If you buy it too low, in some jurisdictions they will call it "equity skimming" which is illegal.It can be very profitable, I've done many, but you really need to know what you are doing. on pre foreclosures on the West coast if you happen to do them legally .. the old owner is due 80% of the profit if you sell within 36 months.. so there is that.. but if your buying pre foreclosure for long term hold and wait out the 36 months then your fine. the reality these days is post GFC lenders/ banks/ servicers have realize that working with the buyer to reinstate recast redo the loans is far better than taking it all the way to foreclosure so your correct its usually the worse houses that make it all the way to the end and go to sale.thats why if you follow NODs  Notice of defaults or whatever they are call in your state. you see so many postponements and or removed or paid off etc.. so you hone in on one property do all this work only to have it not go  to sale  rarely are you going to buy a home that you really want LOL

Legal entities are set up for this purpose.  

We’re being funny because there's still a bit of nuance here.There are strict guidelines and it's sometimes a blurry line between being an RE pro vs not.

You and this private person you met hammer out the details of the loan at the kitchen table so to speak and you seal it with a handshake and your reputation that this Private Person already respects or whomever introduced has vouched for you.But if a man opens a lending company tomorrow with 50 Million of his own capital and he checks in on the HML market to see what it bears and he copies his products and UW guidelines and now is he PML or HML? 

Yes it's definitely legal, and I've sold a few this way.

Said it great .Especially  A legal contractor has more to lose than a homeowner .

The concern with places like Irvington will be once you move out and no longer owner occupy how do you raise rents legally.   

Hopefully as the rates and the housing market loosens so will some of these guidelines in the HML programs. from talking to hard money funds especially those who operate in more than 10 states, and 5 years of experience with underwriting teams, I'd actually disagree and say new construction is preferred to rehab due to experience level to enter the market. there's BP lenders that will do 15% LTC with 1-2 new build experience.

what are the laws in CO regarding unlicensed wholesalers tying up property advertising it and collecting a fee at closing is that even legal in that state. ???

At the time, it never occurred to me that if you want to swindle people it is difficult and expensive to take legal action against a company that is incorporated in a different state than where they do business.