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wholesaling REO’s using a land trust

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing wholesaling REO’s using a land trust

This topic contains 46 replies, has 0 voices, and was last updated by Avatar of areyes areyes 11 years, 1 month ago.

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  • #5165
    Avatar of areyes
    areyes
    Member

    local investor in CA wholesaling REO’s using land trusts

    We take title in our (name) Trustee, Exact Vesting to be determined in escrow.
    Then, when we find a buyer, we simply tell escrow we need to change title (do NOT use the word “Assign”)…this will work 80% of the time (but you need p.o.f. for whoever you change to)

    …in the event the bank says “no”, you can’t change it, we have the buyer fund it, but we take title in a land trust…we give the buyer 100% ownership of the trust as well as a deed putting it in their name. We’ve done over 50 and our average markup is $12,000…hope this helps

    #27220
    Avatar of jerry carey
    jerry carey
    Member

    Alvin …

    Your quote made by the wholesaler is so vague it’s ridiculous.

    1.) How do they “take title in our (name) Trustee” when there has not been any title recorded or escrow closed?

    2.) How do they “simply tell escrow we need to change title (do NOT use the word “Assign”)” when they don’t have title to begin with :?:

    There may be something to this but with the terminology used in the quote … it’s hard to tell.

    Jerry Carey

    #27221
    Avatar of areyes
    areyes
    Member

    @Jerry Carey wrote:

    Alvin …

    Your quote made by the wholesaler is so vague it’s ridiculous.

    1.) How do they “take title in our (name) Trustee” when there has not been any title recorded or escrow closed?

    2.) How do they “simply tell escrow we need to change title (do NOT use the word “Assign”)” when they don’t have title to begin with :?:

    There may be something to this but with the terminology used in the quote … it’s hard to tell.

    Jerry Carey

    exactly. thats all he said. nothing more.

    #27222
    Avatar of homesavers
    NULL
    Member

    @areyes wrote:

    local investor in CA wholesaling REO’s using land trusts

    We take title in our (name) Trustee, Exact Vesting to be determined in escrow.

    You cannot take title unless you come in with CASH and buy the place from the Bank. Banks do not allow you to take title prior to funding and Banks do not use Land Trusts to hold title.

    This is a confusing post. Alvin delete it.

    #27223
    Avatar of areyes
    areyes
    Member

    i cant delete my own posts.

    #27224

    Alvin & Don,

    To Wholesale an REO without Cash to take Title, or in other words, to “Flip” an REO, one would submit one’s bid, or offer, as an LCC.

    Once, your Offer has been approved ( which may very well mean that you had to give Ernest Money and/ or show Proof of Funds ) the entity you “Flip” is the LCC, which you simply Sell to your Investor Buyer.

    The LCC contains the REO property that your LCC has the right to Purchase, at “X”.

    You paid for the LCC, may have some inspection time or money, etc., involved and your Ernest Deposit.

    Those costs, plus your Agreed price to Purchase (“X”) are added to your Selling Price of the REO (“X” plus Costs ), along with a Profit Flip- Assignment- “Creating an LCC and Selling it” Fee ( “X” plus Costs plus Hip National Bank).

    Although, not “Really a Flip” or an “Assignment”, it’s definatly not a Trust transaction, ether.

    NARS home page used to Offer LCC creation.

    #27225

    @homesavers wrote:

    This is a confusing post. Alvin delete it.

    Let’s not delete something we do not understand. Let’s clear it up and understand it. Deleting something we don’t YET understand, imagine how miserable our lives would be if from the beginning of time we just deleted or dismissed what we didn’t understand.

    @agross wrote:

    To Wholesale an REO without Cash to take Title, or in other words, to “Flip” an REO, one would submit one’s bid, or offer, as an LCC.

    With Cash, and with your Private or Hard Money source as a beneficiary, you can also purchase an REO and Short Sales in the name of a Trust/Trustee.

    In the case of a Short Sale, the Seller places the property “in Trust” thereby not creating a title seasoning issue and then negotiate with the bank for a short sale or payoff amount. Now just use all cash to payoff the negotiated amount. Even after the short payoff the title stays with the Trustee and the property is now sold to your end buyer two minutes later in the next room. This is a true and legit Double Closing.

    The Trust/Trustee must make an offer to the bank but the End Buyer makes his/her offer to the Trustee.

    There is no need to use an LLC. Besides, the End Buyer’s Lender is not going to finance the purchase of an LLC, only the purchase of real property.

    #27226
    Avatar of homesavers
    NULL
    Member

    @Scott_L._Moyes wrote:

    @homesavers wrote:
    This is a confusing post. Alvin delete it.

    Let’s not delete something we do not understand. Let’s clear it up and understand it. Deleting something we don’t YET understand, imagine how miserable our lives would be if from the beginning of time we just deleted or dismissed what we didn’t understand.

    You are right. I stand corrected
    @Scott_L._Moyes wrote:

    With Cash, and with your Private or Hard Money source as a beneficiary, you can also purchase an REO and Short Sales in the name of a Trust/Trustee.

    In the case of a Short Sale, the Seller places the property “in Trust” thereby not creating a title seasoning issue and then negotiate with the bank for a short sale or payoff amount. Now just use all cash to payoff the negotiated amount. Even after the short payoff the title stays with the Trustee and the property is now sold to your end buyer two minutes later in the next room. This is a true and legit Double Closing.

    The Trust/Trustee must make an offer to the bank but the End Buyer makes his/her offer to the Trustee.

    What would stop us from just making multiple Cash offers via listing agents to the banks and then cherry picking the ones we like after they are approved? For example, There are 20 REO properties and 20 Short Sale properties listed on the MLS. I write 40 cash offers on these properties. 10 come back and say your offer is accepted. I only like 2 of them and move forward with a CASH buy, flipping to an End buyer in the next room. What happens with the other 8? What is my liability if I back out since I am going to use the State approved P&S agreement? Do I need to provide earnest money for each deal? Agents do not accept offers without opening escrow with a 500-5000 dollar earnest money deposit.[/b]

    #27227

    @homesavers wrote:

    What would stop us from just making multiple Cash offers via listing agents to the banks and then cherry picking the ones we like after they are approved?

    Not a thing.

    However, when you make a “real offer”, there is typically an earnest money deposit required. It may be refundable but it is tied up until you either close or withdraw your offer.

    These “funds” are moneys I get from the End Buyer. I never use any of my own funds, ever! Just make sure that the deposit is REFUNDABLE. Also, there are enough properties out there so you don’t need to make offers on the ones with Realtors involved. Without a Realtor you may not need any earnest money.

    If the bank won’t play ball or the discount isn’t what we want, we get our earnest money back and make another offer.

    You said: “If “I” only like two of them”. Well, it’s not up to you is it? It is up to the End Buyer. He/She is the one that is going to be living in or renting/leasing out the place, not you. Everything you make on the deal is free money to you so who cares if it works for you. It all works for me. I’ll take free money any day.

    Just to let you know. The last one I did, the End Buyer put up $5000 in Refundable (after expenses) Earnest Money. $2500 paid for two appraisals and $2500 started all the Trust Acceptence, Setup, Preperation, Legal Review etc. However, we already knew approximately the Lender would take and that it worked for us and the End Buyer.

    #27228
    Avatar of homesavers
    NULL
    Member

    @Scott_L._Moyes wrote:

    Also, there are enough properties out there so you don’t need to make offers on the ones with Realtors involved.

    I need to find these with good marketing. That is one of things I have not been able to get in place yet. So I go for the properties that are known to me and that is via Realtor(r) listings. I agree with you though.

    @Scott_L._Moyes wrote:

    You said: “If “I” only like two of them”. Well, it’s not up to you is it? It is up to the End Buyer. He/She is the one that is going to be living in or renting/leasing out the place, not you. Everything you make on the deal is free money to you so who cares if it works for you. It all works for me. I’ll take free money any day.

    The end buyer is King. It is not up to me. You are right. My end buyer is most likely going to be funded by an FHA loan.
    I like your CAPP program and I would like to plug a few deals into that system when I find a big equity spread. Right now I have to create the equity spread if the Bank is willing to take a big hit for a CASH deal. I figure buy at 50LTV CASH and sell at 80LTV with new loan. What do you think?

    #27229

    @homesavers wrote:

    So I go for the properties that are known to me and that is via Realtor(r) listings. I agree with you though.

    Hey, you know me, I have no problem with Realtors. In fact, I prefer they be involved. After one deal, they will become your best lead and referral source. I never said not to make offers on listed properties but “listed” properties often don’t work.

    The reason “listed” properties don’t work is because they are listed. This means that you can’t or it is much harder to find an End Buyers Lender who will finance the deal. It needs to be off the listing for 90 days or more before they will finance it for more than the listing. Since your End Buyer will most likely be using an FHA Loan, this is especially true.

    Why?

    Because you are going to be selling the property to your End Buyer for the FULL APPRAISED VALUE, not the listing price, which is usually the Short Sale price the Realtor has it listed for.

    Because you have to create an Equity Spread, you can’t use the listed price as the price you sell to your End Buyer. There’s nothing left.

    The way this all works is based on Real Full Appraised Value, not on a discounted price. You do not buy for 50% LTV and sell for 80% LTV. You sell for 100% LTV.

    I know what you and others are thinking right now. How can YOU sell it at the Full Appraised Value if the Realtor couldn’t? That’s your secret and why the EHTrust/REAP method works.

    Your End Buyer will come in with 10%, 15% or more down using CAPP. They may only finance 80%, but the sale price is the Full Appraised Value.

    This of course has to be disclosed to the Lender and that is what other Investors, Realtors and Mortgage Brokers can’t figure out. We know exactly what to do and say to the lender to receive their blessings on these type of transactions using the EHTrust and CAPP.

    It is this one piece of information that we know that other don’t. It is the reason NO ONE ELSE can do this but us. It is the reason you don’t see ANY OTHER Guru, Broker or Realtor offering what we do. I can’t beleive that no one has ever figured this out. This is like inventing the Frisby all over again. And what is really cool is that it is a function of the current EHTrust System which means that no one else could do it even if they knew.

    I’ve even heard from other NARS Members and Mortgage Brokers that you can’t do it this way, that the Lenders won’t allow it or it is illegal.

    Sorry Charlie, it is legal and the Lender knows it because we show them why. I even get calls from Investor/Lenders wanting to know if I can help their client/borrower move their property or they will have to foreclose.

    The only thing that ever delays the deal, holds it up or stops it, is the borrower themselves. It is always the borrower having to meet conditions of the loan after we have talked to their Lender. Yes, because of what we do, some Lenders may require more conditions to be met which sometimes keeps the end buyer from closing the deal. So, you either get an End Buyer who can meet the conditions or you move your End Buyer to a property and loan they can meet the conditions.

    Hmmm, I wonder if you can Trademark and Patent a Process within another Patented Process?

    #27230
    Avatar of homesavers
    NULL
    Member

    @Scott_L._Moyes wrote:

    That’s your secret and why the EHTrust/REAP method works.

    …meet the conditions.

    Hmmm, I wonder if you can Trademark and Patent a Process within another Patented Process?

    Point One: It is your secret so I would need your help when I find one of these deals. I have to get to the door before the Realtor(r) gets there to sell them. I have to convince the owner that my way is better than listing the property. Which should be easy. The End Buyer is the key. I have spoken to Broker that use the “I will buy your house” business model. They do not know how to do what you/we do.

    Point Two: What conditions do you usually have to meet? There are always Proof of Income, Proof of Employment and all the other standard “stips” do you come across special conditions not usually required?

    Point Three: I would say keep it a Trade Secret I don’t think you want the whole world to know.

    Thanks you have shared a key point in the last statement. Something I have come across before.

    #27231
    Avatar of jerry carey
    jerry carey
    Member

    Just a couple of general comments and questions I have based on the above string of postings:

    Scott …
    From what I’m reading … you’re saying we can buy REO property at a discount and sell it to an End-Buyer for FMV or Appraised Value. You also said these types of transactions do not work if they’re listed because the End buyer’s lender will only finance the amount the the house is listed for … not Appraisal Value and would have to wait 90-days after canceling the listing.

    These seem to be contradictory statements. REO property is ownd by the lender who has made the decision not to short sell the propertry, pay foreclosure costs, do some rehab and pay holding costs. All REO property gets a BPO … Broker’s Price Opinion and they are all listed on the MLS! I don’t know how we can buy REO’s at a substantial discount based on your previous statements?

    HomeSavers:
    You seem to be under the impression that if you find a property that you can buy at discount … that REAP is going toget you an End-Buyer with approved lender funding. On the flip side of the coin … if you find an End-Buyer with financing … REAP is going to find a seller’s property at a substantial discount! Maybe you are right … but from what I read so far and with little bit that Scott has said … REAP will partner with you by handling the paperwork and talking to lenders, attorneys, buyers and sellers for you … but NOT that they’ll find the other half of the deal for you (a Seller or an End-Buyer)! Scott … correct me if I’m wrong!

    Jerry Carey

    #27232

    Don’s

    Point One: It is your secret so I would need your help when I find one of these deals. I have to get to the door before the Realtor(r) gets there to sell them. I have to convince the owner that my way is better than listing the property. Which should be easy. The End Buyer is the key. I have spoken to Broker that use the “I will buy your house” business model. They do not know how to do what you/we do.

    I am looking to refocus the Marketing portion of my business model toward the availability of REAP.

    If, we’re talking about the Seller of these properties being REO’s, then, the Realtor that receives them from the Lender has 48 hours, or so, before they are required to be listed.

    If, your Realtor customarily receives 40% to 70%, of BPO, offers, from other investors and your signed contract for what you are looking for ( loanable condition property that the Realtor knows has a FMV at or above the BPO ) then, where is the MLS ?

    The property is Contracted and approved to be sold, by the Lender at YOUR Bid/ Offer of ____ ( lower than 75% for real deals, but for what I’m talking about, here, = non-croney/ non-pocket property/ non-insider player – yet ) wouldn’t that higher % of 75% or 80% or more still work ?

    The closing would need to be from your Buyers that have wanted you to find them a Bargain, with Equity and No Big Down Out of Pocket and/ or even Cash Back.

    Scott, of course, has come up with the best process, again.

    I wonder what it is and how we could best get “ahead of the curve”, by knowing better what it is, exactly we could be Offering, a la’ Advertising to get “Buyers”, as well as, where to best poke around with our sticks, to unearth these Properties that will work ?

    Just fishing around for a Pre-Heads up, on what could be “It”, for many, many New and “Used” Investors !

    #27233
    Avatar of jerry carey
    jerry carey
    Member

    Alan said:

    If, we’re talking about the Seller of these properties being REO’s, then, the Realtor that receives them from the Lender has 48 hours, or so, before they are required to be listed.

    If, your Realtor customarily receives 40% to 70%, of BPO, offers, from other investors…

    If the Broker does not regularly list the property and have it sell for their full BPO price … the lender is going to get a new broker!

    If it doesn’t sell for the approximate BPO price … the broker doesn’t know what he is doing :!:

    Jerry Carey

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