Selling a property to another real estate investor at a discounted price is called flipping properties, or wholesaling properties. It also the quickest and easiest way to make money in real estate investing.
So can you flip a property negotiated in a short sale with banks to another real estate investor?
This article explores the possibilities of wholesaling a short sale property.
In order to wholesale a property, it is necessary the difference between your buying price and selling price leaves you a profit.
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.
You can make profits from $3000 – $15,000 per deal this way.
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.
Short sale properties usually have to be closed within 30 days after lender’s approval.
Let us explore different scenarios:
1) Contract assignment
To wholesale a property, you can assign the contract so that your real estate investor buyer closes the purchase.
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) Double 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.
One way of funding a simultaneous closing is using the buyers funds to close the first transaction where you buy. A lot of hard money lenders did not mind this. However lately, most of them will not accept this.
Also, most lenders have stopped allowing closing the purchase with your buyer’s money. This means you must have the money to close it.
Hard money lenders also offer transactional funding, used for just closing the first transaction, making this transaction possible.
3) Seasoning issues
Recently, more and more banks are requiring that you hold a property at least 30 days before you can sell it.
This means that you can get a hard money loan, buy the property and flip it 30 days later. Of course you must consider your closing and holding costs in this transaction.
Of course, this filters out a lot of deals that would have made you lots of money without this clause. A deal making you a profit of $3000 – $5000 is most likely eliminated. Properties that make you more money are better for this type of transaction.
Successful real estate investing must be driven by a ready supply of private cash available from private money lenders. Targeting these lenders requires you convince them that their money is safely invested in your deals. Learn how you can attract investing cash through a private money website from real estate investing website