Need your short sale expertise.

[Rodolphe Brun]

Hi Guys,

I need your help. I want to buy a short sale property. I am going to negotiate it for $50,000. I want to resell it for $80,000. I am thinking of doing a double escrow. I have been negotiating a lot of short sale for my clients, but I never did a double escrow on a short sale. Do I need to disclose the short sale lender that I am going to flip it? Should I fund it with my own money or should I use the end buyer's money.(of course I rather use the end buyer's money, but what works best?).
If I have to disclose that I am flipping it to the short sale lender. How should it be written in the contract?
Also, how do I use a Land Trust to do the deal?
I heard that if I did a Land trust, I would not have to pay closing cost twice and my name and price will not show on the property record.

Thanks for your help.

[James Ward]

Rodolphe,

1) It is not illegal to use the end buyers money to fund your deal! But, it is almost impossible. A) Most title companies do not want to do these types of closings. But you might find one that will. B) The end buyers Lender also do not like being involved in these types of deals. But, you might find one that will.

2) As for disclosing your intents, this is real simple. Just put in the contract to purchase that you are purchasing this property with the intent of resaling the property.

3) Land trust- some lenders will not accept offers when a land trust is the buyer. But some do. I know a few investors that this is the ony way the purchase. We do not. We buy in a company name.

4) Not wanting the end buyer to see how much you purchased the property for. Why? If the buyer is getting what they consider a "deal" than who cares how much you paid for the property.

5) Not paying closing costs twice. Talk to your title company about holding open title until you close the second time. This will assist in lowering the closing costs. Or ask them if they have another way to save money. They will help!

6) Using your own money. IMO if you have the cash or funds to close, why not. Why would you want to pay to use someones elses money if you had the funds yourself. But if you do decide to use transactional funding, use a member here a BP. He offers GREAT rates. Plus, it builds the BiggerPockets community.

Hope this has helped!
James