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How To Flip Short Sale Properties
By: Simon Macharia |
| word count: 479 comments(0) views: 101 |
| Wholesaling properties, or flipping properties, involves selling a property at wholesale price to another real estate investor. |
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 explores the possibilities of wholesaling a short sale property.
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 greatly discounted properties, then finding a buyer, usually a real estate investor to buy it.
You sell it at a discount because the buyer does all the repair and you walk away with some money.
You can make profits from $3000 - $15,000 per deal this way.
If situations allow it, you can negotiate with the lender so they sell the property for less than is owed on it. This is called a short sale.
If you create equity through a short sale, the banks require you to close usually within 30 days.
Let us explore different scenarios:
1) Contract assignment
You can simply assign the contract to your wholesale real estate investor buyer to wholesale a property.
In order to do this, your contract needs the buyer to have "and or assigns". Bank do not allow this clause, so you cannot use this method to wholesale properties.
2) Simultaneous closing
The next method involves buying and selling the property on the same table in a simultaneous closing, also called a double closing.
As a real estate investor, you walk away with the difference.
You can use the money from your buyer to close the first transaction, then use it to close the second transaction. A lot of hard money lenders did not mind this. Most of them do not accept this any more.
In addition, if you negotiate a short sale, the bank will not allow you to use the buyer's funds to close the first transaction. You therefore need the cash to close the transaction.
You can get these funds as transactional funds from hard money lenders to make such a deal possible.
3) Seasoning issues
Lately, 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.
This means that you can get a hard money loan, buy the property and flip it 30 days later. Of course, your closing and holding costs could become a limiting factor in such a transaction.
Lots of deals will be eliminated by this clause unfortunately. A deal that makes you $3000 to $5000 does not fit into this category. You would have to focus on higher dollar properties to make this work. |
Author resource:
Learn how you can run your real estate investing business from a real estate investing website that also automates your business from http://www.realestateinvestorswebsites.net/website-types |
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