HUD Homes 101: What Every Real Estate Investor Needs to Know – Part 1

Today’s post is all about…you guessed it…HUD homes.

There is much to uncover in this two-part blog series…what are HUD homes, what does the investing process entail, how do you find HUD homes, etc…But first, let’s touch on the basics of this type of property.

Simply put, the term “HUD” refers to the U.S. Department of Housing and Urban Development.

A“HUD home” is a 1-to-4-unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD then becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

ANYONE, who has the required cash or can qualify for a loan (subject to certain restrictions), can BUY a HUD home.

If you’ve never dealt with HUD homes, try going online to the HUD Home Store site where you can search for these types of properties. This site allows you to search anywhere in the US, which gives you the ability to scale up your business and dive into other markets – something you’ll hear me talking about A LOT.

My suggestion for you is that if you either aren’t in an additional market or you’re intending to get into an additional market in the near future, get in one NOW. The sooner you expand your horizons, the sooner you’ll grow a truly resilient and scalable business!

The Bidding Process

Time to dive a little deeper…

Let’s say you’ve discovered a deal you like – you’ll subsequently connect with a HUD-registered real estate agent from which you can then make offers.

HUD homes, however, are FIRST made available to owner-occupants.

HUD does this because, if the Federal Government is going to take a hit on the property from having insured it and turning it into a foreclosure, they figure that any kind of bargain or savings that comes along should first be offered to owner-occupants.

After all, HUD is all about the American dream of homeownership.

After being offered to the owner-occupants… some of them are offered to police officers, firefighters and teachers at 50% of the listing price…After that, to HUD-approved non-profit organizations…Then FINALLY, the general public, which includes YOU (the investor).

Some investors get discouraged by this process, thinking if they’re offered to everyone else first, then all we get are the scraps!

In a way…that’s true. We get what owner-occupants DON’T want.

However…

The Uninsurable

HUD homes that will not sell to an owner-occupant are when they are labeled uninsurable. This means HUD is unwilling to insure a new mortgage on this property; usually due to the condition of the property.

Simply put—they won’t insure junkers. And it’s junkers that we WANT.

If HUD will not insure it, then the bank will not lend on it.The uninsurable HUD homes are the ones we want to go after.

The Waiting Game

There’s no avoiding it…in many cases you’ll have to wait a while for the price of the home to come down to where it makes sense for us. When that’s the case, it’s a process; a waiting game. Other times the initial asking price works.

Case in point…

One time, I found a HUD property that I liked and decided to make an offer on it. But…I was outbid.

If there’s more than one bid, and the higher bidder meet’s HUD’s minimum takes the cake (that’s assuming that they’re qualified, have proof of funds and can back up that proof of funds.)

What happened in this instance is that the other buyer who made the offer couldn’t perform and ended up cancelling the contract. It went back on the list, and so I jumped back in and made another offer.

Patience is a virtue, huh? You never know what twists and turns will happen in investing!

But, remember this…

One thing you have to watch out for is fees and closing costs. You may be offering $102k, but the deal could actually end up costing you $105k or more, all due to closing costs. Make sure that when you place your offer, you understand exactly what expenses you’re going to incur.

Proof of Funds

Of course, you DO have to show proof of funds.

I offer proof of funds as part of my REI Trifecta program (amongst many other powerful tools and benefits), and I offer 3 Proof of Funds letters too. Click here and learn how to use the REI Trifecta to do more deals in today’s market – it’s free!

These 3 unique letters are for:

  • Private sellers
  • Bank sellers
  • Government sellers (like HUD)

Always be sure to use the correct Proof of Funds (POF) letter for the seller you’re dealing with.

The HUD “Language”

The HUD letter has a very specific language.

By paying attention to our clients and working with closing agents, we have learned that this language is not only important, but required. This allows HUD to accept our POF and your offer.

The proof of its effectiveness is the number of HUD deals that we are currently funding for our client. In fact, as of this writing the majority of deals that we are currently funding are HUD houses.

The client makes their offer, the bid gets opened, the bid gets accepted, and then they’ll require a bank statement.

I do this on an almost daily basis; it’s something I don’t delegate. I have a significant bank account that I use just for this purpose.

Coming Up

In next week’s Part 2 of this blog series, you’ll learn even more about the process of investing in HUD homes. We’ll go over inspection, closing, working with Realtors and more…

Stay tuned!

What Are Your HUD Experiences?

If you have had any HUD home buying experiences—good or bad—I’d like to hear about them. Please leave your comments below!

Regards,

Cameron Dunlap

5 Vitally Important Factors That Exist In Every Good Investment Property

How do you know if an investment property is a truly GOOD deal?

I get this question often and the answer is…there are several simple, yet effective, ways to figure out if an investment property you’ve found makes sense as a deal for you.

Let me be very clear, it’s not about whether I LIKE the property. That has absolutely nothing to do with it!

Pro Tip: Take emotion out of the equation when evaluating an investment property.

You see…to me, these houses are simply inventory. In fact, some of the deals I do these days are on investment properties that I’ve never even seen.

For me, whether to do a deal or not is determined by looking at 5 significant factors – after I’ve used these to evaluate the property, I’ll know if it’s a good deal or not.

Now, let’s dig into the 5 factors that you should look for…

#1: A Highly Motivated Seller                      

In many cases, we’re dealing with a highly motivated seller. For instance, it might be a vacant house, an absentee owner, a foreclosure situation, a divorce, probate, etc…Any of these can lead to you buying at a deep discount and other than in unusual cases, if we’re not buying at a discount, we DON’T buy at all. Period.

Just know that there are 2 types of sellers:

1) Those who want to sell.

2) Those who need to sell.

We ONLY want to work with the latter.

Remember…there are all kinds of motivated sellers…absentee owners, vacant houses…even HUD and the banks are motivated sellers. Being motivated is a vitally important part of our criteria.

Motivated seller resources:

  1. Motivated Seller Data Feed – Use this to find over 5.7 million ultra-motivated sellers nationwide. With the ability to target up to 20 motivated seller types (including vacant houses, absentees, foreclosures and more) this is the most powerful motivated seller resource to date!
  2. Vacant House Data Feed – Use this to find verified vacant house leads nationwide. There are more than 1.7 million of them hiding in plain sight right now. (You can even get phone numbers on a lot of them so you can start contacting sellers immediately!)
  3. Absentee Owner Data Feed – Use this to search for absentee owners in your area (or across the country.) This is MUCH easier and more affordable than any other absentee owner source I’ve found!

Often, motivated sellers that we identify can be hard or almost impossible to locate. Why? Well, it all goes to back to the reason they’re motivated in the first place. They may owe money and be avoiding creditors or they may be going through a divorce or probate and they don’t know that selling the house fast is even an option. Whatever the reason for their motivation, if YOU can’t easily find them, then, more than likely, neither can your competition!

To resolve this particular issue, you’ll need to run a skip trace. I use Real Estate Skip Trace on all hard-to-find owners that my competition can’t touch.

#2: Needs Repairs

If the investment property is in need of repairs, that allows for an even deeper discount.

Repairs drive the price down further than it actually costs to do the repairs. So, for every dollar of repairs needed on the house, we will take the discount down by no less than $2.

#3: Good Location

Of course, this one should be ingrained in your mind…location, location, location.

The location MUST be a good one in order to be a good deal.

The investment property has to be in a place where people (mortgage-qualified buyers) actually want to live.

#4: Appeals to First-Time Home Buyers

If the investment property is affordable and in a place where people want to live, then it will most likely appeal to a first-time home buyer!

First-time home buyers have access to the only free-flowing mortgage money in the marketplace right now. In fact, if you’re looking to buy and sell houses—wholesale or rehab—I can’t stress strongly enough that you should stick to entry-level houses.

Here’s a great example…

One of my contacts was raving about an investment property that was worth $2 million. It had been on the market for 5 years and could be snapped up for just $750k. He asked me if I wanted to partner on the deal.

My reply:

“The reason it’s been on the market for 5 years is
because it’s overpriced. Even if we did buy it, how many buyers
are there for a $2 million house?”

You might be asking, “How is this such a great example for this particular factor?” The answer is because as the price of a property goes up, the number of people who are capable of buying it goes way down. What we’re talking about here is declining demand equaling declining liquidity. Or to put in layman’s terms… we should fish where the fish are!

#5: The Numbers Work

The final reason is because the numbers simply make sense.

First, we look at all the comps…

I know what it will sell for after repair, and I know the cost of repairs, so now I know the price that I will not exceed. If I can’t buy it for that price, or less, I’m not going to buy it. Plain and simple. It’s a no.

We can NEVER pay too much for an investment property, no matter how much the seller may try to steer us otherwise.

Beware! A Realtor will want you to pay too much. HUD will want you to pay too much. Just about everyone wants you to pay too much. You must be the tough one who holds the line and says no – after all, you’re basing your decision on the numbers…which, as they say, don’t lie.

Final Note

Remember, it’s never a good idea to become emotional about an investment property. Things will get messy if you do!

Keep in mind, it’s JUST inventory.

Always be sure to take emotion out of the equation.

Your Turn…

Do you have another tip for determining whether an investment property is a good deal? Have you ever gotten emotions involved in a deal? How did it turn out for you? Leave your comments below. I’d love to hear your thoughts!

Regards,

Cameron Dunlap

8 Simple Rules for Making Offers on Houses That Are “Bank-Owned”

Bank deals are different than private seller deals.

Banks scrutinize your offer much more closely… but there is good news!

THERE ARE A TON OF REO DEALS AVAILABLE IN TODAY’S MARKET FOR YOU TO MAKE REAL ESTATE OFFERS ON!

Banks (specifically “REO” departments) do a lot of deals. They are in the trenches every day and get “blown off” all the time.

Because of this they are systematic in their approach…

Their “BS meters” are finely tuned…

You are not going to get away with anything.

You MUST do a double closing because they forbid contract assignments, whereas in a private seller deal, you should do an assignment and avoid a double closing.

Banks want YOU to close

A private seller doesn’t care who closes, as long as it closes under the terms initially agreed upon.

So when you are submitting an offer on a house to a bank, there are some differences.

The vast majority of banks will rely on their broker to list, negotiate, and manage the sale of the house… any red flags you raise in their mind, and you are toast.

You Must Play by the Broker’s Rules

I get calls and emails on a regular basis from brokers who’ve received an offer on a property from one of my clients (like you) who’s using my proof of funds and transactional funding. They call me skeptical that the money is really available for my client… so I quickly send them a bank statement, and when they see the proof their guard goes down.

I hear stories all the time about “newbie” investors who are doing it wrong. They use the wrong contract, they use too many contingencies, they call “pre-approved” offers “cash” offers, and so on.

Take a guess at what a broker does with your house offers when they sense that a “newbie” is presenting it?

If you guessed… “THROW IT AWAY” … you would be right!!!

They are experts at the “sniff test”. They get investors making offers on property day in and day out: who make exorbitant claims, but cannot back them up.

This is actually good news for you!

While the majority of investors are doing this the wrong way… you can do it the right way and whip your competition.

You can be new to Real Estate investing, and still look and act like a pro.

How? Follow my lead. I have been doing this a long time and in this article, I am going to show you exactly what to do when making offers on houses that are ‘bank owned’.

These rules are unique to bank deals because private sellers don’t think about these things… they are not “in the trenches” every day.

8 Simple Rules for Making Offers on Houses That Are “Bank-Owned”

  1. Offer Earnest Money

Offer at least $500. The more you put up, the more real you look… especially if you have no contingencies. Usually 1-3% of the purchase price is the agreed upon earnest money deposit.

  1. Be Careful With Contingencies

Use as few contingencies as possible. I always include a title search as a contingency, however. Every buyer should do that, on every deal. This is customary. This tells you that there are no outstanding debts, judgments, or “clouds” on the title. The rest (home inspection, partner approval, etc.) are frowned upon and make you look like a “newbie”.

  1. Use THEIR Contract

Brokers want you to use THEIR form, not yours. If you make it easy on the broker and they like you, they may have other deals around the corner for you. And don’t ask them to send their blank contract to you. This makes you look like you have never done a deal. You should look for the local Realtor Board Contract online and send it along with your “proof of funds” on your first offer to buy. And if you are a little nervous about using a big contract like this, I have created a training program called “The Purchase & Sale Agreement Line by Line” to help you understand it. You can find more information at CameronDirect.com.

  1. Make Sure You Have Proof of Funds

If you can’t prove your ability to close, the broker will not submit your offer to the bank. They are the gatekeeper for the bank and everyone is busy.

You need to include “Verifiable Proof of Funds” with your offer; which tells them that you are able to do, what your offer says you can do.

If you have cash in your bank, in a retirement account, or any other place, print up your most recent statement, “black out” your sensitive info, and then include that with the offer to buy the house. This is what a broker is hoping to see.

If you do not have the cash, then you will need to line up some funding. If you would prefer to find local private lenders who will give you a great rate, you can find known private lenders in your area, and all across the USA using my Private Lender Data Feed.

Or, if you are limited on time, you may want to check out my REI Trifecta Program where I will provide you with funding (and everything else you need to make quick cash).

  1. Shoot For A 30-Day Closing

Some banks vary a little, but 30 days is the sweet spot. Banks want to know that you can close quickly (while giving them enough time to get their “ducks in a row”). They use systems to make the process easier for them to dispose of their REO properties. Make an offer for 30 days, but be flexible in case they ask for something different.

  1. Expect Addendums

Each bank has their own set of rules. The best way to make an offer on a house is by using the local Real Estate Board approved contract because that makes the broker happy. But, that doesn’t mean that the bank is satisfied. They have processed thousands of these transactions and they know what is important to them and what is not.

So they have created their own contract which rides along with and supersedes your contract. This is what is known as an “addendum”. This is especially true when you are dealing with a major bank like “Bank of America” or “Chase”. They are lending and foreclosing all around the country, and they are getting offers from investors in all 50 states. Each state has several Board(s) of Realtors which means there are hundreds of different contracts.

The asset manager does not have time to read through each of them to make sure that there is no sneaky or otherwise unwanted language. So, they created their own addendum form and tell you that you have to abide by it, or they will find another buyer who will.

READ THE ADDENDUM! Then if there’s any question about what it says, ask the Real Estate Agent for clarification.

  1. You’ll Be Buying The Property “As-Is”

Banks will not make repairs after you get a deal with them. Their addendum will make you purchase the property “as-is”. I wanted you to be aware before you submit an offer on a house though, because I have seen many investors attempt to re-negotiate with the bank after a few days of putting the property under contract. That won’t fly! Include some margin in your offers in case you find something “behind the walls”, etc. after closing. If you are wholesaling the property, you don’t need to be exact on repair estimates anyways.

  1. Avoid Using “And/or Assigns”

Using “and/or assigns” is the fastest way to show the broker that you are “new”. In private seller deals, you would ordinarily include language in the contract that allows you to assign it. In bank deals, it’s a BIG ‘NO-NO’!

When you’re wholesaling you have to do a “double-closing” for foreclosure properties. You will incur extra closing costs, but the margins on bank deals make it worth it!   Plus, if you’re using my “no fee” transactional funding, those costs are greatly reduced.

Just be sure you are making offers according to my formula and you will be good to go. But whatever you do… do not attempt to make the contract “assignable”. Rather, plan to close on the property in the name of your entity and sell it same day to your cash buyer.

Take a peek below… and learn how to get access to my funds so you can do more deals.

Now that you are aware of these 8 rules, you will be making offers on a house like a pro and you won’t make the same mistakes that most investors make when learning how to deal with each type of seller.

Private sellers tend to believe whatever you say… banks tend NOT to believe whatever you say. You need to PROVE it!!!

If you don’t have the ability to prove it, let me give you the ability…

ANNOUNCING BRAND NEW Training!!

Discover How to Whip Your Competition & Cash Checks Fast By Following the Most Direct Line to Profits Available Today!

I will give you all the tools and training you need to make quick cash in Real Estate. This is exactly what I wish I had when I was getting started. I have spent decades fine-tuning my Real Estate investing business and every time I create something that works, I make it available to my clients… AKA ‘my extended family’.

I will show you:

  • How to Get Unlimited “Proof of Funds” Letters Backed by Me Personally
  • How to Get Funding for Your Deals On an Unlimited Number of Deals WITH NO FEES!
  • How to Get Access to All of the Best Motivated Seller Leads in Your Market
  • How to Find Cash Buyers That Are Hungry to Buy Your Deals Quickly And much more!

Use this flipping formula to make quick cash

Lender Resale Restrictions

After you’ve had a chance to watch the video, please let me know what you’re thinking by posting a comment below.

Cam

PS. Here’s a somewhat cleaned up transcription of the video.

Hello, Cam Dunlap here, for a white board exercise today. What I want to talk to you about is Bank Resale Restrictions. There’s no doubt that there are a lot of bank foreclosures out there now, and some lenders have been for a long time, and others are just experimenting, and some are moving away from the concept of ” lender-resale restrictions”. What is common in the marketplace are 30- Day, then we’ve got 45-Day restrictions, in particular, on some short sales, I’m now seeing an occasional 60-Day, and in some cases even 90-Days. We’re going to talk about these restrictions, and we’re going to talk about how to get past them so that you can continue to do deals, make a ton of money, while we’re in the middle of this amazing foreclosure opportunity.
I see at least another couple of years before the inventory really starts to dwindle. In fact we’re starting to see more and more of the shadow inventory that lenders have started to release, so that is continuing the opportunity, elongating in terms of a time frame – the opportunity. Ok, so 30 days I’ve seen pretty typically on short sales, and also on some REO’s, 45’s the same, 60 is a little more unusual and 90 I’m starting to hear about Fannie Mae doing arbitrarily. They’re not doing it in every market, and on every house in every market, but they are putting some 90-day resale restrictions on their properties.
Now what that means to you and me, is they want to prevent us from re-selling properties quickly. If you read the fine print on the Fannie Mae resale restriction, you’ll notice that it says that you cannot resell it within 90 days as long as you are re-selling it for more than 120% of your purchase price. Now, what they’re basically doing is trying to tell you “Hey, if you’re making more than this much on it, well, we really would rather stick our finger in your eye. If you’re making less than this much on it, well, then we’re ok with it.” So what we have is a government organization, that is a known disaster area, and has been for years, run by idiots and crooks, now trying to tell us what we should be able to make, when we as Real Estate investors are helping them out of the jam that they’re in. Does that bother you like it bothers me? It makes me want to put my fist through the wall! It’s wrong, it’s un-American, it’s anti-capitalistic, it’s controlling, and it’s nothing but big government in our face, but we’re not going to get political in this conversation.
I’m just trying to put it in perspective and I’ve got some others too, some other perspectives.
So, let’s say you live in an expensive market where you are buying a Junker house for $100,000 and you plan to wholesale it. You’re not going to rehab it. You’re just going to turn around and flip it, as is, to another investor or rehabber or landlord type buyer. This is called “Wholesaling” by the way, So you have it under contract for 100k, you could sell it for as much as $119,999.00 and not be subject to that 90-Day resale restriction… read the fine print!
Now if you happen to live in a cheaper market, where you are buying a house for $15,000.00,120% of that is not a whole heck of a lot, although it’s still a $3,000 profit, which is nothing to sneeze at. But, if you’re buying it for $15,000.00 and you could easily sell it for 40k… well you’ll want a plan “B” because it’s certainly more than 20% and it’s certainly not a deal you would want to walk away from. So, there are a couple things to consider on the Fannie Mae 90 day resale restriction. I don’t think you’re going to get them to wave it, by the way. You can always ask, and frankly should, but I would not bank on them waiving it. Now with organizations like Bank of America, Wells Fargo, and other large institutions, where they’ve been pretty notorious with resale restrictions, it’s another story.
More and more of my students from all around the country, are telling me that Bank of America and Wells and the likes, are waiving their resale restrictions when asked.  So, when they make an offer through the realtor, the student, and it comes back accepted from B of A with a resale restriction in the contract saying something to the effect of, “We’ve accepted your offer but there’ll be a 30 day resale restriction in there.” What you can do is go back, obviously through the realtor and tell them “No, take the resale restriction out, or no deal.” And what we’re seeing is Bank of America and Wells Fargo are starting to back down. They’re starting to say: “Okay, we’ll take it out.” The Fannie Mae thing is kind of new. up and coming issue that I think we may see that for a while. The point I’m getting at is the smaller banks, not the Fannie, Freddie, HUD, VA owners – but the smaller, as if Bank of America is small, banks are taking them out.
So I wholeheartedly encourage you to tell the bank to “Stuff it!” whenever you can. It’s also important for you to understand that if there’s a resale restriction in the deal, your closing agent, whoever’s issuing the title insurance policy, whether that’s an attorney or a title company, it doesn’t matter, but whoever’s issuing the title insurance policy, is probably not going to like the idea of a resale restriction. The reason is because it opens them up to a potential title problem later, that they’re going to have liability for. See, if you somehow manage to get the property sold prior to the deeded resale restriction expiring, well then, there’s a title problem, and it falls back on the title company that issued the policy to you when you bought the property – so they don’t like resale restrictions either. Here’s my point, you may be able to get your closing agent to go to bat for you and help you get the resale restriction waved- they don’t like it either.
Now before I move on, I’ve got a very powerful strategy that’s going to take a few minutes for me to lay out for you, that will make you glad you kept reading. Before I move on though, I want to congratulate you for being here. If you’re reading this now, that means is resale restrictions haven’t caused you to tuck your tail between your legs and go away assuming that this business doesn’t work. The fact of the matter is the real estate business never stops changing and evolving! It’s fluid! It’s always changing, and if you don’t like what you’re seeing, then it’s like the weather… wait five minutes, and it’ll change.
With just shy of 20 years of being in this business of buying and selling properties, I can’t begin to share how much change I’ve seen over those years. Not only change in one direction, but in many cases, change back. Like a recoil from things that lenders and governmental agencies have tried over the years. So, I congratulate you for realizing it and understanding that this is a changing, fluid environment, real estate, and I hope that you’ll be like me and see the constant change as part of what makes it so fun! It’s never boring! No two deals are ever the same, and the longer you’re in the business, the more you’ll see in terms of change and the more opportunity you’ll see as well.
Ok, so now let’s talk specifically about this 90-Day one, ok? Because this is tough. If you’re familiar with me and the funding we do, you already know that we just aren’t able to go out that far. Our theoretical maximum is about thirty days, we may go a little over that, but that’s about it. And believe me, if we’re going to hold the funding in place for that long, you’ve got to have a rock-solid buyer lined up, ready to close, with skin in the game, whose not going to wiggle out of the deal. We’re just not willing to go to 90 days, or even close. However, there’s a wonderful strategy that I recently kind of tripped over, that is absolutely unheard of in the marketplace that I wanted to share with you in this video. Now let me explain too, and I’ll probably come back to this point after I explain the strategy.
This one strategy, could easily be, in the eyes of another real estate trainer, not mine of course, but could easily be seen in the eyes of another real estate trainer, the basis for yet another $997 program. That’s not how I roll. I don’t have a $997 program every few months to try to keep you focused on the shiny object. We stick to our core here, and that’s why I want to share this strategy with you right now, and not charge you a dime for it. This is powerful, and I want you to get this. Ok, so what we’re going to do is run through a scenario where we’re making an offer on a property, that we’ll say is Fannie Mae owned and they’ve put in a 90-day resale restriction and we can’t get it out. How can we wholesale this house, and not use any money of your own at all? Knowing that my transaction funding is not available for this deal, going into it, the question is, how can you still do the deal?
Ok, here we go. Now what I’ve done is I’ve gone ahead and I’ve drawn a few boxes on here to represent the different players on this strategy. Party A is the seller, and in this case, it’s Fannie Mae. And Party B is You. Party C is your buyer. Typical sounding A to B, B to C transaction, with a twist. Alright, so what we’re going to do is we’re going to go ahead and put this thing under contract at  whatever price we’ve agreed to, and we’re going to plan on this A to B closing. This will be a cash transaction.
Where’s the money going to come from? Your buyer!
So that requires that your buyer be a cash buyer. This strategy will not work if your buyer is going to get a mortgage at a bank. So this needs to be a cash buyer. Now, you already know that cash buyers are the best buyers in the business, there’s no doubt about it. And, the more often you can sell to a cash buyer, the more quickly you’ll close, the more money you’ll make, and the less hassles you’ll deal with. Cash buyers are the best in the business – they buy again and again, they don’t evaporate at the eleventh hour, like so many financed buyers do. They stick with the deal, if it’s a good deal; they’re going to close. They’re just the kind of buyer that’s easy to deal with, with no hassles.
Now, if you’re not aware, you can get access to cash buyers, known cash buyers from public data, all across the USA, at my cash buyer data feed. Ok, so that’s at www.CashBuyerDataFeed.com. And actually, right now, on the day of this recording we’re running a trial offer at that page that’s a total no brainer. It’s such a great deal there’s no way you’d say no to it, so check it out at: www.CashBuyerDataFeed.com.
Alright, so we have this cash buyer. Now instead of selling to them on the normal B to C transaction, where the deed would transfer to them, we’re actually going to insert in the middle of this transaction, a lease option. Now if you happen to be in Texas, you might want to use a different instrument, you can talk to a real estate attorney, and have him help you with that. But nevertheless, it can be done in Texas too. But everywhere else, we’re going to use a lease option. So we’re going to sell it to our buyer on a lease option. Now the money for our purchase is going to come from our buyer. So this buyer will fund the cash, but we will give them a mortgage, or a deed of trust. So in effect, what is happening now, is our buyer is our private lender. We found this cash buyer, and they’re going to be our private lender. They’re going to lend us the money.
Let’s say we’re purchasing the property for $100,000.00 and we’re selling it for $120,000.00, ok? Now, you might argue, “Well wait a minute Cam, you could get away with the 90 day thing here because you could drop your price a dollar and get under that 20% markup.” Fair enough. It would really be $119,990, but just go with me, it’s an example, and hopefully the numbers are much bigger for you. Ok so, we’re selling to our buyer on a lease option at $120,000.00. He or she is lending us the $120,000.00 and we’re going to have a mortgage or a deed of trust. Now, in order to close this transaction, we only need 100k, the other 20k is going to come out of the closing and go right into your pocket. So you’re actually going to walk away with your $20,000.00 profit when we close the purchase and sell to our buyer on a lease option. This buyer will put up the full $120k, we only need $100k to satisfy the seller, that leaves $20k for us at closing… there’s our profit. Now… there is a mortgage on the property, or deed of trust, that we’re going to sign as the borrower, for $120,000.00. This protects your buyer’s interests, so there’s no way that they could get screwed up here. What we’ll also do is go ahead and sign a deed over to our buyer, Party C, now. Then the closing agent will hold that deed in escrow.
So now the buyer is protected in 2 ways. They have a lean on the property, and they have a deed from you to them in escrow. So there’s no way they are going to get screwed on this deal. They’re going to get their property now, even though there is a 90-day resale restriction. What allows us to avoid that is the fact that the title is not transferring to the buyer yet.
So, let’s pause for a minute and look at the benefits and what we’ve done here. We’ve been able to make this transaction happen. We close with $100k. It comes to us in the form of a mortgage or deed of trust, from our buyer. Our buyer is a cash buyer, who we are asking to be our private lender, for about 91 days, ok? We make the purchase; the additional $20k the buyer needs to come up with is the rest of what they’ve agreed to pay for the property. That obviously represents a good deal to them, or they wouldn’t be willing to do it. And we walk away from this closing, the A to B, with our $20k overage. That’s our profit. The buyer is protected by a lean, at the value of $120,000.00, and a deed held in escrow. So, the closing takes place and the buyer temporarily holds the property on a lease option. As rehabbers, they immediately go to work rehabbing it.
Ok, so we’re wholesaling here, we’re most likely selling to a rehabber, could be a landlord, but they’re going to go about whatever business they need to do to prepare this property to put an occupant/buyer in it. So they begin the repairs immediately. We know we can’t resell the thing for at least 90 days, fair enough. So on the 91st or 92nd or 93rd day, even if you are out of town, you can send the closing agent instructions, your buyer will also instruct the closing agent to go ahead and record the deed. Bam! The B to C transaction just took place. So this happens, on say the 91st day.
What we’ve done is adhere to the 90-day resale restriction, put our buyer in the house immediately so he or she could get the repairs done, and begin lining up their D buyer. The D buyer is the end buyer to whom our buyer is going to sell. So there’s a 3rd transaction to the end buyer. That will almost for sure involve financing, probably government financing. And so, your buyer is likely to get this D buyer going before the deed is ever recorded if that makes sense. Your buyer will understand this process without a problem, as long as they are in the business doing deals, and not a beginner. A beginner might not like the idea of this. A buyer that’s in the business doing deals won’t mind it at all, especially if, and I keep coming back to this, the $120,000.00 they’re paying, is a great deal.  It needs to be a great deal for your buyer.
You know it’s amazing… when you give your buyer a great deal, they’ll jump through rings of fire to get at it. That’s just the nature of what we do. You as a Real Estate Investor have probably found yourself in a place where you’ve been willing to jump through rings of fire to get a great deal. So as long as it’s a smokin’ deal, and you’ve got a buyer who’s not a beginner, this works beautifully. It gives them time to do the repairs, get their buyer lined up, and record that deed as soon after the 90 days as possible. Your buyer’s mortgage gets extinguished at the time that that deed is recorded, and all of this is handled by the closing agent. They do the repairs, line up their D buyer and cash out. So, it’s a way to get around the 90-Day restriction that doesn’t cost you, really, any more money.
Now there is one expense that we’re going to incur here, and it’s something you need to consider, and that’s the tax on recording this mortgage or deed of trust between you and your buyer. In most counties and most states there is some sort of mortgage tax. There may not be in your area, which would be great, but for most of us there is. It’s not a lot of money, but it’s an additional expense. I’m here to tell you, I’d rather pay the fee to get this mortgage recorded, than either not do the deal, or have to figure out some sort of funding so I can sit on the thing for 90 days so I can get my $20k profit. The last thing you want to do, is fund this thing, and then have it sit empty for 90 days before you turn around and resell it. That’s where the 3 V’s come in. Vermin, vandals, and vagrants.
Vacant houses are targets, and so it’s one thing to buy them, but it’s another thing to own them and be sitting on them while their vacant. That’s not a good plan. This strategy allows you to avoid that.
So, let me go through it one more time just to review and make sure you’ve got it. Here’s your seller, it’s Fannie Mae. They’ve imposed a 90-Day resale restriction. We put it under contract for $100k. We go and find a cash buyer who’s willing to pay us the $120k, which needs to be a great deal. We go ahead and talk to this buyer, explain what’s going on. Their going to know how much you’re making on the deal, by the way. That’s a given. Get them on board, they go ahead and lend the $120k, the property is the collateral, you are the borrower, you only need $100k to satisfy your seller, so you leave with the overage of $20k less a few closing costs, which may include mortgage tax on recording this $120k mortgage. The way that we put this property in the hands of our C Buyer temporarily is on a lease option. This gives them the right to use the property, to fix the property, and their protected by this mortgage, and we’ve gone ahead and signed a deed, from you or your entity to your buyer, that’s held by the closing agent. It will only be recorded after the 90 days have ticked off the calendar. So on the 91st day, maybe it’s the 95th, depends on how the weekends fall or whatever, but on the 91st day the deed gets recorded to the buyer, the mortgage is extinguished and you’re out. You were pretty much out when you took your $20k anyway, however you are on title, or better yet, your entity is on title until that deed gets recorded. When it gets recorded, you’re really out. Now you’ve already gotten your money and now you’re no longer on title. They’re on title; they turn around and sell to their D Buyer. During the 90 days they’re doing their repairs and they’re getting their D Buyer lined up.
So it’s win, win, win, win. Everybody wins, and we get around that 90-Dday resale restriction. So, we need a cash buyer. Remember www.CashBuyerDataFeed.com. That’s where you’ll find cash buyers all across the USA. In fact we added 38,000 just last month. That’s from public record. It comes from several different databases. It’s a phenomenal service, and dirt-cheap. We need a cash buyer. We are going to turn him or her into our private lender temporarily. They’re basically going to put out the money now, and in effect they’re lending it to us, even though what they are really doing is they’re just putting it into the property and now they’re going to do the repairs. And what protects them is the mortgage and the deed in escrow.
And by the way, if private lenders excite you, and they should because this building I’m standing in right now is funded by a private lender, then you may also want to check out the private lender data feed, which is where you get access to known private lenders from all over the USA coming from public record. We have access to several different data sources, where we clean and scrub that list down to just the private lenders that we want and oh my gosh, we added 8,000 new ones last month. So, that’s another phenomenal service that’s dirt-cheap and there’s a trial offer going on there as well. Go to: www.PrivateLenderDataFeed.com.
So, there’s a great solution to get you past a long resale restriction. One where you can continue to do the business, make lots of money, and watch your competition whither, because they don’t know about this. They weren’t smart enough to come here. You were. Congratulations. I hope to talk to you soon,
Cam Dunlap

Hello, Cam Dunlap here, for a white board exercise today. What I want to talk to you about is Bank Resale Restrictions. There’s no doubt that there are a lot of bank foreclosures out there now, and some lenders have been for a long time, and others are just experimenting, and some are moving away from the concept of ” lender-resale restrictions”. What is common in the marketplace are 30- Day, then we’ve got 45-Day restrictions, in particular, on some short sales, I’m now seeing an occasional 60-Day, and in some cases even 90-Days. We’re going to talk about these restrictions, and we’re going to talk about how to get past them so that you can continue to do deals, make a ton of money, while we’re in the middle of this amazing foreclosure opportunity.

I see at least another couple of years before the inventory really starts to dwindle. In fact we’re starting to see more and more of the shadow inventory that lenders have started to release, so that is continuing the opportunity, elongating in terms of a time frame – the opportunity. Ok, so 30 days I’ve seen pretty typically on short sales, and also on some REO’s, 45’s the same, 60 is a little more unusual and 90 I’m starting to hear about Fannie Mae doing arbitrarily. They’re not doing it in every market, and on every house in every market, but they are putting some 90-day resale restrictions on their properties.

Now what that means to you and me, is they want to prevent us from re-selling properties quickly. If you read the fine print on the Fannie Mae resale restriction, you’ll notice that it says that you cannot resell it within 90 days as long as you are re-selling it for more than 120% of your purchase price. Now, what they’re basically doing is trying to tell you “Hey, if you’re making more than this much on it, well, we really would rather stick our finger in your eye. If you’re making less than this much on it, well, then we’re ok with it.” So what we have is a government organization, that is a known disaster area, and has been for years, run by idiots and crooks, now trying to tell us what we should be able to make, when we as Real Estate investors are helping them out of the jam that they’re in. Does that bother you like it bothers me? It makes me want to put my fist through the wall! It’s wrong, it’s un-American, it’s anti-capitalistic, it’s controlling, and it’s nothing but big government in our face, but we’re not going to get political in this conversation.

I’m just trying to put it in perspective and I’ve got some others too, some other perspectives.

So, let’s say you live in an expensive market where you are buying a Junker house for $100,000 and you plan to wholesale it. You’re not going to rehab it. You’re just going to turn around and flip it, as is, to another investor or rehabber or landlord type buyer. This is called “Wholesaling” by the way, So you have it under contract for 100k, you could sell it for as much as $119,990 and not be subject to that 90-Day resale restriction… read the fine print!

Now if you happen to live in a cheaper market, where you are buying a house for $15,000.00,120% of that is not a whole heck of a lot, although it’s still a $3,000 profit, which is nothing to sneeze at. But, if you’re buying it for $15,000.00 and you could easily sell it for 40k… well you’ll want a plan “B” because it’s certainly more than 20% and it’s certainly not a deal you would want to walk away from. So, there are a couple things to consider on the Fannie Mae 90 day resale restriction. I don’t think you’re going to get them to wave it, by the way. You can always ask, and frankly should, but I would not bank on them waiving it. Now with organizations like Bank of America, Wells Fargo, and other large institutions, where they’ve been pretty notorious with resale restrictions, it’s another story.

More and more of my students from all around the country, are telling me that Bank of America and Wells and the likes, are waiving their resale restrictions when asked.  So, when they make an offer through the realtor, the student, and it comes back accepted from B of A with a resale restriction in the contract saying something to the effect of, “We’ve accepted your offer but there’ll be a 30 day resale restriction in there.” What you can do is go back, obviously through the realtor and tell them “No, take the resale restriction out, or no deal.” And what we’re seeing is Bank of America and Wells Fargo are starting to back down. They’re starting to say: “Okay, we’ll take it out.” The Fannie Mae thing is kind of new. up and coming issue that I think we may see that for a while. The point I’m getting at is the smaller banks, not the Fannie, Freddie, HUD, VA owners – but the smaller, as if Bank of America is small, banks are taking them out.

So I wholeheartedly encourage you to tell the bank to “Stuff it!” whenever you can. It’s also important for you to understand that if there’s a resale restriction in the deal, your closing agent, whoever’s issuing the title insurance policy, whether that’s an attorney or a title company, it doesn’t matter, but whoever’s issuing the title insurance policy, is probably not going to like the idea of a resale restriction. The reason is because it opens them up to a potential title problem later, that they’re going to have liability for. See, if you somehow manage to get the property sold prior to the deeded resale restriction expiring, well then, there’s a title problem, and it falls back on the title company that issued the policy to you when you bought the property – so they don’t like resale restrictions either. Here’s my point, you may be able to get your closing agent to go to bat for you and help you get the resale restriction waved- they don’t like it either.

Now before I move on, I’ve got a very powerful strategy that’s going to take a few minutes for me to lay out for you, that will make you glad you kept reading. Before I move on though, I want to congratulate you for being here. If you’re reading this now, that means is resale restrictions haven’t caused you to tuck your tail between your legs and go away assuming that this business doesn’t work. The fact of the matter is the real estate business never stops changing and evolving! It’s fluid! It’s always changing, and if you don’t like what you’re seeing, then it’s like the weather… wait five minutes, and it’ll change.

With just shy of 20 years of being in this business of buying and selling properties, I can’t begin to share how much change I’ve seen over those years. Not only change in one direction, but in many cases, change back. Like a recoil from things that lenders and governmental agencies have tried over the years. So, I congratulate you for realizing it and understanding that this is a changing, fluid environment, real estate, and I hope that you’ll be like me and see the constant change as part of what makes it so fun! It’s never boring! No two deals are ever the same, and the longer you’re in the business, the more you’ll see in terms of change and the more opportunity you’ll see as well.

Ok, so now let’s talk specifically about this 90-Day one, ok? Because this is tough. If you’re familiar with me and the funding we do, you already know that we just aren’t able to go out that far. Our theoretical maximum is about thirty days, we may go a little over that, but that’s about it. And believe me, if we’re going to hold the funding in place for that long, you’ve got to have a rock-solid buyer lined up, ready to close, with skin in the game, whose not going to wiggle out of the deal. We’re just not willing to go to 90 days, or even close. However, there’s a wonderful strategy that I recently kind of tripped over, that is absolutely unheard of in the marketplace that I wanted to share with you in this video. Now let me explain too, and I’ll probably come back to this point after I explain the strategy.

This one strategy, could easily be, in the eyes of another real estate trainer, not mine of course, but could easily be seen in the eyes of another real estate trainer, the basis for yet another $997 program. That’s not how I roll. I don’t have a $997 program every few months to try to keep you focused on the shiny object. We stick to our core here, and that’s why I want to share this strategy with you right now, and not charge you a dime for it. This is powerful, and I want you to get this. Ok, so what we’re going to do is run through a scenario where we’re making an offer on a property, that we’ll say is Fannie Mae owned and they’ve put in a 90-day resale restriction and we can’t get it out. How can we wholesale this house, and not use any money of your own at all? Knowing that my transaction funding is not available for this deal, going into it, the question is, how can you still do the deal?

Ok, here we go. Now what I’ve done is I’ve gone ahead and I’ve drawn a few boxes on here to represent the different players on this strategy. Party A is the seller, and in this case, it’s Fannie Mae. And Party B is You. Party C is your buyer. Typical sounding A to B, B to C transaction, with a twist. Alright, so what we’re going to do is we’re going to go ahead and put this thing under contract at  whatever price we’ve agreed to, and we’re going to plan on this A to B closing. This will be a cash transaction.

Where’s the money going to come from? Your buyer!

So that requires that your buyer be a cash buyer. This strategy will not work if your buyer is going to get a mortgage at a bank. So this needs to be a cash buyer. Now, you already know that cash buyers are the best buyers in the business, there’s no doubt about it. And, the more often you can sell to a cash buyer, the more quickly you’ll close, the more money you’ll make, and the less hassles you’ll deal with. Cash buyers are the best in the business – they buy again and again, they don’t evaporate at the eleventh hour, like so many financed buyers do. They stick with the deal, if it’s a good deal; they’re going to close. They’re just the kind of buyer that’s easy to deal with, with no hassles.

Now, if you’re not aware, you can get access to cash buyers, known cash buyers from public data, all across the USA, at my cash buyer data feed. Ok, so that’s at www.CashBuyerDataFeed.com. 

Alright, so we have this cash buyer. Now instead of selling to them on the normal B to C transaction, where the deed would transfer to them, we’re actually going to insert in the middle of this transaction, a lease option. Now if you happen to be in Texas, you might want to use a different instrument, you can talk to a real estate attorney, and have him help you with that. But nevertheless, it can be done in Texas too. But everywhere else, we’re going to use a lease option. So we’re going to sell it to our buyer on a lease option. Now the money for our purchase is going to come from our buyer. So this buyer will fund the cash, but we will give them a mortgage, or a deed of trust. So in effect, what is happening now, is our buyer is our private lender. We found this cash buyer, and they’re going to be our private lender. They’re going to lend us the money.

Let’s say we’re purchasing the property for $100,000.00 and we’re selling it for $120,000.00, ok? Now, you might argue, “Well wait a minute Cam, you could get away with the 90 day thing here because you could drop your price a dollar and get under that 20% markup.” Fair enough. It would really be $119,990, but just go with me, it’s an example, and hopefully the numbers are much bigger for you. Ok so, we’re selling to our buyer on a lease option at $120,000.00. He or she is lending us the $120,000.00 and we’re going to have a mortgage or a deed of trust. Now, in order to close this transaction, we only need 100k, the other 20k is going to come out of the closing and go right into your pocket. So you’re actually going to walk away with your $20,000.00 profit when we close the purchase and sell to our buyer on a lease option. This buyer will put up the full $120k, we only need $100k to satisfy the seller, that leaves $20k for us at closing… there’s our profit. Now… there is a mortgage on the property, or deed of trust, that we’re going to sign as the borrower, for $120,000.00. This protects your buyer’s interests, so there’s no way that they could get screwed up here. What we’ll also do is go ahead and sign a deed over to our buyer, Party C, now. Then the closing agent will hold that deed in escrow.

So now the buyer is protected in 2 ways. They have a lean on the property, and they have a deed from you to them in escrow. So there’s no way they are going to get screwed on this deal. They’re going to get their property now, even though there is a 90-day resale restriction. What allows us to avoid that is the fact that the title is not transferring to the buyer yet.

So, let’s pause for a minute and look at the benefits and what we’ve done here. We’ve been able to make this transaction happen. We close with $100k. It comes to us in the form of a mortgage or deed of trust, from our buyer. Our buyer is a cash buyer, who we are asking to be our private lender, for about 91 days, ok? We make the purchase; the additional $20k the buyer needs to come up with is the rest of what they’ve agreed to pay for the property. That obviously represents a good deal to them, or they wouldn’t be willing to do it. And we walk away from this closing, the A to B, with our $20k overage. That’s our profit. The buyer is protected by a lean, at the value of $120,000.00, and a deed held in escrow. So, the closing takes place and the buyer temporarily holds the property on a lease option. As rehabbers, they immediately go to work rehabbing it.

Ok, so we’re wholesaling here, we’re most likely selling to a rehabber, could be a landlord, but they’re going to go about whatever business they need to do to prepare this property to put an occupant/buyer in it. So they begin the repairs immediately. We know we can’t resell the thing for at least 90 days, fair enough. So on the 91st or 92nd or 93rd day, even if you are out of town, you can send the closing agent instructions, your buyer will also instruct the closing agent to go ahead and record the deed. Bam! The B to C transaction just took place. So this happens, on say the 91st day.

What we’ve done is adhere to the 90-day resale restriction, put our buyer in the house immediately so he or she could get the repairs done, and begin lining up their D buyer. The D buyer is the end buyer to whom our buyer is going to sell. So there’s a 3rd transaction to the end buyer. That will almost for sure involve financing, probably government financing. And so, your buyer is likely to get this D buyer going before the deed is ever recorded if that makes sense. Your buyer will understand this process without a problem, as long as they are in the business doing deals, and not a beginner. A beginner might not like the idea of this. A buyer that’s in the business doing deals won’t mind it at all, especially if, and I keep coming back to this, the $120,000.00 they’re paying, is a great deal.  It needs to be a great deal for your buyer.

You know it’s amazing… when you give your buyer a great deal, they’ll jump through rings of fire to get at it. That’s just the nature of what we do. You as a Real Estate Investor have probably found yourself in a place where you’ve been willing to jump through rings of fire to get a great deal. So as long as it’s a smokin’ deal, and you’ve got a buyer who’s not a beginner, this works beautifully. It gives them time to do the repairs, get their buyer lined up, and record that deed as soon after the 90 days as possible. Your buyer’s mortgage gets extinguished at the time that that deed is recorded, and all of this is handled by the closing agent. They do the repairs, line up their D buyer and cash out. So, it’s a way to get around the 90-Day restriction that doesn’t cost you, really, any more money.

Now there is one expense that we’re going to incur here, and it’s something you need to consider, and that’s the tax on recording this mortgage or deed of trust between you and your buyer. In most counties and most states there is some sort of mortgage tax. There may not be in your area, which would be great, but for most of us there is. It’s not a lot of money, but it’s an additional expense. I’m here to tell you, I’d rather pay the fee to get this mortgage recorded, than either not do the deal, or have to figure out some sort of funding so I can sit on the thing for 90 days so I can get my $20k profit. The last thing you want to do, is fund this thing, and then have it sit empty for 90 days before you turn around and resell it. That’s where the 3 V’s come in. Vermin, vandals, and vagrants.

Vacant houses are targets, and so it’s one thing to buy them, but it’s another thing to own them and be sitting on them while their vacant. That’s not a good plan. This strategy allows you to avoid that.

So, let me go through it one more time just to review and make sure you’ve got it. Here’s your seller, it’s Fannie Mae. They’ve imposed a 90-Day resale restriction. We put it under contract for $100k. We go and find a cash buyer who’s willing to pay us the $120k, which needs to be a great deal. We go ahead and talk to this buyer, explain what’s going on. Their going to know how much you’re making on the deal, by the way. That’s a given. Get them on board, they go ahead and lend the $120k, the property is the collateral, you are the borrower, you only need $100k to satisfy your seller, so you leave with the overage of $20k less a few closing costs, which may include mortgage tax on recording this $120k mortgage. The way that we put this property in the hands of our C Buyer temporarily is on a lease option. This gives them the right to use the property, to fix the property, and their protected by this mortgage, and we’ve gone ahead and signed a deed, from you or your entity to your buyer, that’s held by the closing agent. It will only be recorded after the 90 days have ticked off the calendar. So on the 91st day, maybe it’s the 95th, depends on how the weekends fall or whatever, but on the 91st day the deed gets recorded to the buyer, the mortgage is extinguished and you’re out. You were pretty much out when you took your $20k anyway, however you are on title, or better yet, your entity is on title until that deed gets recorded. When it gets recorded, you’re really out. Now you’ve already gotten your money and now you’re no longer on title. They’re on title; they turn around and sell to their D Buyer. During the 90 days they’re doing their repairs and they’re getting their D Buyer lined up.

So it’s win, win, win, win. Everybody wins, and we get around that 90-day resale restriction. So, we need a cash buyer. Remember www.CashBuyerDataFeed.com. That’s where you’ll find cash buyers all across the USA. In fact we added 38,000 just last month. That’s from public record. It comes from several different databases. It’s a phenomenal service, and dirt-cheap. We need a cash buyer. We are going to turn him or her into our private lender temporarily. They’re basically going to put out the money now, and in effect they’re lending it to us, even though what they are really doing is they’re just putting it into the property and now they’re going to do the repairs. And what protects them is the mortgage and the deed in escrow.

And by the way, if private lenders excite you, and they should because this building I’m standing in right now is funded by a private lender, then you may also want to check out the private lender data feed, which is where you get access to known private lenders from all over the USA coming from public record. We have access to several different data sources, where we clean and scrub that list down to just the private lenders that we want and oh my gosh, we added 8,000 new ones last month. So, that’s another phenomenal service as well. Go to: www.PrivateLenderDataFeed.com.

So, there’s a great solution to get you past a long resale restriction. One where you can continue to do the business, make lots of money, and watch your competition whither, because they don’t know about this. They weren’t smart enough to come here. You were. Congratulations. I hope to talk to you soon,

Cam Dunlap