4. Now that you have a property and you know what it will sell for fixed up and you know how much the repair costs are you are ALMOST ready to make an offer.

5. How much money are you going to make and how much does your buyer need to make. Don't forget to account for the cost of the transactional funds. They collect at closing so you do not have to come out of pocket, so to speak.

6. Now you know what to offer.

7. During this process and before build your buyers list. Find properties where the buyers want them.

8. Submit your offer with proof of funds from your TF guy and a copy of the earnest money check to your realtor. When it is an REO the lender will assign the title company. (Most offers through a realtor will have the title company set up for you.) Your offer gets accepted!

9. Get your own contract with your buyer and sell it to him with your fee in the price. Collect his earnest money.

10. Call your transactional funder and title company and tell them you need to arrange a double closing. Take your contract with your buyer to the title company along with your buyers earnest money check.

11. The transactional funder and title company will handle the rest and set a closing date for a(seller) to b(you) and the b(you) to c(your buyer)closings.

12. Then you leave closing with your check!

Hope this helps,
Michael Mangham
MD Home Acquisitions LLC

http://www.mdtfcam.com Transactional fun site

on an REO double closing. 95% of the banks make you sign an addendum that states you CANNOT flip the property for at least 30 days and most state 90 days. You need a better strategy than double closing to wholesale. Many wholesalers are now adding their end buyer to the title and letting them close with their own money. Once the transaction is done they quit claim a deed back to the end buyer. Wholesaling REOs is very difficult. The banks have caught onto wholesalers thus the reason for the no 90 day flip rule. You need a good buyer's list and you should go to your local REI club to talk to some other wholesalers and find out if they're still doing it. In CA there just isn't enough spread becaus we have a hot market, so many wholesalers have changed their investing strategies. Don't get me wrong some are still wholesaling, but they're putting in 100's of offers to get one wholesale deal. Investing is constantly changing with all these REOs. I would try locking up preforeclosures and charging a 2-3k fee for selling the contract so an investor with cash can do a short sale on the property. You deal direct with owners and you can take a few weeks to find an end buyer. Of course, you won't get paid until the deal closes which could take 90+ days, but if you have a pipeline of these, once it starts paying you should be closing 2-4 deals a month. That's 12k a month. Not bad.

I don't have any problem double closing here. The addendum I see are 30 to 90 days that state you can't flip for over 20% of your purchase price. I don't do it for more than that so I'm OK.

The short sale leads we get from working directly with homeowners we hand over to our short sale team of a realtor and full time negotiator. We get paid a finders fee and a percentage of the realtors net when and if the thing sells before it gos to auction! We WISH it took 90 days! Here 6 months is fast and have seen them go over a year and then go to auction after all!

There are tons of people upside down thats for sure, just like any other strategy you have to weed out the ones that are not deals(90%)

Doing a double close 11/10! Will make $4300 after Transactional fund and closing costs! Quick and easy, got the property under contract 10/22!

Michael Mangham
MD Home Acquisitions LLC