“I Can’t Flip This House”

You just wish they would get the facts straight for once. They pull a stat and run with it. Too many people trust blindly that if it's on CNN it's true. Personally, I'm content with people getting this info. It sounds bad but, it will keep the masses from jumping back in and raising prices again. Those who are on this site regularly know the real deal on RE and see this as a literal "once in a lifetime" opportunity to get in at the bottom. There are so many deals out there right now that can be wholesaled today if you learn and apply what you find on this site.

If you are timid and wait, you may be too late. Identify your goals, find your strategy, build your network and connect the dots! Don't listen to the news, your neighbor, your coworker, or your 2nd cousin who flipped a house 4 years ago. Know that smart investors are buying now, not when the prices get high! Big investors want and often need your help! They want better retunn on their money, the bank isn't getting them what they want. They know real estate will get them the return they need. Use what you learn here and get going on building your business.

Wish you all success!

is good

For Your words of wisdom!

I often worry that I don't know enough and rely sometimes too much on news reports. I have read two of Dean's books and as a Success Academy student I worry that I "don't know enough". Always makes me more confident when site participants validate what i already 'think' I know about RE.

----Kathy from the Sun City

As a result, house flippers have become a dying breed of real estate investors. In its wake comes the growing home rentals market, which experienced a 25% increase in demand from a couple years ago.

Read more: http://community.nasdaq.com/News/2011-10/housing-market-is-this-the-end-...

The market trend is moving from flipping to buy and hold. in my opinion, wholesaling is not flipping. I think flipping is buying, rehabbing, and retailing. That being said, the trend is moving toward investors buying and holding in a strong rental market for future appreciation rather than rehabbing and retailing. People need places to live. People who lost their home to foreclosure or short sale are now forced to rent because of their bad credit. So if you have a market with an influx of more renters than buyers, which direction would you go? Add to that I am seeing hard money lenders loaning at 80% of ARV which to me indicates a bottoming of the real estate market. Remember....the trend is your friend.

I try to live by the philosophy of investing in the opposite of what everyone else is doing. In the last 6 months I have been flipping rather than rentals and I'm killing it! I was making very little with the rentals compared to great success with the flipping.

Many investors are too scared right now to be flipping which makes it a great opportunity for the ones that are good at it.

Although I do think that if one is going to flip they should also know how to wholesale well as in this market that can play a big part.

If the CNN broadcast is correct, as we know that they are, flip artist should be buying properties here in Virginia. The banks here, in an effort to discourage flipping and quick property transfers, have set a 60 day time limit on property assignments.

That is, if you buy a property here, you cannot assign it to a new property owner for two months. In eight weeks, a well organized flipper could practically built a new house in that time. This is a great opportunity for flipping.

We would more than happy to hear from ya'll.

When you get a contract on a property and assign that to your buyer(he takes over your contract) and closes in his name.(only one closing) You are out of the picture except for your assignment fee. Can you do that in Virginia?

Michael Mangham
MD Home Acquisitions LLC

is the backbone of this great industry

It will never die

But the Communist News Network says it did!
Ha Ha.
We are and so are all of our buyers flipping like crazy! Yes the rental market is huge! I will let my buy and hold guys do their thing. They will make some good money down the road for sure. I would rather make mine now and not be a landlord. To each there own in REI world. Everyone (real investors) can make money now!

Michael Mangham
MD Home Acquisitions LLC

There is no way that I know of that can compound ones money as fast as flipping. Not to say each one goes well, but one could start with 10k and easily have 200k in a couple years. I don't know any other investment tool that can make that kind of money.

WOW!

I have just spoken with my Realtors and it seems that we wholesalers will not be able to buy REO's if we wish to do anything but hold the property for at least 60 days from the sale to us!

I have had several counter offers come back from 'BofA'...which holds 80% of the REO's in our nation right now...saying that a condition for my offer, to even be considered, is if I will agree to a "Deed Re-Sale Restriction" they are demanding as part of the sale.

This condition of sale reads like this...
~~~~~
Please indicate whether or not the Buyer agrees to deed restriction as follows:

"Grantee(s)/purchaser(s),of the property may not re-sell/record an additional conveyance document/or otherwise transfer title to the property within 60 days from Grantor's execution of this Deed."

~~~~~

So, in my opinion, 'BofA' is saying that they want to get rid of any wholesaler that wants to do a flip investment or anyone that has been doing a service to investors by finding them properties and then doing 'Double-Closings' with them.

My Realtors have informed me that if I do not accept this condition, my offer will be immediately rejected and closed.

Any comments on this new action by the Bank?

I would need to now get the actual loans from the 'Hard-Money' lenders thereby increasing my costs to hold the property for an additional 60 days! And my Realtors have said that without doing this it would severely limit the possibility of properties to make offers on using 'Double-Closings'.

Theo T.
CogniWorld-LV

Wow, I thought flipping was out; that is what I always wanted to do. Thanks for the insight!

As long as CNN and the media keeps sending marginal information to the masses, there is opportunity for us.

For in opportinity, there are profits to be taken.

Happy Investing!

But last year more than two million people were turned down for home loans, according to federal data, often because they didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic.

The Mortgage Bankers Association estimates that about half of those who try to refinance and 30 percent of buyers are either denied or drop out.

http://www.nytimes.com/2011/10/09/realestate/mortgages-triggers-for-reje...

The trend is moving to buy and hold because the pool of buyers is shrinking, not growing and rentals now cash flow.

"There is no way that I know of that can compound ones money as fast as flipping."

Don't delude yourself. While you can make money flipping, once you have completed your flip, you have dead money. It is not compounding. it is not earning anything. To make more money you have to continue flipping. You stop flipping, you stop earning...it's basically a job. The true path to wealth is to hold property. That's how you go to the Bahamas and get checks in your mail box. That's why savvy wholesalers eventually gravitate to holding property and hard money lending. They don't have to do anything. That's why real estate is the IDEAL investment.

Income
Depreciation
Equity Build Up
Appreciation
Leverage

Cash has to be doing something to compound. You can't just sit on it or it loses value to inflation. You want to still be earning a living flipping in 10 years or do you want to be financially independent getting checks in your mail box for doing nothing? Rentals are strong, cash flowing, and the smart money is taking advantage of it. Too many people make the mistake of moving from a $25,000 a year job to $100,000/year in real estate and think they are financially set. The problem is, they are not because if you make $25k, you live on $25k. You make $100k, you live on $100k. You cease to flip, you cease to earn. You are still on the same tread mill, just a different job for more money.

if everyone stopped cow towing to BOA and didn't buy their products or properties, BOA would have to change their tune. The bank has items they want to sell. We, as buyers/ consumers, hold all the cards! They just act like they do.
Are they the only bank that has properties for sale? Are they the only bank in the country? Does BOA own every property that is for sale in the country?
The president of the company justified their new DEBIT card fees the other day by saying that the bank is entitled to make a profit. He's right! We are also entitled to not use his company. Bank of AMERICA my A--! In our country, we have a choice. I choose not to use his services.

Wake up fellow DGers. Just like I've said about the price of gasoline since the 70s "STOP buying their products and they will lower their prices and/or change their policies if they want to stay in business." It's just that simple!!!!

That's my 2, 3 and 4 cents.

Andy Sager
DG's AndyS

CogniWorld-LV wrote:

WOW!

I have just spoken with my Realtors and it seems that we wholesalers will not be able to buy REO's if we wish to do anything but hold the property for at least 60 days from the sale to us!

I have had several counter offers come back from 'BofA'...which holds 80% of the REO's in our nation right now...saying that a condition for my offer, to even be considered, is if I will agree to a "Deed Re-Sale Restriction" they are demanding as part of the sale.

This condition of sale reads like this...
~~~~~
Please indicate whether or not the Buyer agrees to deed restriction as follows:

"Grantee(s)/purchaser(s),of the property may not re-sell/record an additional conveyance document/or otherwise transfer title to the property within 60 days from Grantor's execution of this Deed."

~~~~~

So, in my opinion, 'BofA' is saying that they want to get rid of any wholesaler that wants to do a flip investment or anyone that has been doing a service to investors by finding them properties and then doing 'Double-Closings' with them.

My Realtors have informed me that if I do not accept this condition, my offer will be immediately rejected and closed.

Any comments on this new action by the Bank?

I would need to now get the actual loans from the 'Hard-Money' lenders thereby increasing my costs to hold the property for an additional 60 days! And my Realtors have said that without doing this it would severely limit the possibility of properties to make offers on using 'Double-Closings'.

Theo T.
CogniWorld-LV

keeps the people who follow the news away from buying properties, and leaving more for investors... to flip!!!

although...I personally prefer to buy and hold; as TRSD says, it's passive money in your mailbox!

Wishing everyone success,
Valerie

Hi Michael:

My source was a "real estate agent" that deals with investors. She stated that you as the initial investor of the property [the buyer] take legal possession of the house. At that moment, the time of the orginial purchase aggreement, you are on a sixty day time table. You cannot assign ownership of the real estate contract [house] to another individual.

However, I still have to "confirm" this with a real estate attorney, but if the property is bought as an asset in a real estate trust, it maybe transferred to an entity within the trust. That way a contract can be assigned without the mortgage company terminating the deal. And, this applies only to financed transactions, where a mortgage company has a say in the deal.

I believe that there is more than one way to skin a cat.

If your interested, let me know. I'll be happy to make the inquiry.

I totally agree with you Andy, and no I do not use BofA. I have stock in them, but that is going down the tubes. So I know they are in trouble, that is why they are charging the fees. Didn't we just bail them out?

Keep it going, I like.

Sandra

it's all about the money.more,more...BofA will soon be my past mortagage holder!!!!!!!!!!!!

I met with a real estate attorney to answer this question a few weeks ago. Yes, you can do assignment of contracts in VA, as long as you are upfront about it. The boiler plate contract that most realtors use in VA states that you cannot assign, but you can change the wording in the contract.

However, things are different with REOs and then things depend on the bank. Hope this helps!

GIST seems to have solved the debate about how to perform an assignment of contract in Virginia.

Now the trick is to form a relationship with a bank that will allow you to undertake the assignment clause in the the initial purchase aggreement. I am not being a doubting Thomas. But, given the Bank of America's recent consumer unfriendly fees on account holders and it's reluctance to short sale pre-forclosure properties, the mortgage holders are starting to draw a line in the sand. And, they are becoming less and less flexible on contract terms.

The KEY to the contract assignment strategy is to work directly with a MOTIVATED homeowner. No banks or agents involved. 99% of banks will not allow assignable contracts. Most agents won't work with someone whose sole means of closing a deal is assignment of contract. So, in my opinion trying to get banks to allow assignable contracts is a TOTAL waste of every ones time.
Double closing using Transactional funding is what we do when dealing with a bank. We don't tell them what we are doing other than buying with cash, period. We then set up the double close with our investor friendly title company (the b to c) IF the contract has no seasoning issues.

Michael Mangham
MD Home Acquisitions LLC

I'm a holder.

Work wise, 99% of my income comes from flippers, but I tend to buy and hold.

Its a combination of after expenses, looking at what I have left and smiling and also being able to say nonchalantly "yeah I own %$# houses, so I must disagree that the housing market is on a downturn...."

That tends to shut those who have no idea what they are talking about up.

Michael,
I'm a newbie and have a couple of questions about assignments. In Dean's book, 30 days to RE cash, on page 124 he says "You write up a purchase contract with the seller. You both agree to the terms, including the price, closing date, inspections..." My question is: does the RE attorney prepare the contracts or do we do that ourselves? Regarding the RE agents--are we just using them to make the offers?
-Teresa

I don't know the laws in Texas. Here we had our contracts looked over by a known RE lawyer. He oked our contracts. We take our purchase contract to the owner/seller ourselves. We get the contract signed and then assign that contract to our buyer using an assignment of contract-contract. We then take the 2 contracts to the title company and close. I do not use an agent when working directly with motivated homeowner/sellers. I make my offer directly to the homeowner.

I do use agents to make offers on REOs and short sales. They supply the contracts on those offers. They are not assignable, we double close the ones we can.

PM me if you have questions.

Michael Mangham
MD Home Acquisitions LLC

There is a Transactional Funder that funds deals for 60 days. There name is Aegis and you can see there terms at http://www.aegisrepartners.com/transactional-funding but the fees for 60 days are quite expensive at 10.50% and a $400.00 up-front fee due to Aegis on the first transaction and then $250.00 on subsequent transactions thereafter. They want all their clients to submit to full background checks.

This could be another option for some, but it would make your offer less competitive, especially if the property makes a good rental and their are Investors that want to buy the property to rent and hold. If they just want to rent they can go up on their offer.

Below is there criteria for working with Investors.
A: In order for us to begin the underwriting process, we must have all of the following information:

1. Aegis Application Form
2. Aegis Short Sale Transaction Worksheet
3. Copy of Drivers License
4. Articles of Incorporation/Organization
5. Bylaws/Operating Agreement
6. Evidence that Corporation is in Good Standing (as of transaction date)
7. Resumes of all Principals and/or Authorized Signers
8. Brief Narrative Describing Business Plan
9. Fully Executed A-B Contract (with all Addendums if applicable)
10. Signed Approval Letter from A-Seller’s Lender
11. If Short Sale, Affidavit of Understanding: Signed by A Seller and Notarized
12. All Investor Disclosures (e.g., Intent to Sell at Profit, etc.)
13. Fully Executed B-C Contract (with all Addendums and Disclosures)

P.S. I like what AndyS said. That is what everyone should do. Do not buy there properties and let them get penalized by the Government for holding onto them too long.

Michael I made notes of your assignment posts. They are very clear and informative for this newbie. Thank you. May I also pm you if I have questions about assigning in the future? Thanks, Tammy

Thanks Michael. I will PM you tonight.
-Teresa