OfflineI just got an offer accepted, but it was an REO and I couldn't get a clear understanding as to whether it would require 90 days before resale. I have applied for my LLC and will be getting it in the next week or so. Did I read someplace that banks will allow LLCs to purchase without seasoning.... or am I confusing it with something else I read? It was a great deal, but I would have had to tie up $1000 for 3 months plus holding costs. And that ain't happening! So I withdrew my offer. Was there something else I could have done?
Shirley
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It's my understanding that usually REO's have the 90 day seasoning....and it doesn't really matter who's buying it, an LLC or an individual. They won't usually let you assign the contract either.
Can you get around the seasoning by putting it into a trust or LLC then selling that to your end buyer?
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However, that requires a lot in itself, I believe, to set up the trust.
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a land trust isn't that big a deal. we have an attorney in our REIC that sets them up all the time for investors. do you have a good attorney who is familiar with them? you might ask fellow club members if you are in a REIC for a referral. there might be a seasoned investor who might be willing to help you as well. i believe Tammy (Zion Properties) uses them and might be able to help you along the way.
Linda, Army EOD Mom
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If you don't exceed 20% of the purchase price when you re sell the property you can do the standard method of closing that you normally use. NO seasoning issue!! I like taking the property under contract and doing a double close. That's just me. The LLC or Trust thing to me anyway, is a big hassle. Lender's have a problem when their buyer is not actually on contract but a trust or LLC is. Can be done of course but I would just rather sell at 20% or less of the purchase price. I control the deal.
SO AGAIN PEOPLE. THERE IS NO SEASONING ISSUE IF YOU RESELL FOR LESS THAN 20% OF YOUR PURCHASE PRICE.
If you sell for more than 20% I prefer a L/O between the b to c! Way better than a Trust or an LLC in my opinion.
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
It is a way to avoid the seasoning issue only. Your buyer funds the A to B closing. You collect your fee. Lease payments are $1.00. You sell to him on a Lease option. He exercises the option in 91 days. You have been on title for 91 days. Seasoning issue beaten, property flipped for more than 20 % of purchase price.
This is actually a new and advanced strategy. Remember, you heard it here first!
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
SO AGAIN PEOPLE. THERE IS NO SEASONING ISSUE IF YOU RESELL FOR LESS THAN 20% OF YOUR PURCHASE PRICE.
If you sell for more than 20% I prefer a L/O between the b to c! Way better than a Trust or an LLC in my opinion.
Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC
Mike
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Michael, thank you for your explanation. You always seem to have the answer I need.
Let me see if I have an understanding of the lease option to avoid seasoning...
1. I find a property, get it under contact then find an end buyer.
2. I let the end buyer know what I'm doing and why I'm doing it.
3. I set up a lease option for the end buyer to lease it from me for $1/month.
4. At the end of the 90 day seasoning, he exercises his option to purchase and then my name comes off the title and his goes on the title.
5. We close and I get my profit.
Is this correct? Do I have to wait the 90 days to make a profit or is there another way I can make it before then?
thanks,!
Shirley
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
From the way Michael explained it, it looks like you get your fee when your buyer funds the dry close. But I could be wrong.
Marc Rodill
New REI in SWFL!
By golly, I think you're right!! I reread Michael's comment and that is exactly what would happen! I think I'll try that when my next offer is accepted(REO).
Shirley
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.
Hi Shirley,
Use you agent! Whenever you are unsure of something like this your agent is there to provide facts to you; in most cases he/she can answer anything pertaining to the purchase agreement. I have found through several Fannie Mae, Freddie Mac, HUD and VA purchases, among other REO accepted offers that the seasoning varies from 0 to 90 days, limited only to a dollar amount (which I could be wrong, but it seems that also varies). The way I do my wholesales I circumvent the entire issue, but with my fast rehab flips I do have to lease it forward to the end buyer. It works well.
In the basic wholesale flip, as many of you know I found a rather unorthodox method where my buyer funds the deal to close-- then I QC it on the grounds that I ask the Recorder to "recognize true ownership"-- this skirts the Deed Restriction.
DO REO's. Do 'em scared!
I'm still a newie but 23 of my deals have been REO's and I have never had a Deed Restriction issue.
-Tina
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176
That all makes sense but is confusing at the same time. If you get a chance PM me and go over the steps you take and how you approach the buyer.. or you can post it as well for others.
thanks,
Shirley
Everything works out in the end. If it hasn't worked out, it's not the end.
You have not lived a perfect day, unless you have done something for someone who will never be able to repay you. Ruth Smeltzer
It is what it is 'til you change it.