Flipping REOs For Cash Blueprint Single Family Residences (SFR) & Multi-family REOs Direct from Bank (Broker is involved) Ask REO Agent to write offer Preview all properties first Find a good local Broker to write multiple offers Have Broker get access to MLS (Multiple Listing Service) platform Look at properties, analyse deals and make offers Find properties for sale and call agent Build relationships with REO Agents Cash Buyers List
Getting Offer Accepted Double check your numbers After Repair Value (ARV) Have minimal Earnest Money Deposit (EMD) Ensure Contractor double/triple checks your ARV for accuracy. Allow 10% over budget. Bank accepts offer? Deliver the Earnest Money Deposit (EMD) Sign bank Addendums and Disclosures Time to do a quick, thorough research
Local City and/or County Research Building Dept Pull all building permits Ensure there are no building or structure violations Illegal structures exist? Find out what is required for property to be compliant Find out associated costs to remedy Make the inspector your new best friend Ensure ALL investigations & inspections completed in time Planning Dept Check Zoning Is the property location in proper zoning for SFR Determine recent changes to the Zoning Map Ascertain if Zoning Map affects positively or negatively Determine Highest and Best use as per Zoning
Local City and/or County Research Police Dept Code Inspection Determine if any active code violations on property Code violations? Ensure Bank is willing to pay for Compliance before Close of Escrow (COE) Bank refuses to Compliance? Ensure Bank pays for existing code violations before COE Ensure Bank pays for existing code violations before COE Do not agree to fix property after COE (unless cosmetic) City Clerk Visit city Office Outstanding invoices on property? Provide outstanding invoices to Escrow Seller to pay before COE Clear Title
Financial Options - Private Money - 100% Financing - 10-12% Interest - Money can be borrowed for rehabs - Line of Credit - Your Own Cash Fast Closing Process: Avg 3 wks or less for cash deals ALL-CASH Must have funds ready for wire 2 days before COE If you are doing a 1031 exchange, ensure to inform Escrow immediately. - Will lend 60-65% of After Repaired Value (ARV) - Charge 3-5 points - $1500-3000 in garbage fees - 12-15% interest HARD MONEY LENDER Required Docs: - Escrow docs - Loan docs - Addendums - Disclosures - Extensions - Misc. - Title Financed Purchased Traditional 30-45 day Escrow Ensure Required Documentation is available
Escrow Process Accepted Offer Agent Docs. Escrow Docs. BANK Seller Disclosures Escrow Instructions Get copy of executed contract Termite Report Home Inspection Water Hazard Disclosures The State Contract will be superceded by Bank Contract Buyer Disclosures Misc Disclosures Preliminary Title Report Appraisal if financed Bank Disclosures and Addendums ALL Addendums Signed Any Addendums and Amendments Make the inspector your new best friend Verification of Property Condition (VP, Final ) Estimated HUD Statement approved by Buyer & Seller CLOSING
w you re closing Escrow, What w? Change locks/ install lock box Turn Utilities ON Dispose trash and haul away Contractor/ Rehabber Begin Work Be a part of the ENTIRE process Beware of status of every stage of project Contractor should know that: A) You plan to be involved in the rehab ; B) Visit rehab site at least 3 times per week Must keep Rehab on Schedule as Time is Money Prevent Idle Rehab. Know the schedule weekly. Stay on top of City insprections Complete Rehab on time! It s not a bad idea to include clause in agreement in regards to bonus/percentage lost if past deadline. REHAB TIP # 1 Don t Cheap Out. Finish your remodel according to the neighborhood conditions REHAB TIP # 2 Convert your rehab into a must buy by adding unique and inexpensive touches, which Buyers will find irresistable. REHAB TIP # 3 Always look at your Rehab and finishings from the perspective of male and female buyers
Exit Strategies SELL THE HOME For Sale By Owner Become proactive and innovative to market and sell property on your own. Maximise the potential of the Internet. High Profit: - Long-selling period - More liability - Time-consuming For Sale Using Agent An exclusive Agent will help you get discounted rates and will become a vital member of your team. Free up your time to find more and better deals! RENT THE PROPERTY Put up for sale at this point. Sell or Rent whatever happens first. Try to rent first for 60 Days
Exit Strategies 95% of all Buyers and Sellers use a Licensed Real Estate Agent A Licensed Real Estate Agent is a professional that will protect you and your interests throughout your business. - Resolves many possible liabilities fm Seller - Knowledgable in marketing your properrty on MLS areas in your region. - Well connected with other Brokers in the industry to market your property. - Able to host multiple Open Houses to sell your property - Able to negotiate / reduce commission.