Posts Tagged ‘bank owned properties’

Insider Secrets To Find Private Money To Flip Short Sales And Bank Owned Properties

In different areas of the country, real estate investors are having difficulty getting funding for their deals. Some hard money lenders have gone out of business and the funds that were easily available are no longer around. As a matter of fact the private cash lenders who actually still have cash available now require a down payment to use their private cash. You have to put up more of your cash plus credit and still have to pay up to fourteen percent plus other holding costs to flip homes . This process has stopped a lot of real estate investors from doing deals.

There’ a great strategy out there that some real estate investors have adopted because of the shortage of private funds. They have found companies on the internet that allow them to use private money to do double closings. The plan I’m referring to is using private funding to flip shortsales and foreclosed homes. Even though the market is suffering there are still A credit buyers out there that are looking for deals. They are intelligent to know that it’ a buyers market and so they are securing houses with equity that’s twenty percent or more below market value.

By using private cash you can pick up these houses lower than the usual buyer because you’re using cash. So even though your end buyer with normal financing may be able to pick up a home that’s twenty percent below the market you can come in and get it for about 40, 50 and in some areas 60 percent beneath market value as a cash buyer. You can then flip that home to your end buyer in a double closing transaction enablingyou to make 10 to 50% profit spreads with Short Sales and flipping reo homes. The double close is structured as an A to B then C to D transaction. The bank is the A seller; you the investor are the B buyer. This covers your transaction buying the property from the bank. The C to D process now makes you the investor C seller and your end buyer purchasing the property from you becomes D. This deal is structured so that if your end buyers financing doesn’t come through you are not stuck with the property. This protects you and the private money lender.

When you search the internet look for companies that provide private money with no up front costs. Most of these companies are charging up to four percent before they fund you the private money for deals. This can become very costly and eat into your profits. Things to look for are companies that enable you to use their private investor money and charge you about two percent plus a usual $500 processing fee with closing costs that is taken out of your profits at closing. This will enable you to work numerous deals at once.
Once you’ve found your transactional funding source you can now start making deals to flip short sales. Here is an example of how a short sale flip or foreclosure flip with private funds using the double closing strategy will work:

$100,000 Retail Value of Property
$50,000 Bank Accepts Your Short Sale Or REO Offer
$80,000 You Resale to End Buyer at this Price
$30,000 Profit at Closing
$1500 Your Cost of Funds (2% Plus $500)