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Real Estate Investing Forums | Real Estate Investing | Bird Dogs, Wholesaling, Flipping Properties Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas, motivatedceo) | Topic: Wholesaling HUD Homes « previous next »
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elijahgrey99
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« on: August 14, 2013, 04:22:00 PM »

I attended a webinar about flipping HUD homes and I think it is a great way for someone to begin wholesaling if you don't have alot of money to spend on marketing. During the webinar the presenter mentioned you are able to flip HUD homes virtually ? Maybe because I am new to wholesaling I don't completely understand the concept, but don't you need to do a double close if you are going to flip HUD homes to a cash buyer? So, if I am in CA how can I bid and close on a home in FL ? Won't I need to be in FL so I can go to the closing ? I am confused on this...     
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campbellsimon
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« Reply #1 on: August 15, 2013, 02:32:27 PM »

I believe that you were taken for a ride in that webinar.

First, all HUD homes need to be bid on by a registered HUD agent.  If you are not then you will need to go through an agent.

Second, since you are an investor and do not plan to owner occupy the home, you will not be able to bid on the property for the first 30 days.  After that period of time, the good/cheap properties are purchased.

Third, you cannot assign a HUD contract. So that means that you would have to purchase the property yourself as an investor and then resell it down the road.

I just do not see wholesaling as a viable business opportunity for HUD listed homes.
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JLondon
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« Reply #2 on: August 18, 2013, 08:04:01 AM »

You can wholesale HUDs. I've done several BUT as the poster above said. You do have to close on them with cash and then you can turn around and sell to your end buyer. Most people use transnational funding to do this. The only kicker is..... Everyone and their dog is doing it now because of the these guys (just like the one that you saw) are selling this BS. I was doing it before they all caught on. I have a Brokers license and bid on the properties myself then flipped them to buyers. I was great cause I got paid the commission and a spread when my buyer closed.
If you don't have a license, getting a Realtor to spend a couple of hours a day making offers for you won't happen.
The GURUs are trying to teach you to get your Realtor to give you their HUD log in info so you can make to offers yourself, which I believe is crazy cause that Realtor is responsible for any offer made and could lose their license if a complaint is made.
Chase the low hanging fruit. Find the motivated sellers that are not listed. 
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javipa
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« Reply #3 on: August 18, 2013, 01:51:11 PM »

You can absolutely wholesale/flip HUD houses.

And you can buy as an owner-occupant, which is exactly how many investors get started.  Low interest, low down, low price?  It's a no-brainer.

Unless you're a serial buyer that never moves into these houses, you can do about 10 of these deals in a row.  Once the property has been sold, the the government doesn't track the property.  The issue comes when you have to list all the FHA-originated loans you have.  There's a limit.

You also can do double closings on HUD flips. 

Technically, the first closing has to occur, before the second one, but the money for the first closing can come from the second closing.  It just requires a title company/attorney that knows how to do double closings the right way.

Double closings are standard operating procedure on non-transferable, REO flips.
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campbellsimon
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« Reply #4 on: August 22, 2013, 01:44:02 PM »

A thought on double closings. The key to making this work is finding a title company that will handle the closing. Not all title companies will proceed with a double close. This is a critical first step before beginning the process.

Additionally, if you are really looking into getting into this full time then getting your real estate license can be a really good move in the long run.
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javipa
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« Reply #5 on: August 22, 2013, 02:23:20 PM »

One of my full time wholesaler/investor acquaintances got his real estate license last year.

He told me that there's a couple of benefits, but the most important one was the credibility it gave him with other real estate agents.

Another benefit was being able to search the MLS and get first crack at anything new, and to get access to properties in other counties.

Of course another benefit was being credited with portion of the commissions in some situations.  This isn't always the case.

Meantime, he's also bound by an avalanche of state regulations, limitations and liabilities.  And it costs some money to maintain those regulations, stay within those limitations, and avoid the liabilities.

Those mutual restrictions and limitations are one of the reasons that other agents are comfortable dealing with my newly licensed investor friend.  He's part of their fraternity.  They know what they can expect from him, as a professional.

That all said, I know many, many more investors with dropped licenses.

The advantages of maintaining a license for me are meager.

Having to advertise and inform everyone I come into contact about a property that "I'm an agent" does not help me.

People don't trust real estate agents.  They assume they're experts and will take advantage of them, if at all possible.

Frankly, most of the agents I know are barely more than trained gophers with an "ethics complex" (more like fear) and wouldn't recognize a true deal if it blew kisses in their face.

And that doesn't even describe the general lack of creativity, if not incompetence, I find in most agents.

The conclusion might be that if you're a go-getter with a brain, ability to negotiate, think on your feet, and not afraid to offend people, that you would be the agent that run circles around your competition.

That might be true.

But you will also the agent that uncovers 'real' deals, that the full-time prospectors also find, that can be bought for 40% of their ARV. 

However, if you personally buy properties at this size discount ...you're more likely to be sued for plain old equity stripping by sellers.

Once a seller realizes, or thinks about the price he sold to you for, he'll talk to his friends and relatives, and they encourage him to sue your butt off for taking advantage of grandma, or whomever.

And if you happened not to mention anywhere that you were an agent, it gets worse.

And finally, that 'steal deal' will get unwound in court faster than an old video re-winder.  And there's no telling what the state real estate commission will decide to do with your judgment and complaint by the seller about you.

So, being an agent is great, as long as you're prepared to be sued for taking advantage of sellers that gave you a steal deal.

That's just one downside.  There's several more I could cover, but that'll have to wait for another post.

If you're gonna really dig up deals like an agent might, I don't see the advantage of being an agent in the first place.  I would rather ride the private investor horse, and completely protect myself from all the regulations and restrictions that agents have to endure. 

That way, I can equity strip grandma like a cheap hooker and never look back.  j/k

That's my professional take.
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J Mac
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« Reply #6 on: August 23, 2013, 07:22:06 AM »

Get the HUD property under contract through an LLC.  Assign 100% membership interest in the LLC to the end buyer before closing for the wholesale fee.  Done.  No double closing, no transactional funding, no nothing.  Only negative in this one is the end buyer see's your profit (assignment fee).
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elijahgrey99
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« Reply #7 on: August 26, 2013, 07:50:05 PM »

Thanks for all the info...I have a better understanding of how to go about doing this now...
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AustinJBK
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« Reply #8 on: September 04, 2013, 03:42:53 PM »

You can absolutely wholesale/flip HUD houses.

And you can buy as an owner-occupant, which is exactly how many investors get started.  Low interest, low down, low price?  It's a no-brainer.

Unless you're a serial buyer that never moves into these houses, you can do about 10 of these deals in a row.  Once the property has been sold, the the government doesn't track the property.  The issue comes when you have to list all the FHA-originated loans you have.  There's a limit.

You also can do double closings on HUD flips. 

Technically, the first closing has to occur, before the second one, but the money for the first closing can come from the second closing.  It just requires a title company/attorney that knows how to do double closings the right way.


Double closings are standard operating procedure on non-transferable, REO flips.


I am new to this process, and I am in the process of purchasing a HUD property now. My contract has already been accepted & I was planning on wholesaling to an end buyer doing a double close via transactional funding.

However, HUD sets a designated closing agency that is non-negotiable, and they are telling me that there is a limit to the markup percentage that I can charge to the end buyer. So they are telling me there is a limit to the amount of profit that I can realize. She said that the markup amount would have to be approved directly through HUD. I was under the impression that was not the case with HUD properties. Is this something that anyone else has experienced or does the process vary in different states and regions?

To do a same-day close on both transactions, HUD's closing agency says that I must close the transaction to the end buyer through a separate title company so that it does not have to meet HUD's approval. My concern with this is that I was planning on using transactional funding and they usually require that both transactions be held at the same title company. Am I on the right track here or am I missing something? I appreciate any feedback; thanks in advance.
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javipa
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« Reply #9 on: September 04, 2013, 05:08:51 PM »

You can absolutely wholesale/flip HUD houses.

And you can buy as an owner-occupant, which is exactly how many investors get started.  Low interest, low down, low price?  It's a no-brainer.

Unless you're a serial buyer that never moves into these houses, you can do about 10 of these deals in a row.  Once the property has been sold, the the government doesn't track the property.  The issue comes when you have to list all the FHA-originated loans you have.  There's a limit.

You also can do double closings on HUD flips. 

Technically, the first closing has to occur, before the second one, but the money for the first closing can come from the second closing.  It just requires a title company/attorney that knows how to do double closings the right way.


Double closings are standard operating procedure on non-transferable, REO flips.


I am new to this process, and I am in the process of purchasing a HUD property now. My contract has already been accepted & I was planning on wholesaling to an end buyer doing a double close via transactional funding.

However, HUD sets a designated closing agency that is non-negotiable, and they are telling me that there is a limit to the markup percentage that I can charge to the end buyer. So they are telling me there is a limit to the amount of profit that I can realize. She said that the markup amount would have to be approved directly through HUD. I was under the impression that was not the case with HUD properties. Is this something that anyone else has experienced or does the process vary in different states and regions?

To do a same-day close on both transactions, HUD's closing agency says that I must close the transaction to the end buyer through a separate title company so that it does not have to meet HUD's approval. My concern with this is that I was planning on using transactional funding and they usually require that both transactions be held at the same title company. Am I on the right track here or am I missing something? I appreciate any feedback; thanks in advance.

You are on the right track, but you need to find another bridge funding source.
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"149 Ways (Plus One) To Find Motivated Sellers..!"  -Free Report-
>>> Click: http://sub2marketdomination.com/?p=3011
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Real Estate Investing Forums | Real Estate Investing | Bird Dogs, Wholesaling, Flipping Properties Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas, motivatedceo) | Topic: Wholesaling HUD Homes « previous next »
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