Article by Simon Macharia
Flipping properties, or wholesaling properties, involves selling a property to another real estate investor at wholesale price. It also the quickest and easiest way to make money in real estate investing.
If you have negotiated a discount with the bank in a short sale, can you flip the property successfully to another investor? This article analyzes the possibilities of flipping short sale properties.
Successful wholesale real estate investing must allow you to make a profit between your buying price and your selling price.
Wholesale real estate investing involves finding properties at a discount, then selling them to a real estate investor.
Typically the buyer does all repair work, so it is necessary to sell it at a discount.
typically you can make 00 to over ,000 per deal wholesaling properties. If the equity is not enough, you can negotiate with the bank to accept less than the mortgage balance. This is called a short sale.
You must close a short sale property within 30 days.
Let us explore different scenarios:1) Assigning a contract You can simply assign the contract to your wholesale real estate investor buyer to wholesale a property. You contract needs to have “and or assigns” to assign a contract. Bank do not allow this clause, so you cannot use this method to wholesale properties.
2) Simultaneous closing Alternatively, you can buy and sell the property on the same table in a simultaneous closing, also called double closing.
As a real estate investor, you walk away with the difference. You can close the first transaction using your buyers cash, and still use it to close the second transaction in a double closing. Most hard money lenders never used to have a problem with this. A lot of them no longer accept to do this.
Also, most banks no longer allow you to use your buyer’s cash to close the first transaction. You therefore need the cash to close the transaction.Hard money lenders also offer transactional funding, used for just closing the first transaction, making this transaction possible.
3) Seasoning issuesLately, if you negotiate a short sale, more and more banks are now requiring that you hold the property for at least 30 days before you sell it. So you can finance the first transaction with a hard money loan, then flip the property 30 days later. Of course you must consider your closing and holding costs in this transaction.
Lots of deals will be eliminated by this clause unfortunately. A deal that makes you 00 to 00 does not fit into this category. You would have to focus on higher dollar properties to make this work.
About the Author
In order to close more deals, it is necessary to increase efficiency in your real estate investing business so you close more deals spending less time, money and effort. Learn how you can achieve this goal with a real estate investor web site for buying houses from real estate investing website for selling houses.
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