Walker’s Wholesale Houses

Below is what I found written up.

FHA will look at the most current legal owner of record and the date they acquired title to the property to begin the 90 day clock.

As a specific example, if a seller acquires title on June 1st and then transfers title to his/her LLC on July 15th, the 90
day rule applies from July 15th not June 1st.

This is true even if the seller is 100% owner of the LLC and no money exchanged hands.

FHA simply looks at the date title last transferred and that is the date they use. The name of the seller on the contract of sale must be the EXACT name that is currently on title.

There may be variations allowable to these guidelines.

Are you a real estate investor looking:

• For pre-foreclosure homes in Richmond VA?
• For sub2 deals in Richmond?
• For deals with owner financing in Richmond?
• Low priced houses to rehab to keep as rentals
• Cheap Houses under 50K in Richmond VA?

How much time do you spend looking for houses?  Combing through the real-estate wanted ads?  Searching through the junk on Craigslist?  Hoping to find the motivated FISBO?

We take the hunt out of the equation for you so you can focus on what you do best.

We find those homes where foreclosures are coming, and we can bring them to you with creative owner financing or deeply discounted for cash. 

See what we currently have in our inventory, or grab our feed or signup for our email alert system to get instant notification when we have a new home for you.  It might or might not be in foreclosure.

We do not handle REOs, after they have gone back to the back.  We deal only in pre-foreclosures.  If you are looking for REOs in Richmond, I can refer you to a realtor who has helped me deal in houses.

Occasionally, we have houses in our inventory in Richmond or Petersburg Virginia for under 50K.  Check out our current inventory of available homes to see if any qualify.

To get an automatic notice of new houses that we post, grab our RSS feed, or get our investors only email.

We specialize in finding undervalued houses and bringing you great deals. 

Houses under 50K can still be found in the Richmond Market.  Take the pain of hunting out of the equation and give me a call at 804/915-9475 and ask me what I know about houses under 50K in Richmond Virginia.

Some of my business associates may have something available in their inventory that I can refer you to.  I know what my credible associates have in their inventory and will be happy to refer you.

Prior houses under 50K

33K for this little house house.

20k for this teardown

8K for this remodel (not in Richmond)

17K for this townhouse.

Capitalization rate (or “cap rate”) is a measure of the ratio between the cash flow produced by the rental property that you have purchased as a real estate investments and either its original price paid or its current market value.

• annual cash flow / cost (or value) = Capitalization Rate

Cash flow is the amount left over after all your fixed costs and variable costs are removed from your gross rental income for the year.

That is the general way to compute the cap rate for your rental property.  The average nationally, according to Wikipidiea for rental properties is running about 5%

Example:

Let’s say you paid 65,000 for a property that produces a $900 a month rent.

Closing costs and fees run say $3500 for a total in price of $69,000.

Annual cash flow = 10,800 a year income less your expenses, assuming no vacancies.

For this example, 100% down at 6.5% yield PI at 436 a month or 5232 for the whole year, leaving 5568.

Taxes and insurance at $170 a month (2040 for the year) leaves 3528, annual cash flow.

Thus annual cash flow / 69000 = Cap rate of 5%.

Variables

There are all sorts of other variables to consider such as future repair monies, vacancy credits, and simple overhead such as accounting and things like depreciation expenses.  How much fine tuning you want to do is up to you.  Some investors will include the vacancy rate, others will not.  It’s your choice.  It’ll still impact your rate.

There are also other formulas out there as well, but this is one commonly accepted version.

Wholesaling houses is all we do.  That is our particular real estate investor niche and our particular area of focus.

So you want to know how to wholesale a house?  Let me give you the big picture steps.

1.  Find the Property.

We spend thousands of dollars to find the wholesale property for you.  We screen the sellers of the real estate, we filter out those who can’t sell out a discount and find something that is workable.  We handle the phone calls.

For every 100 calls we screen, one may make it to the level of deal.  That is where most of our time is spent — finding the property for you.

2.  Put the property under contract

Get a contract on the property with the seller.  Make sure that your real estate contract is valid for your state.  Make sure that you have clauses to back out of your contract with the seller.

We make sure that we have a time limit built in and that the seller knows that we will locate an investor from our private buyer’s list.

3.  Photos and Videos

Have photos made of the property and if you good at assembling them into a video, make one.  Put  these on your website.

4.  Put the property in front of your buyers list.

Post the links you created to advertise your house online and send them to you buyers website and publish the link to your wholesale buyer’s list.

5.  Expand your marketing.

Use the free online classifieds to market the property link as well as the link to your buyer’s list so that people can sign up for it.  I have found that with almost every house, using the free online classifieds brings more buyers to my list for the next possible house.

6.  Find your buyer and get their deposit.

Once you locate your buyer, get the property under assignment and collect that deposit.

7.  Take it to closing.

These 7 steps are the basic process that I use to wholesale houses full time.  The bulk of the work is done in the marketing and screening of seller calls.  We handle all that so you don’t have to.

Freddie Mac Cuts Maximum Number of Financed Properties

Freddie Mac recently announced guideline changes that will greatly affect residential real estate investors.

Beginning August 1st, 2008 the following changes will go into effect:

A borrower may not have more than four financed 1-4 unit properties, including the subject property.

For cash out refinances the borrower must own the property for at least six months prior to refinancing.

For a complete update on new Freddie Mac guideline changes go to: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll042208.pdf.

What does this mean to the investor?

Under current guidelines for Freddie Mac and Fannie Mae an investor is allowed to have up to 10 financed properties. This change will prevent an investor who has more than 4 financed properties from obtaining a mortgage with lenders who sell their loans to Freddie Mac.  
Currently Freddie Mac and Fannie Mae do not have loan seasoning requirements on investment properties.

The second guideline change would affect investors purchasing properties with hard money loans, lines of credit or cash with the intent of refinancing to pull cash out.  Under the new guideline an investor would have to wait 6 months in order to process a cash out refinance.
Fannie Mae and Freddie Mac are for-profit, privately capitalized government-sponsored
enterprises that purchase the majority of conforming loans. Most all conforming lenders now underwrite strictly to Fannie/Freddie guidelines. 

Source: REIN USA

For investors that deal in Short Sales, there is a new tax relief for homesellers who complete a short sale.

In the past, the forgiven debt could be taxed by the IRS. 

Under The Mortgage Forgiveness Debt Relief Act of 2007, up to $2 million of the canceled debt on a principal mortgage is now tax free. The new law does not apply to investment property.

Source: Short Sale and Foreclosure Tax Break

This may mean that you may have to update your disclosures.  It may also increase the incentive for home owners to complete the short sale with you as their canceled debt is not taxable.  Notice that this is for primary residence only property.