Flipping real estate owned properties owned by banks

Flipping Real Estate Owned Properties Owned by Banks

I know we have all heard it before; you can make a ton of money flipping Real Estate Owned (REO) bank property while other buyers are doing a short sale. Here is the truth; short sales take forever to close on so the word is get away from short sales and pre-foreclosures. The time you waste sitting around to see if you even got the property is not worth your time when you can be purchasing a REO bank property for little of nothing, flipping the house and taking the profit from that property and buying another.

Short Sales & Pre-foreclosures In short sales and pre-foreclosures the strategy is to turn the property over as fast as you can to invest in another but the problem is the banks like to hold onto the properties as long as they possibly can to negotiate after all the property might still go to auction and there could still be a bidding war take place over it.

The Bank is On the Hook

In 90% of cases today in these recessionary times the bank will wind up being stuck with the property which is a good thing for you. The bank will start to panic when they start to pay for things associated with that property like taxes, maintenance fees, winterization, etc. The time to make the deal would be at this very moment when the bank is feeling the pinch. Lenders like to collect money, not hold on to property that is costing it money. This is the best time to make a sweet deal that will be to your liking and also help the bank get out from under.

Wholesale Prices Many mortgage companies will sell at wholesale prices because they are starting to put money into property that they do not really have capital for, banks are not set up for this. Because banks do not want to be put in this position you should be able to get a good deal and in turn sell the house at a bargain to a buyer who is more than grateful to pay a reduced price and still come out ahead. Most of the time the property just needs a fresh coat of paint inside and out, a few fixes done here and there, and it will be ready to go for wholesale.

A Good Example Let say you come across a good deal for a bank owned property that you pay $30,000 for when it is worth $80,000 retail. You could sell it for full retail or put it up for quick sale at $65,000 because when buyers see this at wholesale they will usually jump all over the deal because there is still money to be made, another $15,000 if they can get retail. By lowering the price and allowing others to get a bargain also you can take that $35,000 profit you just made through a quick sale and start to look for another with your $35,000 in tow. Remember the quicker you can sell it the more money you will be able to make in the long run.

6 Tips for Buying REO Homes You will need to do these 6 things before you do an offer: 1. You will have to find a good realtor that will be able to help you in the writing of the contracts and the submitting of the same.

2. You will need a proof of funding letter or a letter of the balance of your bank account that will cover the

price of the property. You could also need a prequalification statement from a traditional lender. If you need a hard money lender you can check out a directory put out by Real Estate Radio USA that may be able to help.

3. You will need to determine the retail value of the property.

4. Look for houses that have been for sale for a while and are ready to go into foreclosure. When you have found one make an offer of 15%-30% under what the bank wants.

5. A property that is in poor repair you should offer in the 30% below list range. A property that is in good condition you should make an offer around 15% below list price.

6. Do not play around with the banks on your offers.

Remember they want to make as much as they can even in foreclosure. Only make a maximum of 2 offers and if you do not hear back be prepared to walk away from the deal.

These tips will work if you give them time, just remember when the market starts to get better the

lenders will start jacking the prices up closer to the list price. So take a good look around, check out the REO's; see what the list is and then go from there.

Remember the banks are now full of these properties and the time is right for picking the right deals. Take advantage and happy hunting!