As a real estate agent, I'm sure you've had lots of wanna be investors come out of the woodwork who want to take advantage of this great opportunity in purchasing and reselling REO and short sale properties. They tell you they have funding, provide you with a proof of funds letter, and have you start making offers. However, when its time to close, they don't follow through and the deal falls apart. WHAT HAPPENED?
The key is in understanding what kind of financing or proof of funds they actually have. I've discovered some investors only have transactional financing, meaning they only have funds to close the property and intend to resell the next day to another buyer. Although that's fine, if its legal in your state, and the title company is willing to perform a double close transaction (some are and some aren't), make sure you know the facts on the other end of the deal ..... in other words, know your investor's exit strategy. Does the investor intend to buy and hold, resell immediately, or rehab then flip, etc. Knowing this ahead of time is very important.
I'm not saying don't work with investors -- this is a great time to work with investor buyers. Investors are currently buying a majority of the properties in Las Vegas right now, absorbing a lot of short sale and bank owned properties for amazing prices. However, it is a must to understand your investors exit strategy in order to manage the first, and maybe subsequent transactions, getting you multiple commissions.
If they plan to hold the property for at least 90 days to resell to an FHA/VA buyer, make sure your investor has that type of financing in place so you don't get surprised when the deal doesn't close. In otherword
Now get out there and make some money!
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