The Government is Screwing Wholesalers and Flippers!!!

[Mr Investor]

All Hail Emporer Obama

Yes may he form the first ever Galactic Empire and rule with a might fist

[investorman]

Wow.....more red tape..and tax payer money to hire someone to check what kind of improvements are made?

It's ironic because the government definitely wants home prices to go back up

But at the same time they are against people making a profit selling something for more than they bought it for ..

Which is the ONLY way that prices go up!!!

[Ineedmoney]

Hey can someone help me out? I  went to the link and read the synposis of the law passed. I am not quite sure how this applies to flippers and wholesalers. If I buy a home from the bank foreclosure or wholesale and turn around and resell it for a profit of say $10,000. Where does the problem come in

Is it because the banks ask for a full disclosure and then they realize your a flipper or wholesaler and then ask for proof you put some money into the house?

[Hooch]

You won't have a problem with it unless you are "doubling" your money or more. If you're only making a profit of 10K on a flip than you are definitely not going to be dealing with anything. But you may want to check your purchasing strategy out though because 10K on a flip is cutting it way too close! 1 big unexpected problem could mean that you make 0 or negative.


If you bought it for 60K and sold it for 140K and can prove that you put in 50K you will be fine.

If you bought it for 60K and sold it for 140K and can prove that you put in 10K you are doubling your money and you are screwed because people are no longer allowed to make money.

Or if you bought it for 25K and resold it for 50K without putting a dime in it, you are also screwed by our great leader.

[Ineedmoney]

Well Hooch I am new to wholesaling and have yet to actually complete a deal. But If I got a home under contract for $200k I would resell it for $230k or something like that to cover the transactional (24 hour funding) fee for double closing, the closing costs and then what ever is left I would. It is not exactly doubling my profit but its more than $10k.

I do not have a lawyer on retainer or anything so at this point I can not seek any legal advice. So all clarification is appreciated.

[Ineedmoney]

And it sounds like this only applies to flippers or wholesalers using traditional financing to flip a property? Is this correct? If this is the case, it is not the total end of the world because there is always 24 hour flash funding that is not through a bank. But that is if its the case. I read the link posted and that really sounds like its the case. 

[Hooch]

24 hour flash funding that is not through a bank.

Won't work because the problem is not on your end.

The problem is for your buyer not being able to get a loan on it because you are making too much money.

For example, I bought a duplex a couple of weeks ago that my wholesaler bought for 10K. He assigned it to me for 25K.  If I were getting a loan, he would have had problems. But I paid cash so there was no issue.

This is all very new to me as well. Most people don't even know about it yet. And I thought you were a flipper. 10K for a wholesaler is fine. 

But If I got a home under contract for $200k I would resell it for $230k or something like that to cover the transactional (24 hour funding) fee for double closing, the closing costs and then what ever is left I would.

You may want to consider assignments or simultaneous closings so you don't eat so much into your profit. And in that scenario your buyer will have no probs with the bank. They would only on your great deals.

[Ineedmoney]

Thanks for the response Hooch. Right now I have a lot of cash investors. I was talking with an agent I know to collab on short sales. I buy them and flip them to his first time homebuyers, so that may be a problem. Because they would use loans.

[jolawler]

You are absolutely right - to quote my father, "I will make an honest living as long as the government will allow me too.  After that..." well, I'll let you fill in the blank.

Too much government, supported by too many special interests, feeding too many lazy mouths!

(my two cents)

Have a wonderful weekend, anyway.

[xpandergt]

This is what happens when the government interferes with the free market. How's that "Hope&Change" treating ya?