OfflineGood morning!
I am running into a question neither my realtor or I can answer and I'm hoping someone here can shed some light on the subject.
I want to buy a FNMA owned property inside of an LLC for wholesale purposes. My philosophy is that the end buyer would buy the LLC prior to the closing the transaction, therefore making the buyer the owner of the LLC that is contracted to buy the property.
My Realtor (who is very open to creative ideas) is concerned that FNMA is cracking down on this practice and may not may not sell to an LLC unless the articles of organization reflect the original manager or ownership has not been very recently transferred.
Also - my Realtor is concerned about the 20% profit rule 3 months after transfer of ownership. Would the transfer of the ownership of an LLC from me to the end buyer represent a transfer of ownership within 3 months?
Any constructive comments are extremely appreciated!
Sean
Sean
Negative people are like cancer. They'll eat you alive unless you irradiate them out of your life.
What did your RE attorney say on this?
I am not an attorney so these are just my opinions.
I don't do the LLC thing myself, but I know several fellow wholesalers that do. I know that if financing is involved on your buyers side that can be a problem but can be done. The lender of course whats to see their client as the entity making the offer and on the accepted contract. Cash deals are no problem.
As far as the LLC and FNMA checking the articles of organization I know this to be a fact. This strategy, like assigning REOs may soon be very rare.
I avoid all of this by my gross profit not exceeding 20% on the b to c transaction. When I fix/flip them myself the 90 day rule is no problem. I can sell it before then, just can't close until the 90 period is up.
You can also do a quit claim after closing. I don't do this myself but I know others do. I am happy with the 20% in most cases and most importantly so are my loyal buyers!!
Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
You could buy the property with a Land Trust. FNMA does check the LLC records and ownership and verifies it with the state.
For a trust though, you should never give a 'copy' of your trust to anyone, but let them know that you will show it to the escrow company at closing. By that time, you'll have the beneficiaries in place on the paperwork. They may want bits and pieces of the land trust up front, such as the trustee's information, and directions to the trustee from the beneficiaries. I always black out the typed up beneficiaries names when I submit this as it is private information; verses public. That's the benefit of the trust. Only the TRUSTEE is public information... the beneficiaries aren't
Thank you for your great comments. I really do appreciate it!
On a side note, how about LLCs with big banks such as BOFA or Wells? Do they have the same stringent requirements on REOs as Fannie or Freddie?
Thanks!
Sean
Negative people are like cancer. They'll eat you alive unless you irradiate them out of your life.