Flipping Properties - Bank REO Properties

Flipping properties, or wholesaling properties, is a creative real estate technique wherein an investor keeps track of the properties that are available for sale, negotiates a deal with the seller, usually for a lesser price than the market value of the property, and resells the property to a rehabber for a little more than the amount that was paid by him, thus making a cool profit without actually investing any money at all. 

For example, let's say Person X comes across a motivated seller owning a property whose market value is around $225,000. He may be forced to sell the property because of bad debts, or a business loss or foreclosures. Person X makes an offer of $175,000 and gives them the assurance he can close the deal within a month. X then prepares a sales contract with the seller listing X's name and the words “and/or assigns” in the place intended for the buyer's name. X then gives an initial deposit of perhaps $500 to bind the contract, contacts the appropriately interested rehabbers and sells the property to them for $195,000. You can see how X ended up making a cool profit of $20,000 without actually investing any money at all. The rehabbers can do some rehabbing and sell the property for its market value or much higher, thereby making a good profit, too. Wholesaling properties is a win-win situation: The seller gets a good deal with upfront money, the flipper gets a cool profit without investing much capital, and the rehabber gets to make a profit, too.

Importance Of A Compatible Attorney 
It is very important that you have a compatible experienced attorney who is familiar with creative real estate techniques and who will help you negotiate better wholesaling properties deals without causing any glitches while preparing the closing documents. If the attorney is aware of creative real estate investing techniques, perhaps he/she will give valuable advice related to wholesaling properties. The creative and innovative wholesaling properties techniques used by the wholesaler have to be legally materialized by the attorney, making sure that everything is legal and above board. He/she will have to be able to guide you regarding the transferal of the property in the rehabber's name using trust deeds or quit claims or warranty deeds. 

Good Marketing Strategies
Marketing is an essential ingredient for the success of any venture. If a real estate investor uses the correct marketing strategies, he/she will have a consistent supply of motivated sellers and rehabbers in the form of wholesalers for wholesaling properties. Effective, consistent advertisements in the local newspapers, radio, cable TV, signboards, and distribution of fliers, website with keyword search optimization, and permission-based email marketing can be used to generate motivated sellers as well as develop contacts with rehabbers. It will be of no use if you have a property but no rehabbers, or vice versa. It will help to have contacts with other wholesalers in the event you have either only a seller or a rehabber and they have a deal. You could get a commission from that wholesaler as well as establish firmer relationships with the rehabber, who will know he can depend on you to find him a good deal for wholesaling properties.

Flipping Bank Real Estate Owned (REO) Properties
It is one thing to wholesale with regular motivated sellers, but it can be a whole lot different if you were to deal with Bank REO properties. With banks, you cannot negotiate much and you will have to make sure that the rehabber’s name is not listed as the buyer, which can cause unnecessary delays and problems. It is recommended to use the wholesaler’s name with the words “and/or assigns” after it in the sales contract. There are a few drawbacks to wholesaling Bank REO properties, such as nonrefundable deposits and no guarantee that the deal will actually go through. You may have some problem with the bank’s attorney; but if you have done everything legally by consulting your attorney, your deal will go through. Thus, bank REO properties wholesaling can also deliver very profitable wholesaling deals. It has certain risks, though, such as a deposit fee ranging from $10,000 to $50,000, and the property may not be vacant to flip it easily. It is also time-consuming, as a lot of research is necessary, especially in the county court house, as well as being more complicated.

If you are experienced and have a good knowledgeable attorney to help you, wholesaling properties can be a very profitable business. Without actually investing much capital, a successful wholesaler can make impressive profits, between $5000 and $20,000 per deal. This is hassle-free, too, as you do not actually own any property or have to worry about maintaining it. Wholesalers who market their services well and have a commendable supply of motivated sellers as well as an impressive list of rehabbers are creative real estate investors who are the most successful.

 

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