Runum -
I am answering your question here because I did not want to publish it publically.
As I have mentioned here before, in our 'New Venture', we have been searching for 'lead generators' in the form of 'Wealth Coaches', 'Wealth Advisors', etc. - essentially companies who do mass marketing to generate investor leads.
One contact I made was with a group out of CA. Their website was impressive and after hearing a bit about the deals we had available here in JAX, they flew out a representative from their company to take a closer look.
Turns out, these folks had TONS of buyers lined up but their big pitch was 0-5% down. In order to do this, it required that we sell the investment property to the end buyer at 'market value'. For ease of numbers sake, let's say 100k. We deal in REOs so we rarely pay more than 50% of ARV (these days it tends to be more like 40%). So let's say we bought the house for 45k (cash). We then do a bit of clean up/repairs and be all-in at 50k. This group wanted us to sell the property to one of their end buyers and once the sale was complete, kick back 60% of the profit to their company. 30k for them....20k for us.
A portion of their profit was used to reimburse themselves for the money they had fronted the end buyer. They provided most (if not all) of the downpayment and in many cases offered to pay their closing fees as well. They were very clear that they wanted to use their banks.
Some people call it creative financing.....some say its a grey area or walking the line. I happen to see it as loan fraud so we decided to pass on the opportunity. Beleive me, it was tempting. They were promising 5-8 deals per month.
That would be one possible way as to how these deals you mentioned might be getting done. Just a guess - there could be other methods.
I am answering your question here because I did not want to publish it publically.
As I have mentioned here before, in our 'New Venture', we have been searching for 'lead generators' in the form of 'Wealth Coaches', 'Wealth Advisors', etc. - essentially companies who do mass marketing to generate investor leads.
One contact I made was with a group out of CA. Their website was impressive and after hearing a bit about the deals we had available here in JAX, they flew out a representative from their company to take a closer look.
Turns out, these folks had TONS of buyers lined up but their big pitch was 0-5% down. In order to do this, it required that we sell the investment property to the end buyer at 'market value'. For ease of numbers sake, let's say 100k. We deal in REOs so we rarely pay more than 50% of ARV (these days it tends to be more like 40%). So let's say we bought the house for 45k (cash). We then do a bit of clean up/repairs and be all-in at 50k. This group wanted us to sell the property to one of their end buyers and once the sale was complete, kick back 60% of the profit to their company. 30k for them....20k for us.
A portion of their profit was used to reimburse themselves for the money they had fronted the end buyer. They provided most (if not all) of the downpayment and in many cases offered to pay their closing fees as well. They were very clear that they wanted to use their banks.
Some people call it creative financing.....some say its a grey area or walking the line. I happen to see it as loan fraud so we decided to pass on the opportunity. Beleive me, it was tempting. They were promising 5-8 deals per month.
That would be one possible way as to how these deals you mentioned might be getting done. Just a guess - there could be other methods.
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