Questions to the pros. RE: FLIPPING properties - Posted by Deron Mercer

Posted by JohnB_NJ on April 18, 1999 at 22:56:16:


Forgive me I am still learning. I have a few properties tied up. One is a cash wholesale flip. No problem. The one that concerns me is my retail flip. The home needs very little work (around 3k for paint & carpets). I negotiated a 55k sales price. The ARV is around 80 to 84k. Now, I found a buyer with 10k cash and he wants to get a bank loan for the balance. Are you saying from the above post that I will not be able to do a double close because I can’t justify the increase from what i bought it at and what my buyer is paying? I just negotiated a real good deal with a motivated seller. I am selling it at ARV.
I want to own it for a few minutes. I surely do not want to own it for six months and have to get financing to buy it and hold it. This house only needs paint an minor cosmetic work that the buyer wants to do if I pay their closing costs.

Can I get these guys financed? I am taking them to my mortgage guy on Tuesday. My broker says yes…but maybe he is wrong. This is my first retail flip. Maybe he is refering to FHA which these people do qualify for. I will read Jackie’s articles again but i thought she was talking about cash flips and owner financing deals. My seller want cash now and will not take a note. I tried. So I made a lowball cash offer that they took after thinking about it for a few days.

As usual, thanks for your insight into this matter and thanks for any and all advice.

Questions to the pros. RE: FLIPPING properties - Posted by Deron Mercer

Posted by Deron Mercer on April 18, 1999 at 24:39:05:

I am a new to the real estate game and would like to begin flipping properties to homebuyers and investors. But I have a few concerns. I already have a mortgage lender lined up to pre-qualify my prospects and i know a realtor that will give me access to some reo properties. My concern is structuring the contracts properly. How is a simultaneous closing conducted and do I have to qualify for the contract price of the home and close in my name and then go to another closing for the flip or is this all done at one time? How will this affect the title to the property? My credit is not all that great but I have a list of people that are interested in buying homes from me, because they are reo properties and if the numbers are right my lender will put them in with no money down and no closing costs. any help would be appreciated.
DM in DC

Re: Questions to the pros. RE: FLIPPING properties - Posted by SCook85

Posted by SCook85 on April 18, 1999 at 16:18:30:

One Red Flag. I am in Maryland and after reviewing hundreds of loan programs for investors no one is able to do a flip. The no money down programs that I have located only work if the property is contracted directly from the seller to the end buyer. I have had numerous loan brokers tell me that they can do it, I have learned the hard way that they can’t. They don’t know the programs that they have available themselves. If you tell them to call there investor (lender) and find out if they will do assignments you will almost always get a “no”. If your loan broker still says that they can do it I would like for you to email me his/her name.
I have been told by many mortgage brokers that they can do this only to be let down because they don’t know and understand exactly what you are doing. They will tell you anything to TRY to get more business. I have found that the only way I can pull off wholesale flips is to sell “all cash” or use a “hard money private lender”.
In the case of doing a retail assignment to an FHA buyer you can pull these off. FHA loans don’t have a restriction as far as assignments go.
I don’t really understand why they have these guidelines. If the loan is a good loan why does it matter where or who it is coming from, but it does.

Be Careful and investigate more. I can almost guarantee you that your mortgage broker has never done an assignment with the programs they are referring to. Even if you take title and do a simultaneous close the lender will require 6 months seasoning on your part. You can at times get a variance for these situations by showing you have done work to the home to increase it’s value but in most cases your sale will not be considered if you can not provide before and after pictures along with repair invoices to justify the increase in value.


Does anyone have suggestions? - Posted by SCook85

Posted by SCook85 on April 18, 1999 at 16:21:30:

In reference to my above post. Is there anyone out there who is doing flips in which there buyer is borrowing money from an institution, and are you getting BCD buyers funded for your rehabs without complications related to seasoning of ownership.

Thanks for your help.