View Full Version: How Are You Getting Paid Doing SS Flips?

How Are You Getting Paid Doing SS Flips?

GKREI
2008-03-21 16:39


1.How are you getting paid doing SS flips?
2.Are you using a land trust and then assigning beneficial interest?
2a. Is the end buyers bank saying anything about it being in a land trust? (from what i have been told is you must take it out of the trust)
3. Is it considered title fraud to use a land trust to flip the property?

I have been hear more and more that land trust cant be used. How do you make a large profit and do it legally? Can anyone spell it out for me and others that need the help.


CincyRealtorNKY
2008-03-25 10:24

I'd be interested as well. I currently have 14 ShortSales listed. There's a goldmine in there, besides the commission. I just need to figure it out. The right way.


jackbenimble
2008-03-25 10:57

1. Get the deed (dont record yet) submit your offer to the bank 3. Once bpo is done record your deed and list. 4. find your new buyer 5. get your release/payoff from the bank 6. Escrow coordinates a simultaneous close 7. You collect 100% of the margin

Must Haves
- Title company that will insure the policy with only disclosures to buyer and seller, NOT either lender.
-Escrow officer that has experience with simul closings
-Make sure your end buyer has an updated prelim before they submit their loan.

No land trust is needed. Seasoning is NOT an issue no matter what you might hear.

Sounds easy right? It is once you get it down. Good luck.


[ Edited by jackbenimble on Date 03/25/2008 ]


Qwest
2008-03-30 14:41

Jack, to further elaborate on your explanation. You mention to record the deed and the list the property after the BPO is done, but prior to SS approval from the bank?

If you then record the deed does the lender then not see that you are the new owner and the hardship is lost? I have heard if you record it, then the bank may not do a short because you are now the homeowner.

Additionally, if you record it then there would be no simultaneous close because you already own it and are just selling it. I think i misunderstood that part, so your clarification would be appreciated.


loon
2008-03-31 10:12

You can record what you want, the bank won't see who's on title, their eye's on the prize. But you should wait til you have a decent chance you'll get approved. The sooner you record, the longer title will season while the approvals and payoffs get processed. If the SS takes 6 months like many do, you'll be seasoned before you pay the bank off. If the SS goes faster, a good title company (hard to find!) will arrange the closing so seasoning isn't an issue, though there is some grey area there that could alert an attentive lender, esp. these days.

I'm still not convinced there isn't a bit of loan fraud involved (I know Jack will dispute this, but I think he does his own loans, making it a smoother process) due to the flipping aspect of a double close like this, which is really under scrutiny these days. But if no one complains or notices, and all parties are happy with the deal, it should go smoothly.

Don't be afraid to casually ask the bank's loss mit rep what the BPO came in at, I'm amazed at how often they'll tell you this privileged info if you slip the question in while you're asking for other info. I was able to get a SS house for $20k less than I was going to offer the other day just by asking, and adusting my offer accordingly, to about 80% of BPO. They didn't even counter, maybe I should have gone lower...

[ Edited by loon on Date 03/31/2008 ]


GKREI
2008-03-31 10:20

Are you just getting a regular warranty deed? What happens if you dont get the SS approve or dont find a new buyer in time?


loon
2008-03-31 12:09

Recording the warranty deed can happen independently of any financial transactions. You record the deed asap so you can start the seasoning, stop any more liens and judgments from encumbering title from seller's problems, and in case any other investors are trying to get your deal. Some sellers will sign multiple deeds to different investors, they can get confused by everyone teliing them they can fix their situation.

if you don't find a buyer in time, be ready to close with hard $ or walk away from your earnest $ and tick off the bank and your title company. Good to have a back up plan, if this was child's play it wouldn't be profitable.


jackbenimble
2008-03-31 20:06




Quote:

On 2008-03-31 12:09, loon wrote:
Recording the warranty deed can happen independently of any financial transactions. You record the deed asap so you can start the seasoning, stop any more liens and judgments from encumbering title from seller's problems, and in case any other investors are trying to get your deal. Some sellers will sign multiple deeds to different investors, they can get confused by everyone teliing them they can fix their situation.

if you don't find a buyer in time, be ready to close with hard $ or walk away from your earnest $ and tick off the bank and your title company. Good to have a back up plan, if this was child's play it wouldn't be profitable.



Loon,
Good afternoon.
Recording the deed unfortunately does not prevent future liens or encumbrances from popping up on title.

As I've mentioned before, seasoning is not an issue as we have dozens of deals under our belt where the 'deed' was not recorded till just before closing. I would highly recommend not recording the deed till at least your bpo is completed. Mainly bc lenders are looking at title more and more prior to approving a deal. Some don't care while others want explanation and yet others flat out decline putting you back another 3-5 weeks. It is most likely not a deal breaker, just my opinion to save people frustration.

If one is good at establishing a repore with the distressed homeowner and conducts business with effective frequent communication and professionalism then clients won't do business with other people.





jackbenimble
2008-03-31 20:20




Quote:

On 2008-03-30 14:41, Qwest wrote:
Jack, to further elaborate on your explanation. You mention to record the deed and the list the property after the BPO is done, but prior to SS approval from the bank?

If you then record the deed does the lender then not see that you are the new owner and the hardship is lost? I have heard if you record it, then the bank may not do a short because you are now the homeowner.

Additionally, if you record it then there would be no simultaneous close because you already own it and are just selling it. I think i misunderstood that part, so your clarification would be appreciated.





You need to seperate transactions otherwise you would have to disclose your profit on the HUD and to both lenders, killing the deal.


loon
2008-03-31 21:24

Jack

Recording the deed, at least where I live, means the former (and presumably struggling) owner is no longer on title. Any liens/judments they get--from unpaid creditors, etc.--can't harm the title anymore. The courthouse cannot record anything on a property unless that person is on title, which they're not, after the deed is recorded.


jackbenimble
2008-04-01 10:54

Loon,
I'm sorry but whoever told you that is wrong. This is the law in your state.

https://www.revisor.leg.state.mn.us/statutes/?id=514.41





[ Edited by jackbenimble on Date 04/01/2008 ]


LOSSMITCRUSHER
2008-04-01 16:45

Jackbenimble!! man your right on top of things! lets do some deals!


ypochris
2008-04-01 17:34

Not sure how a law regulating leins on timber relates to this discussion- was that the correct link?

Chris


jackbenimble
2008-04-02 20:46

We are not talking about an insured policy are we?


bgrossnickle
2008-04-02 23:45

In Florida, once a property has been deeded to a new owner, no encumberances from the previous owner will attach. Of course in some cases the deeding could be considered fraudulant and there could be a look back period (deeding right before a lawsuit, right before you apply for government benefits, etc). But for most real estate investing purposes, additional liens from a previous owner will not attach.

Also in FL, once the Les Pendens is filed, additional liens will not attach. I had thought about getting paid for my foreclosure services by filing a lien on the property. My title guy said that technically, my lien would not attach if an LP had already been filed.


loon
2008-04-06 18:16

Jack, Thanks, but the question was about judgments, and though I did reference "liens," I was replying only with respect to Minnesota statutes on judgments, which I know pretty well. The link you put was for liens only and, as Chris said, only pertains to timber issues.

Even when perfected/docketed judgments are different from liens, which are typically for work performed but not paid. Judgments here do not encumber property except in very specific situations, and only if filed before property transfer.

Unsatisfied judgments may give title companies reason to deny title insurance, though this really just reflects title company pickiness. In the case I spoke of, the title was insured for a Wells Fargo refi despite the presence of an unsatisfied $5000 judgment, on the title holder, incurred since the original loan and while on title. Not exactly a hidden title defect, and easily found; it was in the same county as the property! Yet the refi was done, the loan funded...then two years later, I shorted it for 50c on the dollar.

In the case of non-homestead property ONLY, judgments could cloud clear title, at least if filed before the transfer. A case could be made to unwind the chain of title if a transfer like mine occured, with or without title insurance, in this case. Then I'd have to satisfy the judgment. I'm prepared to do that if necessary, but my RE atty says "don't worry about it, they can't collect."


jackbenimble
2008-04-08 11:51

Quote "stop any more liens and judgments from encumbering title from seller's problems"

I am talking about a lien such as a mechanics lien commonly found on pre foreclosures. You are correct in your point regarding judgements. A judgement such as child support is imposed on the individual's assets not the property itself. That is only part of your blanket statement above.


chrysology
2008-05-21 14:37

Anyone here familiar with using a land trust in South Carolina & are there any unusual obstacles in doing so?


charlotteinvestor
2008-05-23 00:59

a memorandum is giving the buyer the terms at the time the property went under contract, so if a judgment is filed later, too bad for the judgment holder. at least here in nc since we are a racing state which mean he who files first has the superior position. that is why once an agreement is made people race down to the court house to file their agreements for this same protection.


ypochris
2008-05-23 08:42

The current tendency in the judiciary is to discourage racing to the courthouse- I just read a case in Utah where the state supreme court specifically rejected an arguement because that interpretation would encourage the "race to the courthouse".

I guess other states are different, but the trend is to discourage this.

Chris


charlotteinvestor
2008-05-23 09:23

so Chris how does this relate to the filing of a memorandum and its protection in that sort of state?


ypochris
2008-05-23 20:16

Basically the judges ruled that the intent of the law is more important than just filing first. This wasn't specifically on point, but I would suspect that if a lien were filed shortly after a memorandum, the lien would still have to be satisfied before the property could be transfered- especially if the action the lien was based on pre-dated the memorandum.

This is the case to some extent in most states with certain types of liens- for instance, a mechanic's lien dates from when materials are first delivered to the site or labor is first performed, even if it is not filed until six months later.


charlotteinvestor
2008-05-24 05:29




Quote:

On 2008-05-23 20:16, ypochris wrote:
I would suspect that if a lien were filed shortly after a memorandum, the lien would still have to be satisfied before the property could be transfered- especially if the action the lien was based on pre-dated the memorandum.

This is the case to some extent in most states with certain types of liens- for instance, a mechanic's lien dates from when materials are first delivered to the site or labor is first performed, even if it is not filed until six months later.

this mentality doesn't exist in a racing state such as NC. What i learned in the state real estate agent course was that whoever file their agreement first has the recourse.

Which means if a second file before the first deed of trust then the second proceeds. In such cases first lien holder request that the second name their agreement the second deed of trust.

i can't imagine a judgment filing after any agreement and holding precedence.


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