Hard Money Lender to start Wholesaling?

Question

I found a short sale that I believe will be a really great deal to wholesale.  Does anyone suggest using a hard money lender to close the short sale and then wholesale it?

Mateusz Prawdzik · Answer

@Tiffany Boulden Okay, couple more tips for you. Now since it's on the MLS, chances are someone already snagged it if its a good deal. And I hate to break it to you, it sounds like this isn't a good deal. The numbers are very tight and you don't even know the rehab amount. Also, I would never go to someone other than the listing agent to submit an offer and always offer them both sides of the listing if they accept your offer (it builds incentive and helps you A LOT). You don't need a hard money loan in other to get an approval letter, they don't give them out to anyone either, you just have to call and ask about if they can help you out with an approval letter. But please don't fixate on this deal as it seems like it's not a very good one. @150k ARV, you need the purchase to be around 50-70k depending on the rehab. Also, I highly recommend going with the listing agent on short sales and any sales for that matter and do what I said, offer them both listings because it will make them look your way. I have done it plenty of times.

Mateusz Prawdzik · Answer

@Tiffany Boulden Hey Tiffany, there are many questions that have to clarified first before anything. Is the short sale already approved or does it need approving? If it needs approving, is this deal on the MLS or off market? Are you an agent, can you do the short sale? If you can't and it is not approved, find an agent that can do the short sale, then put the name on the offer as an LLC that you will LATER SELL THE ENTIRE LLC, that is the important thing to know. You don't need to close on the property, but just be aware that after the short sale approval comes back the bank is going to give you 3-4 weeks to close, in that time you need to find a buyer that will buy the LLC off you on closing with nothing but the property on it.

I have done this before on one of my the properties I was suppose to pick up. MOST investors have absolutely no problem with this, but some do (rare). I would do my due diligence while the property is being negotiated for sure as it will save you lots of time when it's approved to find a buyer.

That is where I come in, if the numbers make sense, I wouldn't mind taking it off your hands at all. Please let me know if you have any questions as far as numbers go or anything of that sort. Let's connect, ask away.

Tiffany Spann · Answer

Thanks @BJ Henderson and @Roland Paicely.  I will keep both of your suggestions in mind.

Roland Paicely · Answer

I assume that you when you said that you will offer $70K.  You meant that is what you hope to buy it for.  With that in mind.  You should offer less than $70K to start.

BJ Henderson · Answer

Oh ok. Well I'm not too familiar with your market, but if you get it under contract at 70k and with repairs at 30k if it were me I'd assign it at 75k. If you can get it lower than 70k great. More money for you if you assign it, but I wouldn't recommend trying to wholesale it at 85-90k if repairs are 30k.

Tiffany Spann · Answer

@BJ Henderson The repair values are around $30k.

BJ Henderson · Answer

You could either put it in an LLC or a Trust and then assign it to an end buyer when it's time to close. Make sure you do your research on it first though.

One thing you didn't disclose is what repairs would be?

Tiffany Spann · Answer

@Mateusz Prawdzik Hey Mateusz, the short sale needs approving.  It has been on the MLS for 3 months now, and my plan is to shoot my shot with a low ball offer that I believe may get approved.  I am not an agent; however, my managing partner is an agent and can do the short sale.  I know a pre-approval letter is required to submit the offer and thats why I was thinking about going the hard money lender route.  I also have the funds in the back to show I could do a cash offer BUT I did not want to take that risk as I am still very much a newbie.  Thank you for the idea of creating an LLC exclusively for this property and then selling the entire thing at closing.  I am looking to offer $70k and hoping to wholesale it for $85-90k, the ARV is $150k.

Hard Money Lender to start Wholesaling?

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