All Forum Posts by: Joshua S.

Yep you're right, I do need to learn more about foreclosure... and real estate in general! That's why I'm here on these forums interacting with you folks who know your stuff. Lurking is fine, but personally I learn a lot more from actually getting out there and asking (sometimes stupid) questions and bouncing ideas off of people. Sometimes that means taking a few jabs but I'm cool with that as long as I learn something.

Great point Kristine, I didn't even consider the fact that the property could be bought by a third party at auction! It would be a huge pain in the neck for them, and if they planned on using it as their primary residence, then according to the the Tenants in Foreclosure Act the lease becomes invalid and they just give a 90-day notice instead. Which would suck for the sub-leasee, if they were under the impression that they had a place to live for the next year, or whatever the terms of the lease were. So basically, a losing situation for everyone involved. It's a crappy strategy, and irresponsible too. Case closed. Now I'll be able to sleep at night lol

Thanks for the link Jon! Lots of relevant info there. To be clear, the leasee/investor would continue paying rent to the bank after they take the house, so as to preclude any illegal rent skimming.

So far I'm not seeing a solid reason why it can't be done, aside from the "bona-fide tenant at market rent" stipulation, which is kind of a grey area...

Good one Don.

Haha! Nope, not considering! But the idea has been buzzing around in my head, and was really just hoping for a good reason why it WOULDN'T work ;)

So, the law states that it must be a bona-fide tenant, at near or close to market rent eh? That seems to leave a lot of room for speculation, and wouldn't the bank need to take legal action to prove/disprove? Do you think they'd bother with all of that?

So I wanted to explore an idea here, and see if anyone has heard of anyone else doing it. But before I go there, I want to make clear that I'm not ADVOCATING this or any other shady business practices; I'm simply wanting to explore a hypothetical. With that aside...

This idea revolves around exploiting a law that was recently passed that protects a tenant from being kicked out in the event of their landlord going into foreclosure. The law states that the bank must honor the lease of the current tenant until it expires. Couldn't an opportunistic investor approach homeowners who are facing imminent foreclosure, and get them to sign a lease to rent out their home? He might offer them some cash to sweeten the deal, perhaps enough to cover their moving expenses. He would then have a lease at a STEEP discount to do with as he pleases. He could move in himself, or he could sub-lease to other renters and make a handsome cashflow. The new tenants win because they could be getting a nice house at a below-market rent. The foreclosee wins because he's getting cash to move, can collect rent from you for a month or two until the house is taken, and he feels like he's "sticking it to the bank" for whatever it's worth. The only loser is the bank, who as far as I can tell, wouldn't really have any legal recourse... Thoughts?

I'm surprised nobody's mentioned yellow letters yet! Mailing them to leads that I obtain from listsource will be the bread and butter of my marketing. Good to see another newbie getting started in wholesaling, best of luck to you!

Always on the ball with relevant info and links! Thanks Steve!

Based on my understanding, the main reason to do a double close instead of a reassignment is so that the buyer doesn't find out how much you're making until closing. If he knows beforehand, he may use it to try and negotiate a better price for himself. So the "rule of thumb" is that under $10,000 is considered a "typical" fee for a wholesaler to make and it's fine to do a reassignment, but anything above that opens up too much room for negotiation, and it's best left a mystery until closing time.

Rob-

I never said anything about lying. If the seller wants to ask in-depth questions about exactly where the money is coming from, I'll answer their questions honestly. But I'm under no moral or ethical obligation to give an up-front explanation of how I run my business. And I suppose that's where we will have to agree to disagree.