Flipping Properties

I don't know anyone that flips that doesn't factor in some holding costs. 90 days isn't bad if you have a snowball of deals rolling... when one is cashing out another is getting finished up and another is closing on the purchase, etc. I try to get my rehabs finished up within 4-6 weeks and get them right back on the market so I can try to get and accepted offer, therefore by the time the buyers mortgage is ready the 90 days is nearly up, if anything we just stretch the closing date out a little further. The 90 day rule shouldnt afffect you too much.

I have been told this strategy is supposed to work in a thirty day period. Where you find an end buyer while waiting for the closing date. I was also lead to believe this strategy was to happen within thirty days, not over ninety. I have to use a TFC and there is no way to use them if you have to hold a property longer then thirty days. If anyone knows of a funding source who will allow you to hold a property for ninety day or more before flipping it, please let me know. TFC is my only option.

Why not work directly with distressed, motivated sellers and do contract assignments?

Not all REOs have a seasoning issue. We double close them all the time.

Transactional funding is not your only option.

I don't think you have a clear understanding of wholesaling.(flipping) If you have Dean's books read them again. If you don't get them! Go to every REI club meeting you can find and network, network, network!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Your rigth Mike, you dont need no transactional funding to flip a property, first off work with only motivated sellers in your market, How do you find motivated sellers, Bandit signs, network with REI in area, drive around look for vacant houses, call for rent signs looking for tried landlords,Call FSBO signs, but by far the bandit signs work the fastest for getting motivated sellers calling you. Use bandit signs for locating motivated sellers and hungy buyers also. If you use bandit signs you will find deals and you will flip them in less then 90 days., I set my close dates at 30-45 days, or sooner if the title work and absentract work can be completed early. Find the deal get it under contract with the seller and then assign the deal to your buyer, he closes the deal, you collect your money, win-win-win.....John

If you are focusing on REOs to flip, you can flip in less than 90 days using TFC. 1st direct your emphasis on Freddie Mac properties; you can sell the next day or double close with no profit amount restrictions. If the REO properties you are finding are Fannie Mae's, then you can still use TFC & flip, but you are limited to only 20% profit margin if closed in less than 90 days. I would take 20% Return any day of the week! You don't have to be greedy to make money.

Thanks for your comments above. I did not know about Freddie Mac and I appreciate that info.
I am having a little worry until I know that I have some actual buyers on hand. Thanks,
Sy

Am I to understand the Freddie Mac REO properties are exempt from the ninety day holding period? I was told by a local lender that most, if not all, financing from an end buyer to purchase a property has to have been held for a minimum of ninety days. I was also told this is a nationwide government policy. I feel as if I'm missing something here. I need more information on your strategy.

What does any restriction with the financing from an end buyer have to do with you the investor? Let me give you my last Freddie Mac REO deal : We purchased the property the last week of October, 2011 for $ 36,000, Cash. Did our rehab which consisted of a new roof, paint, carpet, light fixtures & ceiling fans.(Approx. 11K to 12K). Sold the property the first week of January, 2012 for $ 60,000, that was a $ 12,000 profit or about a 25% return on investment. As you can see this less than 90 days & more than $ 7200 profit(20% of the initial purchase price of 36K).
Now the same week(last week of October) we purchased a Fannie Mae property for $ 41,300 cash; right in the documents there was a "deed restriction" stating we could only sell it at a $ 8260 mark up if sold within a 3 month period. That deal we did our rehab on; new roof, appliances, paint,
carpet, etc. and sold it for $ 70,000 but waited until February 1, 2012 to close. This way there wasn't any problem to make a $ 18,000 profit.
Our buyers purchased both houses the same day for cash, but each house could have been sold to anyone whether cash or financing.
I hope this answers your question.

The way the ninety day holding period was explained to me was that if I were to buy a property, I would have to hold onto that property for a minimum of ninety days before I would be able to sell it. If someone is paying me cash for the property, there is no problem. This policy is supposedly only affecting anyone who will be financing the property I'm selling. Mainly it will be FHA loans but most likely it is any type of financing. With my situation, I don't have the money to put into rehabing a property. I need to find a property which doesn't need a lot if any rehab and then be able to find a cash buyer. Because of my situation, I'm very limited on what I can do. This is why I haven't had any success in real estate yet.

Thanks

We have flipped properties to people who financed them in less the 3 months
just so long as they are either (a) not a Fannie Mae or (b) if a Fannie Mae made 20% or less if sold in less than 3 months.

I'm not going to argue with you. I am new and don't know anyone in the process of completing deals and your experienced and know the people you deal with. Maybe is hasn't caught on where you are. I do know when it comes to government regulations, it may take some time for them to go into affect in some areas but they will one of these days. For all I know your doing things on the sly, doesn't matter. Even if your intentions were meant well, you haven't helped me at all and I won't ask. Keep doing what ever it is your doing as long as you can.

If your buying a REO the terms & conditions are outlined in the contract & addendum. If there are no restrictions in the documentation, there are no restrictions for the re-sale. It is difficult to find properties that don't need rehab & find a cash buyer. The cash buyers can find their own deals directly. You need to find properties the unconventional way; motivated sellers that have some equity with bandit signs or calling ads for sale/rent; probates/estates(these properties are free & clear a lot of the time & the heirs, especially if they are out of the area, just want to unload them for quick cash.
If you don't have money to buy, build a buyer's list & then use transactional funding & double close to your buyer. You have to think a little
outside of the box, research at the county court house for deals; tax liens,
pre-foreclosures, probates. In Dean's book, Your Town, we were featured in Chapter 12 & one thing my wife Jill does is go to yard/estate sales, not to buy junk but to dig for leads to see if the property is for sale. Auctions, the MLS, Realtor.com & other Internet sale web sites won't do you any good because there are too many investors with CASH that make multiple offers which
result in properties going to highest & best.
When Dean was at our house filming a TV infomercial, one of the things he tries to emphasize to everyone is that real estate investing is not a get rich quick scheme, it takes determination, hard work, creativity and persistence. I can assure that despite clearing over 2 million dollars in deals I can be one of the worst offenders of not getting off my lazy butt & following thru and coming up with excuses. In short just do it!

Gary your right on, He needs to put out bandit signs and do whole sale deals without cash to build up his war crest. You need to craw before you walk in this business, I myself learn something new every time I complete a deal, and I would rather work with private owners then do deals off the MLS, you need money for that, with private owner property deals all you need is a motivated seller. .....And Action is important also, no action no offers no deals, no money, No nothing happens without action, and another point I wish to make here is ,that you will be come a better investor, when you can do deals with OPM, and Make $$$ no excuses..WIN..Win Win.....John