Flipping Short Sales VS Wholesaling 4 a Newbie Investor?

[buckwild]

As we all know there are tons of wholesalers out there. There are tons of good deals out there and there are just as many short sale opportunities.

Question is...as a new investor would you recommend one to learn to flip short sale properties and create value for my buyers out of thin air OR start out wholesaling properties like the many other newbies in this business? The way I see it is if I learn the more difficult approach by learning to flip short sale properties first and then learning to wholesale properties would be a walk in the park. From my understanding flipping short sales can be outsourced and therefore one could close deals cross country?

Based on my research of both flipping short sales and wholesaling properties this is what I’ve come up with. Please correct me if I'm wrong.

Wholesaling process

1. Create your buyers list
- REIA meetings
- Order bandit signs “ We Sell Houses 555-5555â€
- Keeps eyes and ears open for other bandit signs in the area
- Internet classifieds, use craigslist (Whol)
- Courthouse records
- Realtors
- Real estate auctions

2. Finding sellers
- Send out mailers to homeowners stating your service
- Social networking
- Tracking down owners of an abandoned property
- Door knocking / door hangers
- Magnetic car signs
- Bank REO departments
- Classifieds
- FSBOs
- Your own website
- MLS (team up with an agent) You can meet with a few Realtors who are willing to co broker deals with you in return to access some great leads on the MLS.

3. Before meeting with the seller run comparables on the property (MLS, state’s taxation website, zillow.)
to get an idea for a happy median price for your seller and your investor with your wholesaling fee included. Check the register of deeds/county registrars for any liens on the property.

4. Meet with the seller and show them benefit of utilizing your services vs. doing a FSBO or getting it listed with a Realtor and waiting forever for an offer. Let them know you have access to several buyers. Take a walkthrough of the property with the seller with a “fix it list†and clipboard of any repairs that are needed. Take pictures of any damage to the property. Verify with the sellers to make sure they know about any liens.

5. Seller agrees to your services and the selling price. Present the offer either by an Option or Offer to Purchase Real Estate Contract & file it with the County Clerk’s Office (disclose to all parties involced that you will be filing your document with the County Clerk.)

6. Hire an attorney to type up a real estate contract for you. At the same time contact a few contractors to get different estimates for the repairs (if any).

7. Close the deal either with a contract flip or a transactional flip. Request that your buyer references your services on the HUD1 form with their closing attorney.

Flipping Short sales process

1. Find homeowners
- Your website
- Agents
- Loan mod companies
- Referrals
- Door knocking/ door hangers

2. Qualify the seller: give them their options; died in lieu, loan mod, foreclosure, loan workout, forebearance agreement, short sale.

3. If a short sale is in their best interest research the mortgage info, property & tax info)

4. Determine the property’s value: run comparables ( state’s taxation website, zillow or team up with a Realtor to access the MLS)

5. Present an offer to the homeowner. After seller agrees to move forward with the short sale have them sign a written authorization form and a purchase contract for their property.

6. Start negotiating the process with the lender’s Loss Mitigation Department & get authorized. Have the lender fax you the short sale packet.

7. Submit a hard copy and an email copy of the packet to the lender. It should contain
- Homeowner’s hardship letter
- Cover letter
- Mortgage statements
- Bank statements, pay stubs & W2s
- Low MLS comparables (get from agent)
- HUD1 form
- Get repair estimates from different contractors (submit the highest priced one since it will help you negotiate a better deal.) Also include pictures of the property damage.

8. Wait a week to a month for the lender to review the package. Meet with the lender’s BPO agent and present to them all the market data so they see what the distressed property is really worth.

9. Harass the lender’s Loss Mitigation Department every 3-4 days to make sure everything is moving forward.

10. The lender might say “NO†to the final offer. Negotiate with the Loss Mitigation Specialist to find a happy median.

11. Once the approval and retail buyer are in place close the deal and get paid.

[/i]Would you recommend one to learn to flip short sale properties and create value for my buyers out of thin air OR start out wholesaling properties like the many other newbies in this business

Phhhew! Good night ! That was alot of typing! I'm gonna pass out now

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[LesG]

Question is...as a new investor would you recommend one to learn to flip short sale properties and create value for my buyers out of thin air OR start out wholesaling properties like the many other newbies in this business?

I would say depends on you. Factors like do you like working with others? How much money do you have. No money have. Me personally when I started I did both. I like the Realtor side of it as you can do more deals and see more transactions. the more you do, the more you learn. Both can be profitable.


The way I see it is if I learn the more difficult approach by learning to flip short sale properties first and then learning to wholesale properties would be a walk in the park. From my understanding flipping short sales can be outsourced and therefore one could close deals cross country?

I didn't realize it was difficult. Lots of realtors do it. Can't be that difficult. Not sure what you mean by outsource?


Based on my research of both flipping short sales and wholesaling properties this is what I’ve come up with. Please correct me if I'm wrong.

Okay, you make it sound quite difficult and don't want your program. How about put an ad out and see if it works. Then meanwhile go to investors meeting, meanwhile. This is just a suggestion. Your's leads me to believe you are trying to figure out the perfect game plan to buy properties and only then will you create a great game plan, then only then will I begin to execute. "Paralysis of analysis"

I suggest you know enough already. Begin with one that you like and execute. Then things will begin to fall into place. I need to modify that meanwhile and I do another step.


[/i]Would you recommend one to learn to flip short sale properties and create value for my buyers out of thin air OR start out wholesaling properties like the many other newbies in this business


I suggest you be in action.

Phhhew! Good night ! That was alot of typing! I'm gonna pass out now[/QUOTE]

Yes, I was exhausted reading it too. Just kidding.

 

[bflbob]

Great to see you post again, Les!

 

[Red]

I'm having some serious Déjà vu here... I swear I remember reading this before and commenting how some of the outlined steps above are being prosecuted in CA & AZ as loan fraud...

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[David_Martin]

Sounds like you have a pretty good handle on things. I'm looking to get into flipping short sales myself. If you don't already hold a license, it might be a good idea to start driving the neighborhoods you're interested in working and calling on the For Sale Signs for Realtors to work with and run comps for you. Start building your team now (real estate agent, real estate attorney, title company, transactional lender) so you're prepared when opportunities present themselves.

Speaking of short sales, who has a copy of the following forms they can inbox me?
- Affidavit of Understanding
- Investor Disclosure (Intent to Sell at Profit)

 

[ReInvestor]

Like Les said, it really depends on you.

What I would recommend is to first take a look at your market. Go to your local real estate investment association/ club meetings. Get to know investors who have already become millionaires through real estate. Find out what strategies they are currently utilizing. As with any business, you need to know find out exactly what it is that your "target market" wants. In your case, this means find out what investors want. Ask them what their criteria is for investing.

For instance, when you are in a flat market with little or no appreciation occuring, and existing home sales are very slow, you will find that veteran investors will be buying properties that are rentable and that cashflow every month. Now obviously the more equity in the property, the more attractive the deal will be to them, but that is sometimes a secondary factor to investors looking for positive cashflow.

Once you determine what they are looking for, then you can create a gameplan. I would say that working on shortsales can be profitable, but keep in mind that only about 1 in 10 shortsale packages that you submit will actually become approved. This can be a daunting number to think about, but you want to be realistic at the start of your venture so you can know what to expect. The very successful investors that I know do utilize short sales as a PART of their real estate businesses, but they do not solely rely on it as the end-all strategy to millions. It will be good experience for you to submit short sale packages and become familiar with the process, but I think if you only work on short sales in the beginning of your career as an investor, you may become deterred at the lengthy and sometimes frustrating process of dealing with the banks loss mitigation departments.

Your marketing strategies will be dependent on your budget. My advice on a "shoestring budget" would be for you to get some "We Buy Houses" "bandit signs", get some door hangers made up, get out there and get the word out. Let people know that you are in the business of buying houses(it's your investors who are really buying them.) Get good at talking with homeowners. Remember you are looking for motivated sellers. There are two parts to the equation. There is the property and then there is the situation the homeowner is in. It is going to take a plethora of different strategies for you to ulitmately become a millionaire in real estate. The more situations you come across, the better you will get at solving the homeowner's problems.

Familiarize yourself with "Subject To" acquisitions. This is a strategy of taking over a homeowner's mortgage payments for title to the property. It is a creative strategy that can be key in getting your real estate career off the ground. If you have no money, this is the strategy that can get you into owning your own real estate and really accelerate your venture. Exit strategies for this can be to lease option the house (check your state laws on this, some states do not allow "lease options", but even in those states there are other ways to achieve the same result,) also you can just sell the contract to another investor for a finder's fee.

You may be jumping ahead of yourself thinking about closing deals cross country. Focus on what you have available where you are now. Your profile says that you live near DC. I'm not too familiar with the current market in DC, but I guarantee you that there enough deals in your area to make you a millionaire.

Best of luck, stay in touch with me if you have any more questions I'd love to help.

Upwards and onwards

-Ben

 

[Red]

I knew I wasn't losing it.... Here's the duplicate thread:


https://www.thefastlaneforum.com/re...wholesaling-4-newbie-investor.html#post146157

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.