Foreclosure Investing Primer - 7 Best Ways To Do REO Flips
Foreclosures are dominating the real estate market and bank owned properties or REO’s make up a huge portion of all listings. This is perfect inventory for wholesale real estate investors. But how can you flip a bank owned property if the bank does not allow assignment of contract? Here are the 7 best ways:
1. Make your end buyer your co-buyer. You get the contract with the bank. Once you find your buyer you add them to the contract as a co-buyer. After closing you execute a quit-claim deed to remove yourself from the title in exchange for your wholesale fee.
2. Use your end buyer as private lender. You use your end buyer as a private lender who funds your purchase price plus your wholesale fee. After closing you deed the property to the private lender. You receive your wholesale fee through the closing because the private lender funds transaction for more than your purchase price.
3. Partner with your end buyer. You can execute a partnership or joint venture agreement with your buyer. It states that you are buying the property together, in the name of your end buyer. your end buyer agrees to buy you out of the JV at closing for a set fee which is your wholesale fee.
4. Use an entity that can be taken over by the end buyer.You can buy the property in the name of a new entity such as an LLC. Your end buyer can buy the LLC or entity from you for your wholesale fee. Since the property is owned by the LLC or entity, the end buyer owns the property with the LLC.
5. Use a Title Holding Trust (or Land Trust) to buy the property. You can use a title holding trust to buy the property and then sell the beneficiary interest to your end buyer. As in the previous REO flipping strategy, your buyer can fund the purchase transaction and take control of the trust or entity at the same time.
6. Do a double closing. Double closings are legal and ethical and are sometimes referred to as “simultaneous closing” or “back-to-back closing”. You will close the purchase transaction yourself and close your re-sale transaction immediately thereafter. This is not a preferred way of flipping REO’s because it can be difficult to controle the transactions, and you may be required to use “transactional funding” to close the purchase independently from the resale transaction.
7. Syndicate your REO flips. Syndication is a common way to work with partners in commercial real estate. Your partners will fund the deals that you bring into the syndicate. The syndication can be structured so you get paid off once the deal closes or you can remain in the deal for long term profits. While real estate syndication is widely used in commercial deals, you can apply the same strategies also to single family or land investing deals as well.
You can get a lot more free information, videos and reports on REO flips and short sale flips as well as foreclosure investing in different types of properties on our blog.
Thomas Bartke has been an active wholesale real estate investor for over 6 years. Sign up for his Nationwide wholesale distribution list at http://cawholesaledeals.com - You’ll even get a free report just for signing up and great deals with tons of equity on a weekly basis!
For more info about REO investing, please check this great resource Review Of REO Secret List.
