I have made several offers over the past few weeks and the three Fannie Mae properties have all had different requirements!
The only similarity between any of them has been the requirement of a 10% EMD.
Property #1
Offer was submitted with all required Realtor forms along with Proof of Funds and EMD.
After offer submitted they came back and asked for highest and best because they had multiple offers on the property. I lost out because I was not willing to go higher than my predetermined amount.
Property #2
Offer was submitted with all required Realtor forms along with Proof of Funds and EMD. In addition I had to sign the 15 pages of addendum’s provided by Fannie Mae.
I am still waiting to hear back on this offer. I do not expect them to accept my offer, rather I think I will go into negotiation. I have my predetermined offer and I am not willing to go any higher.
Property #3
Offer was submitted with all required Realtor forms along with Proof of Funds and EMD. No addendums were required but the Realtor has requested that I have a letter from my lender saying they will provide the funds.
This is a little bit of a strange situation. I am buying the property into my LLC and the funds are coming from a separate business. They have said that my proof of funds must match up with the buying LLC. OR…I can get a letter from the business who is holding the funds saying that they will provide $X amount of funds for the purchase of 123 Street.
I am noticing that there are a ton of hurdles to jump through when offering on a Fannie Mae property. Some are easier than other and all of them may require something a little different. I am not sure why this is but it is a good learning experience and all I can do is learn and continue to make offers.
I already have my eye on several other properties and plan on continuing to make offers until I can get a few under contract.
The last two are still up in the air and I will keep you posted.
The point of this post is to let you see some of the differences that you may encounter while dealing with Fannie Mae owned properties.
Good Luck and Happy Investing!
Ross Treakle
Ross,
What you are describing sounds like most REO properties today, whether it be Fannie Mae, Freddie Mac or any other bank, they all have different hurdles to jump through, just to submit your offer. As yes they are requiring that the proof of funds be in the same name as the buyer or at minimum the proof of funds holder to be on the contract. The only good news is you can chose how you are going to hold title.
Richard Gregg
No wonder no one can buy any property.
Very few would want to be investors have 10% down after they get POF.
Unless you get 100% POF with $ 1000 dollars earnest money very few if any Realtor will even continue from that point. How are you getting POF for any more then 48hrs. I sure don’t have access to that kind of relaxed funding sources..not without some high fees upfront or expensive memberships before having access to this longer term loan.
Now with the seasoning issues 1-3 months.. who can afford that. There is some company called Artice funding that will do this for and expensive fee (1-2 grand) and 2-3 percent loan fee on top of loan amount. Plus even if you get this money your still stuck with 1-3 months of payments,prorated 1-3 months property taxes. After all this and closing cost after 1-3 months could run up to 10 grand ..better hope to get property real cheap with room to sell for some profit.
My question is who really is making money in real estate out there..
Is the guru selling how to do it that has not sold a property in years…why?..no money in it and insane bureaucracy.
Until next time nice taking to you!
Pat E.
It is Saturday and I have things to do so I am going to make this short…
You need to have a private lender who will provide you with the…
1. earnest money when the property goes pending
2. remaining cash when you buy
3. cash in order to fix the property so that it can be resold quickly for a profit
The first key is in how you buy. You have to buy at a big enough discount so that the deal is profitable. Real Estate Investing is about the numbers, not anything else. You can use the Ron Legrand formula of take 70% of the ARV (After Repair Value), subtract out repair costs and then you have your highest acceptable offer. A lot of people are modifying that formula to 65% or even 60% of ARV due to the current market conditions.
Then you need to have your financing lined up. I am starting out giving 50% of profits on the deal to my partner. I think it is a great deal. I get experience and profit now and in the future I will have leverage to negotiate for better terms.
You can get around the 90 day deed restriction by not buying Fannie Mae properties and reselling with the buyer using a conventional loan.
I will cover this more next time but I want to address one more thing…
Yes, there are “guru’s” making money in this market. The guy who I am learning from, who has a course, is doing more deals right now than most other investors do in an entire year…period!
Ross Treakle