Thread: Wholesale Flip

I have the opportunity to contract for highly discounted property. The seller will allow me to enter into an purchase option and then contract with another party to purchase at a slightly less discount.

Upon execution of the purchase by the new owner, I will collect the option fee.

Has anyone done this? This is not a cash back scam. I'm getting the properties at a steep discount and the second buyer is also getting a good discount.

Since the option payment is on the HUD at closing, will this cause a problem with the lender for the person buying the property.

No relationships exists between me or the other buyer other than I have the option on the property first.

Well, you flipping the contract,that's all.
If you are a licensed RE agent, you must disclose everything to every party though. Very easy but make sure to close wih a title Co that is comfortable with this. The good deal: you name does not appear anywhere, except on your check at closing

http://ezinearticles.com/?Flipping-Contracts&id=385854

Thanks.
I was just concerned about how the second bank may look at the transaction. My Option fee would typically be greater than $25,000 on the properties I want to option. It sure beats a 3% commission...

I'm able to contract new homes and condos at 50% or less of recent appraisal so there is tons of equity even in todays market. The second buyer is getting the property at 30%-40% discount so there is still money on the table for them.

I found a couple of organizations doing seminars for new "investors" that basically puts these new investors into properties that were optioned to a previous party. Nice scam.... And they charge the participants $6,000 for the privilege. Go figure!

Originally Posted by REbuyersgroup

Thanks.
I was just concerned about how the second bank may look at the transaction. My Option fee would typically be greater than $25,000 on the properties I want to option. It sure beats a 3% commission...

I'm able to contract new homes and condos at 50% or less of recent appraisal so there is tons of equity even in todays market. The second buyer is getting the property at 30%-40% discount so there is still money on the table for them.

I found a couple of organizations doing seminars for new "investors" that basically puts these new investors into properties that were optioned to a previous party. Nice scam.... And they charge the participants $6,000 for the privilege. Go figure!

I've done numerous flips in S fl and generally as long as the assignment fee or the money you are making is less than 10K the buyer's lender will not have an issue. More than that and they will. There are some strategies to use to get around this that are legal but you should use your title company or one that is familiar with this sort of process. That will ensure that the deal doesn't get screwed up.
Another influencing factor is how the buyer is paying. If its cash there is no issue. If they are using a hard money lender then most of the time there is also no issue(this is changing often now b/c of the market though). Also, some hard money lenders can have problems with how much of the assignment they finance. It really varies b/c they can make up the rules if its their own money so shop around.

It sounds like you are routinely getting these discounted properties. I am a wholesaler and have a large database of buyers in fl. I would be interested in talking with you more.