How to buy, and flip properties that are out of state

Question

Not seeing many deals in Massachusetts and I am searching Connecticut. Looks like Connecticut has many deals. I will be using the Bureau of Labor and Statistics to see what the economy looks like down there. Also will look at Recently Sold props and Rentals to get strong idea of Markets.

My questions

What are the steps in order to buy, and assign my property to another Investor and be safe. I will be using an attorney to review my first couple transactions.

I would be VERY grateful to another Investor here, if he can give me the steps he takes to buy properties that are long distance from him.

Since I need a Contractor to help me calculate the rehab costs, how do I get an Interest in the property if the Rehab costs are unknown. If I have NO interest, the contractor could buy it and I would lose the deal????????

Please help and be specific. Thanks in advance. Ron

Karin Crompton · Answer

Hi @Ronald H. - all good questions. I answered some of this in your other post ("Why do there seem to be so many deals in CT?").Regarding assignment, it can be tough to do so here. You can try writing "(Your company name) and/or assigns" when you submit an offer, but a lot of sellers balk at that. Other folks here on BP have had some creative ideas, so maybe they will chime in. I believe another idea I've heard is to form an LLC w/your end buyer and then have the other member buy you out. That way the company name remains the same on the contract. I forget the exact details, but you would need some things in place ahead of time.Good question, too, about the contractor helping you to estimate rehab costs and then grabbing the deal out from under you. I don't have a good answer on that one! Maybe you get burned a couple of times before finding the contractor you're going to work with. Or maybe you rely on a bunch of photos from the agent. Or you find a CT-based rehabber to partner with. Tough call.Oh, and the Census Bureau has good stats and demographics info on towns and cities; check American Fact Finder on the Census Bureau's website.

Michelle Stanish · Answer

Typically I've seen are a double closing versus assigning a property over to another investor. I think you always have the chance that one of the parties could walk from the deal and leave you empty handed. I suggest meeting and networking with investors to get an idea of who the good guys are and start there.

Karin Crompton · Answer

I'm not sure what you mean by Letter of Intent, but in my opinion you'd do just as well - actually, better - to send in an actual offer. Send an offer with the earnest money deposit and your contingencies; you can have a contractor walk-through as a contingency (or a 10-day inspection period, etc). To put it bluntly, the LOI will most likely get tossed back at you b/c it sounds like you're kicking tires - and an offer will accomplish the same thing and have more credibility.Also, what do you mean by transactional funding? Do you have someone putting up cash for you, or a hard money lender, or cash yourself? Are you prepared to buy the property if your end buyer backs out? The only thing a seller and a listing agent want to know is that you can and will follow through, and they should be doing everything they can to verify that you have the funds. Can you show them you do?In the Bristol example, there are a lot of unanswered questions, the biggest being: how much rehab is needed? On a really quick-and-dirty calculation that assumes your ARV is correct, if the house needs more than about 45k in work you won't be able to wholesale it.Just remember: the simpler you keep it, the better.

James Wise · Answer

1. Become an agent yourself. 2. Find off market deals.3. Pay the agent non refundable money up front.4. Work with the listing agent.

Ronald H. · Answer

If you are correct then how is it that others here are having success using Transactional Funding?

James Wise · Answer

Contractors are prolly going to want $300-$500 to give you an estimate on the house.Yes your going to have a very very difficult time getting a RE agent to work with you as most will not entertain the idea of working with someone using Transactional funding. You would be someone who is considered to have a very low chance of closing.

Ronald H. · Answer

Hi, KimIf assigning is balked at, then I could just buy it, and do a double close.I have seen a couple of properties on the web that appear to be good deals. I have replied to some, and have not gotten answers. Lot of BS postersI am looking at one now for $59,000 in Bristol.. I did a search of Trulia.com using 3 bed, 1 bath parameters and the recently sold properties, which I used as comparables, in that area are similar in square feet, bedrooms and baths showed me homes that were $100K higher in price. Average sales price appears to be around $161,000.00.In the past, I did not have good experiences with Real Estate Agent's. They all wanted to stifle my dream, but a lot has changed these days and I can now use a Transactional Funder to buy. I would kind of wonder why a Real Estate Agent would work with me, if he knew how to estimate rehab costs himself. Why wouldn't he just buy himself?The only way to buy sight/unseen I can think of is, to send a letter of intent "If it is a deal" with a 10 day Inspection contingency and have an Earnest Money Deposit stated in the letter to show Good Faith. Before I send the LOI with the EMD, I would have the attorney review it.To establish if it is a deal, I would get comps, I could use comps of similar properties on Trulia or Redfin, but in the beginning, I might want to get a Broker's Price Opinion or an Appraisal, but only if there is interest from the seller. If the comps are good, have the attorney send the letter of intent with the EMD to escrow agent.If seller accepts, I would now send the Contractor over to establish Scope of work and give me an estimate. Probably getting a couple Contractors would be prudent, but how much will I have to pay them would be a question, I would be thinking about.How am I doing? Do I got it covered?