I attached an FNMA 13 page addendum that, essentially, has the buyer sign away many VERY significant rights AND enables FNMA to control how much profit you can make, for the following 90 days, after you purchase their house. READ THESE ADDENDUMS before you purchase that house ! You may get stuck and find yourself with the "deer in headlights" look on your face when you realize that asset is more of a liability.
Check out Clause #14 -
For flippers, like me, who are in and out of a property in 6 weeks, or less - this clause can really can cost you serious $$ and possibly more - depending on how much capital you have available for other projects.
This is one of many such psychotic addendums you'll need to sign off on, surrendering specific rights.
Seems with all that bailout $$ these lenders got, like Fannie and Freddie, they shouldn't be worrying about how much $$ you're making on your deals - they should be concentrating on liquidating the properties to buyers who have made acceptable offers and getting back on their own damn feet - leaving investors to help move the housing market into better times - like investors have always done in such times of strife.
However, if Fannie and Freddie - AND others, want to control how much you make - then let them fork over the renovation costs and contribute to our holding costs.
Of course, such contributions would be at the option of the buyer to choose yay or nay.
Remember - read those addendums to confirm that the deal IS the deal you think it is.
In my travels to other real estate websites and forums, I'm amazed at how many investors never read those psychotic addendums and it has cost some of those investors their business -
Make 2012 your best year yet -
New To You RE, LLC
I made $53,849 on one house in July 2005 for 3 hours of my time. It's a real estate investment property that I found through an advertisement, then called the seller, signed the contract, and sold within 20 minutes of taking possession. I did absolutely nothing to this home and only visited it twice (when I bought it and when I sold it).
If you've never heard of the term "wholesaling," let me explain. It's when you buy a home well below market value and quickly resell it, still below market value.
The advantages of this over other types of real estate investing are that it:
Step 1: Make your offer Whether you pursue FSBOs (for sale by owner) or properties listed on the MLS (Multiple Listing Service), you're never going to be able to flip a property unless you first make an offer.
In making your offer, you need to keep your customer, the rehabber, in mind. Your offer should be based upon a conservative estimate of the market value of the property after repairs minus:
Max Offer = ARV - 30% (or $25,000) - repairs - $5,000
Step 2: Offer is accepted, sign the contract to buy Once your offer is accepted, you will meet with the seller (if it's a FSBO) or your real estate agent to sign the contract and give them an earnest money deposit.
Step 3: Start the title work After signing the contract, contact your settlement attorney (title company, escrow company, etc.) to start the title work on the property. They will order a title search and schedule a settlement date.
There are two reasons to start the title work ASAP.
Fixer Upper*123 Main St., $80K comps,
only $40K (xxx) xxx-xxxx
Step 5: Come to agreement with prospective buyer At some point, someone will show interest in your property. Whether you have one potential buyer or multiple potential buyers will depend upon the deal. Each one is different. The more buyers you have, the less flexible you need to be in reaching a final sales price.
Step 6: Qualify the prospective buyer Make sure the prospective buyer either has the cash or a line of credit (ask for proof of funds if they say they do) or will be able to borrow the money from a private (hard money) lender to purchase your property.
Step 7: Sign contract with buyer & collect a deposit After verifying your buyer's source of funds, meet with him, execute a sales contract or an assignment agreement, and collect a deposit. The sales contract serves as the receipt for his deposit.
Be sure you either handwrite or include typewritten verbiage somewhere on your contract a statement such as the following:
"Received $(insert dollar amount) as an
earnest money deposit on (insert date)"
...and initial it once you receive their deposit. You might also include their check number or write "CASH" if they give you cash.
Step 8: Submit documents to the title company Submit both items: the executed contract with the original seller and the executed sales contract/assignment agreement with your buyer to your attorney (title company, escrow company, closing agent, etc.) and schedule a settlement date.
Step 9: Go to settlement Go to settlement, pick up your check, and celebrate!
An additional tip based on real life experience When I first started, I believed everyone who signed a contract to buy a home from me. I believed everything they told me and took their word. Often, I got burned. It didn't take too many slaps in the face before I realized that I needed to take control of the entire process.
At that point, I decided to control every deal by lining up contractors, lining up the lenders, starting the title work myself through my attorney, and mandating that my buyers use my attorney.
Before taking control, I estimate that about 25% of my deals didn't settle with my first buyer. Since taking control, that percentage has been reduced to about 5%.
At mikcohen.com - we enjoy sharing insights, helpful tips and specific information. Feel free to comment and share your knowledge and experience, but please keep it respectful.