Overcoming Lender Resale Restrictions: Make Money in Real Estate Flipping Houses

Overcoming Lender Resale Restrictions: Make Money in Real Estate Flipping Houses


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margl1440margr1440vieww10540viewh9320viewkind0 pardtx720tx1440tx2160tx2880tx3600tx4320tx5040tx5760tx6480tx7200tx7920tx8640pardirnatural f0fs24 cf0 Hello, Cam Dunlap here, for
a white board exercise today. What I want to talk to you about is Bank Resale Restrictions.
There’s no doubt that there are a lot of bank foreclosures out there now, and some lenders
have been for a long time, and others are just experimenting, and some are moving away
from the concept of ” lender-resale restrictions. ” And what is common in the marketplace are
30 day, then we’ve got 45 day, I’ve seen in particular on some short sales, I’m now seeing
an occasional 60, and in some cases even 90 days. Now we’re gonna talk about those, and
we’re gonna talk about how to get past that so that you can continue to do deals, make
a ton of money, while we’re in the middle of this amazing foreclosure opportunity. I
see at least another couple of years really before the inventory starts to dwindle, in
face we’re starting to see more and more of the shadow inventory that lenders have starting
to get released, so that is continuing the opportunity, elongating in terms of time frame
the opportunity. Ok, so 30 days i’ve seen pretty typically on short sales, and also
on REO’s (check please, unsure of phrase he is coining) 45’s the same, 60 is a little
more unusual and 90 I’m starting to hear about Fannie Mae doing, and I say arbitrarily, I
mean in terms of nationwide. They’re not doing it in every market, and on every house in
every market, but they are putting some 90 day resale restrictions on their properties.
Now what that means to you and me, they want to prevent us from re selling this thing quickly
.If you read the fine print on the Fannie Mae resale restriction, you’ll notice that
it says you cannot resell it within 90 days as long as you are selling it for more than
120 % of your purchase price. Now, what they’re basically doing is trying to tell you “Hey,
if you’re making more than this much on it, well, we would rather stick our finger in
your eye. If you’re making less than this much on it, well, then we’re ok with it. “So
what we have is a government organization that is a known disaster area and has been
for years, run by idiots and crooks, now trying to tell us what we should be able to make,
when we helped them out of the jam that they’re in. Does that bother you like it bothers me?
It makes me want to you know put my fist through the wall! It’s wrong, it’s Un-American, it’s
anti-capitalistic, it’s controlling, and it’s nothing but big government in our face, but
we’re not going to go there in this conversation I’m just trying to put it in perspective and
I’ve got some others too, some other perspectives. So if you happen to live in an expensive market
where say, you are buying this junker house for $100,000 and you plan to wholesale it,
not gonna fix it, just gonna turn around and flip it to another investor rehabber landlord
type buyer, you bought it for 100, you could sell it for as much as $119,999.00 and not
be subject to that 90 resale restriction, read the fine print! Now if you happen to
live in a cheaper market, where you are buying a house for $15,000.00 , 120% of that is not
a whole heck of a lot, although it’s still a $3,000 profit, which you might, you know,
if you’re buying it for $15,000.00 well you could easily sell it for 40k,well you might
want to figure something else out because it’s certainly more than 20% and it’s certainly
not a deal anyone would want to walk away from. So, couple things to consider, on the
Fannie Mae 90 day, I don’t think you’re gonna get them to wave it. But with organizations
like Bank of America, Wells Fargo, where they’ve been sort of notorious resale restriction,
ving ! Finger in the eye crybaby’s, here’s the trend that I’m seeing. More and more of
my students I’m seeing it all around the country, are telling Bank of America and Wells and
the likes of those banks, “No.” . So, when they make an offer through the realtor, the
student, you, and it comes back accepted from BofA with a resale restriction in the contract
saying, “We’ve accepted your offer but there’ll be a 30 day resale restriction in there.”
What you can do is go back, obviously through the realtor and tell them “No, take the resale
restriction out, or no deal, you choose.” And what we’re seeing is Bank of America and
Wells Fargo are starting to back down, they’re starting to say “Okay, we’ll take it out.”
Now the Fannie Mae thing, that’s kind of new up and coming, and so we may see that for
a while. The point I’m getting at is the smaller banks, not the government owners but the smaller,
as if Bank of America was small, but the banks in some cases when you are willing to tell
them to “Stuff it!” will actually take it out. So I wholeheartedly encourage you to
tell the bank to “Stuff it!” whenever you can. So, it’s important for you to understand
also that if there’s a resale restriction in the deal, your closing agent, whoever’s
issuing your title insurance policy, whether that’s an attorney or a title company, it
doesn’t matter, but whoever’s issuing the title insurance policy, is probably not going
to like the idea of a resale restriction, and the reason is because it opens them up
to a potential title problem later, that they’re gonna have liability for. See, if you somehow
manage to get the thing song prior to this resale restriction expiring, well then, there’s
a title problem, and it falls back on the title company that issued the policy to you
when you bought the place so they don’t like resale restrictions either. Here’s my point,
you may be able to get your closing agent to go to bat for you and get the resale restriction
waved- they don’t like it either. Some food for thought. Now before I move on I’ve got
a very powerful strategy that’s gonna take a few minutes for me to lay out for ya, and
I know you’re gonna be glad you stuck around for a few extra minutes. Before I move on
though, I wanna congratulate you for being here, because if you’re here watching this
video now, what that means is resale restrictions haven’t caused you to tuck your tail between
your legs and go away assuming that this business doesn’t work. The fact of the matter is the
real estate business never stops changing and evolving! It’s fluid! It’s always changing,
and if you don’t like what you’re seeing, then it’s like the weather, you know if you
don’t like it wait five minutes, it’ll change. So then, just shy of 20 years of being in
this business,of buying and selling properties I can’t begin to share how much change I’ve
seen over those years. Not only change in one direction, but in many cases , change
back away, more of a recoil from things that lenders and governmental agencies have been
doing over the years. So, I congratulate you for realising it and understanding that this
is a changing, fluid environment real estate , and I hope that you’ll be like me and that’ll
be part of what makes it so fun! It’s never boring! No two deals are ever the same, and
the longer you’re in the business, the more you’ll see in terms of change and the more
opportunity you’ll see as well. Ok, so let’s talk specifically about this 90 day one, ok?
‘ Cause this is tough. Now if you’re familiar with me and the funding we do, you already
know that we just aren’t able to go out that far. Our theoretical maximum is about thirty
days, we may go a little over that, but that’s about it. And believe me, if we’re going to
hold the funding in place for that long, you’ve got to have a rock-solid buyer lined up, ready
to close, with skin in the game, whose not gonna wiggle out of the deal- simple as that.
We’re just not willing to go here to this 90 day figure. But there’s a wonderful strategy
that I recently kind of tripped over, that is absolutely unheard of in the marketplace,
that I wanted to share with you in this video. Now let me explain too, and I’ll probably
come back to this point after I explain the strategy. This one strategy, could easily
be in the eyes of another real estate trainer, not mine’85But could easily be in the eyes
of another real estate trainer, the basis for yet another $997 program. That’s not how
I roll, I don’t have a $997 program every few months to try to keep you focused on the
shiny object, ok? We stick to our core here, and that’s why I want to share this strategy
with you right now, and not charge you a dime for it. This is powerful, and I want you to
get this. Ok, so what we’re going to do, we’re going to run through a scenario where we’re
making an offer on a property, that we’ll say is Fannie Mae owned and they’ve put in
a 90 day resale restriction and we can’t get it out. How can we wholesale this house, and
not use any money of your own at all? And you know that my transaction funding is not
available for this either. How can you still do the deal? Ok, here we go. Now what I’ve
done is I’ve gone ahead and I’ve drawn a few boxes on here to represent the different players
on this strategy. Party A is the seller, and in this case, it’s Fannie Mae. And Party B
is You. Party C is your buyer. Typical sounding A to B, B to C transaction, with a twist.
Alright so, what we’re going to do is we’re gonna go ahead and put this thing on contract,
we’re going to agree to whatever price we agreed to, and we’re going to plan on this
A to B closing. This will be a cash transaction. Where’s the money going to come from? Your
buyer. So that requires that your buyer be a cash buyer. So this strategy will not work
if your buyer is going to get a mortgage at a bank. It’s just not gonna work. So this
needs to be a cash buyer. Now, you already know that cash buyers are the best buyers
in the business, there’s no doubt about it. And, the more often you can sell to a cash
buyer, the more quickly you’ll close, the more money you’ll make, and the less hassles
you’ll deal with. Cash buyers are the best in the business- they buy again and again,
they don’t evaporate at the eleventh hour, like so many finance buyers do. They stick
with the deal, if it’s a good deal, they’re going to close. They’re just the kind of buyer
that’s easy to deal with with no hassles. Now, if you’re not aware, you can get access
to cash buyers, known cash buyers from public data, all across the USA, at my cash buyer
data feed. Ok , so that’s @ cashbuyerdatafeed.com. You might want to make a note of that, ok
Cashbuyerdatafeed.com . And actually, right now, on the day of this recording we’re actually
running a trial offer there that’s a lay down, it’s such a great deal there’s no way you’d
say no to it, so check it out @ Cashbuyerdatafeed.com. Alright, so we have this cash buyer. Now instead
of selling to them on the normal B to C transaction, where the deed would transfer to them, we’re
actually going to insert in the middle of this transaction, a lease option. Now if you
happen to be in Texas, you might want to use a different instrument, you can talk to a
real estate attorney, and have him help you with that. But nevertheless, it can be done
in Texas too. But everywhere else, we’re gonna use a lease option, ok? So we’re going to
sell it to our buyer on a lease option. Now the money for our purchase is going to come
from our buyer. So this buyer, will fund the cash, but we will give them a mortgage, or
a deed of trust. So in effect, what is happening now, is our buyer is our private lender. So
we found this cash buyer, and they’re gonna be our private lender. They’re gonna lend
us the money. Let’s say we’re purchasing this for $100,000.00 and we’re selling it for $120,000.00,
ok? Now, you might argue, “Well wait a minute Cam, you could get away with the 90 day thing
here ’cause you could drop your price a dollar and get under that 20% markup.” Fair enough,
but just go with me, it’s an example, and hopefully the numbers are much bigger for
you. Ok so, we’re selling to our buyer on a lease option for $120,000.00. He or she
is lending us the $120,000.00 and we’re going to have a mortgage or a deed of trust. Now,
in order to close this transaction, we only need 100k, the other 20k is going to come
right out of the closing and go into your pocket. So you’re actually going to walk away
with your $20,000.00 profit when we close the purchase and sell to our buyer on a lease
option. This buyer will put up the full $120k , we only need $100k to satisfy the seller,
that leaves $20k for us at closing, there is a mortgage on the property, or deed of
trust, that we’re going to sign as the borrower, for $120,000.00. This protects your buyers
interests, so there’s no way that they could get screwed up here. Worst case scenario would
be to foreclose, but we’re not going to force them to do that at all, in fact we’re going
to put a deed in escrow. So, we will go ahead and sign a deed over to our buyer, Party C,
and the closing agent will hold that deed in escrow. So now the buyer is protected in
2 ways. They have a lean on the property, and they have a deed from you to them in escrow,
so there’s no way they are going to get screwed on this deal. They’re going to get their property.
So, let’s pause for a minute and look at the benefits and what we’ve done here. We’ve been
able to make this transaction, we close with $100k. It comes to us in the form of a mortgage
or deed of trust, from our buyer. Our buyer is a cash buyer, who we are asking to be our
private lender, for about 91 days, ok? We make the purchase, the $20k the buyer needs
to come up with, this is what they’ve agreed to pay for the property. That obviously represents
a big deal to them, or they wouldn’t be willing to do it. And we walk away from this closing,
the A to B, with our $20k overage. That’s our profit. The buyer is protected by a lean,
at the value of about $120,000.00, and a deed held in escrow. So, the closing takes place,
they now have this place on a lease option, they immediately go to work rehabbing it.
Ok, so we’re wholesaling here, we’re most likely selling to a rehabber, could be a landlord,
but they’re going to go about whatever business they need to do to prepare this property to
get this final transaction taking place. So they begin the repairs immediately. We know
we can’t resell the thing for at least 90 days, fair enough. So on the 91st of 2nd or
93rd day, even if you are out of town, you can send the closing agent instructions, your
buyer will also instruct the closing agent to go ahead and record the deed. Bam! The
rest of the B to C just took place. So this happens, on say the 91st day. So we’ve gone
ahead and adhered to the 90 day resale restriction, put our buyer in the house immediately so
he or she could get those repairs done, and begin lining up their D buyer. This is the
buyer to whom our buyer is going to sell to. So there’s going to be yet another transaction.
That will almost for sure involve financing, probably government financing. And so, your
buyer is likely to get this D buyer going before the deeds ever recorded if that makes
sense. Your buyer will understand this process without a problem, as long as they are in
the business doing deals, and their not a rank amateur. A rank amateur might not like
the idea of this. A buyer that’s in the business doing deals won’t mind it at all, especially
if, and I keep coming back to this, this $120,000.00 is a great deal. It needs to be a great deal
for your buyer. You know it’s amazing, ’cause when you give your buyer a great deal, they’ll
jump through rings of fire to get at it. That’s just the nature of what we do. You as a real
estate investor have probably found yourself in a place where you’ve been willing to jump
through rings of fire to get a great deal. So as long as that’s a smokin’ deal, and you’ve
got a buyer who’s not a rank amateur, this works beautifully. It gives them time to do
the repairs, get their buyer lined up, record that deed as soon after the 90 days as possible.
It’s already in escrow so there’s no risk. The mortgage gets extinguished at the time
that that deed is recorded. All of this is handled by the closing agent, and then they
line up their deed buyer and cash out. So, it’s a way to get around the 90 day restriction
that doesn’t cost you, really, any more money. Now there is one expense that we’re going
to incur here, and it’s something you need to consider, and that’s the tax on recording
this mortgage or deed of trust. In most counties and most states there is some sort of mortgage
tax. Now there might not be where you are which would be great, but for most of us there
is. There is here. It’s not a lot of money, but it’s an additional expense. I’m here to
tell ya, I’d rather pay the fee to get this mortgage recorded, than either not do the
deal, or have to figure out some sort of funding so I can sit on the thing for 90 days so I
can get my $20k. The last thing you want to do, is fund this thing, and have it sit empty
for 90 days before you turn around and resell it. That’s where the 3 V’s come in. I call
’em the 3 V’s. Vermens, vandals, and vagrants. Vacant houses- they’re targets, and so it’s
one thing to buy em, but it’s another thing to own ’em and be sitting on ’em while their
vacant. Not a good plan. This avoids that. So, let me go through it one more time just
to review and make sure you got it. Here’s your seller, it’s Fannie Mae. They got a 90
day resale restriction. We buy it for $100k, we have it under contract for $100k. We go
an we find a cash buyer who’s willing to pay us the $120k, that’s needs to be a great deal.
We go ahead and we talk to this buyer, explain what’s going on. Their going to know how much
you’re making on it, ok? That’s going to be a given. Get them on board, they go ahead
and lend the $120k, the property is the collateral, you are the borrower, you only need $100k
to satisfy your seller, so you leave with the overage of $20k here, ok? You got a few
closing costs here and there, there is one additional fee that you will incur here, and
it’s likely you’ll get stuck paying this, maybe not. Maybe you are a good negotiator.
It’s gonna be the tax on recording this $120k mortgage. The way that we put this property
in the hands of our C Buyer temporarily is on a lease option. Ok, so they have rights
to use the property, to fix the property, and their protected by this mortgage, and
we’ve gone ahead and signed a deed, from you and your entity to your buyer, that’s held
by the closing agent, that will get recorded after the 90 days have ticked off the calendar.
So on the 91st day, maybe it’s the 95th, depends on how the weekends fall or whatever. But
on the 91st day the deed gets recorded to the buyer, the mortgage is extinguished, you’re
out. You were pretty much out when you took your $20k anyway, however you are on title,
or your entity is on title until that deed gets recorded. This one being held in escrow
on the 91st day, you’re on title until that happens. When that gets recorded, you’re really
out. Now you’ve already gotten your money and now you’re no longer on title. They’re
on title, they turn around and sell to their D Buyer. During the 90 days they’re doing
their repairs and they’re getting their D Buyer lined up. So it’s win, win, win, win.
Everybody wins, and we get around that 90 day resale restriction. So, we need a cash
buyer. Now remember cashbuyerdatafeed.com. That’s where you’ll find cash buyers all across
the USA. In fact we added 38,000 last month. That’s from public record. It comes from several
different databases. Phenomenal service, and dirt cheap. We need a cash buyer. We are going
to turn him or her into our private lender temporarily. They’re basically going to put
out the money now, and in effect they’re lending it to us, even though what they are really
doing is they’re just putting it into the property and now they’re going to do the repairs.
And what protects them is the mortgage and the deed in escrow. And by the way, if private
lenders excites you, and they should because this building I’m standing in right now is
funded by a private lender, then you may also want to check out the private lender date
feed, which is known private lenders from all over the USA coming from public record,
from several different data sources, where we clean and scrub that list down to just
the private lenders that we want. Oh my gosh I think we added 8,000 new ones last month.
So, that’s another phenomenal service dirt cheap and there’s a trial offer there going
on as well. Privatelenderdatafeed.com. So, here’s a great solution to get you past a
longish resale restriction. One where you can continue to do the business, make lots
of money, and watch your competition whither, because they don’t know about this. They weren’t
smart enough to come here. You were. Congratulations. I hope to talk to you soon, goodbye. }

6 thoughts on “Overcoming Lender Resale Restrictions: Make Money in Real Estate Flipping Houses

  1. Hay Cam, Enjoyed your video on over coming lender resale restrictions. Was wondering why did you not just buy from bank in a land trust and assign BI to your lender/buyer?

  2. I thought the property could not be sold or encumbered for more than 120%…placing a mortgage on the property for 120% would seem to conflict with the restriction..

  3. To learn how to flip items, go play Runescape.

  4. What are the tax consequences to Party B? Seems you would be subject to short term capital gains taxes.

  5. That would be on the B – C transaction, not the A – B.

  6. Is this strategy still legal/acceptable?

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