Flip Financing
27. Oct, 2009 
15 Comments
Here’s a quick video I made for you about flip financing.
This is in response to the question I’ve been getting a lot lately: “What’s the deal with this new 90 day funds program?”
Well, here’s a quick (13 min) video that explains not only what’s up with it but how to get access to it!
If you’re working short sales or want to be able to flip to FHA buyers before the 90 day “seasoning” requirement, just press the blue arrow in the center of the video to watch. And then here’s the link to grab the offer: http://www.getflipfinancing.com
Nice job Susan. Aaegis in Tampa seems to be very good way to go on the flips. I am in commercial, specifically, Assisted Living Centers and Mobile Home Parks. Have not had an opportunity to run anything by them as yet. Thank you for doing this. LF
This is great. But… I have a flip that I have had for over 90 days; Where do I find a lender? This is good for getting around seasoning. Where can I get financing on a property I own free and clear as a investor because I cant find a buyer who qualifies?
Hey Gwen. This won’t work for the one you’ve had for 90 days since it has to be with them from the get-go. With your free & clear it’s a cash out refinance to you that requires 12 mos seasoning if you refi in your name. Regarding selling – if you’ve had it over 90 days you can sell to someone using FHA financing. Or you could offer seller financing to avoid both of those issues.
Dear Susan:
It has been since 1997 that I started attempting to
wholesale; spent over $30K literally in my efforts; to include what was blatantly stolen from me by the unscrupulous – I have gotten over it, except that I am now in foreclosure – another matter that was brought on by mis-representation on the part of the lender.
I had to stop cold with the changes until I saw this. Thank you for sending the invitation to me. I want to jump in now! I need your help – How can I purchase the program on a two-part payment plan?
I am not stopping now and need to recover my integrity. With $15K to present to prevent my foreclosure, and with my flipping experience, this program is the best way I see that can provide me with the avenue to make this work and save my home and resume my real estate efforts.
Sincerely
Sidney
(941) 474-7756
It sounds like a good idea but I would be a little concerned about paying $1,000 to get into a program that could go away next month. Is that a concern for anybody else?
HI SUSAN,
I AM NOT UNDERSTANDING BY WHAT YOU MEAN TO GIVE THE
PURCHASE AGREEMENT TO AEGIS? WHICH PURCHASE AGREEMENT?
ALSO, ON A SHORT SALE, JUST BECAUSE YOU HAVE A SELLER SIGN A PURCHASE AGREEMENT THAT DOES NOT MEAN THAT THE BANK(S)
ARE GOING TO ACCEPT THE OFFER. CAN YOU PLEASE CLARIFY.
AT THE PRESENT TIME, I HAVE ALREADY MADE A CASH OFFER ON
A PROPERTY WITH A FRIEND BUT WOULD LIKE TO MAKE THESE OFFERS ON MY OWN. HOWEVER, WE HAVE THE DILEMA OF THE 90 DAY RULE AS YOU MENTIONED ABOVE THAT WOULD ALLOW US OR ME TO DO MORE DEALS.
PLEASE CLARIFY. THANK YOU
Hi Mike,
It means just that. You give the purchase agreement to Aegis and they fund the deal.
That is true on short sales. Obviously you have to work the short sale and get an approval from the seller’s bank.
I second Scott’s opinion that why should potential investors have to pay an upfront charge of $1,000 before they even have use of the funds.
Besides, I don’t think Aegis can guarantee funding even after a new investor spent the $1,000 buy-in fee.
Besides, I just learned that Chris and Nathan are equity owners in Aegis RE Fund, meaning they double dip on bring clients into the system, as well as profit on the lending back end. Pretty profitable.
I hope competition arrives soon so that Aegis is not the only game in town for 90-day funding programs.
This just motivates me to find my own private funding.
The way they are packaging it is the $1K is for the training, not the funding. Access to the funding source is just part of the perks. As a former mortgage broker, I was a little surprised they were positioning it that way. I think they’d make more by opening the program up to all and charging a few more basis points per transaction. They’d make more and we wouldn’t have a concern. I’m shopping the structure to a couple of hedge funds I know to see if I can drum up some competition. In the meantime, I agree… if this isn’t for you then private money is the way to go.
Hey Susan. Good video. But here’s the flaw in how this would interact with an FHA deal:
* FHA now has the inglorious 90 day seasoning rule (we all know this)
* This rule says you cannot GO TO CONTRACT TO SELL to an FHA buyer until the 91st day after you’ve owned it
* Then you’re going to have at least another 45 days (maybe more) before you can actually close your B-C.
* So by default (and by necessity) any deal with an FHA buyer in the B-C position will fall in the most expensive 18.5% capital contribution category (according to their schedule about halfway through your video) and require the highest minimum profit margin (greater of $18k or 18%)
The $64,000 question: How good of a deal does it have to be in order for this to work for an FHA buyer at these terms?
Remember, if your buyer is FHA, then the house must pass an FHA inspection & appraisal…which means it’s gotta be in pretty darn good shape on day 91 when you go to contract with your buyer.
So either you’re buying a real fixer and repairing it during those 90 days of waiting (will Aiegis even allow you to buy a rehab deal? I don’t think so…)
OR you’ve got to get an ABSOLUTE KILLER DEAL on a house that’s already FHA worthy.
So I’m not saying it’s IMPOSSIBLE to work with an FHA deal. But for like 99% of the flips where the house is already FHA worthy…it’s just not going to work cause you can’t get a good enough deal most of the time.
So I think what these guys have is a good program, but I think it’s a big mistake to say it’s THE SOLUTION to the FHA 90 day seasoning issue.
Do you see this any differently?
…jp
Kind of. 45 days to close an FHA deal is a LONG time. There will be instances when 120 days won’t be long enough to get it done but I think that will be the exception and not the rule. Why wouldn’t Aegis let you rehab the property? Obviously it will work a LOT better for conventional loans that only have a 30 day seasoning requirement vs 90 but, hey, it’s a possible solution. And it’s my responsibility to report it.
Hi Susan,
Good information. I’ve been searching for a 90 day flip lender for some time now. I am glad that someone have come forward with it. I have approached traditional transactional lenders as well as hard money lenders to see if something like what Aegis is doing could have been created. So far, until Aegis, everyone I spoke with was stuck on their business model, one only lending for 24-48 hrs and the other requiring heavy fees upfront and a high APR.
Needless to say, I was frustrated. I could understand hard money lenders to charge their fees when the market was going upward out of control. But now, depending where you are, the market value of the properties have decreased substantially. As you know, assuming a house in good condition, lenders will accept a certain percentage of the BPO, leaving a smaller spread on the resale of the property (assuming resale at BPO value). Not enough to pay the excessive fees. Of course it also depends on the property value ($100k vs $1M). At least that is my take.
I am not too crazy about the fact they are the only ones providing this service or that $1K is required to get access to them. For som of us that have invested on short sale education from some other people it is frustrating. However, $1K is less than the upfront points from hard money lenders. And I assume it is a one time fee. Still, not crazy about it.
Regarding giving them the P&S agreement, I guess it depends on how the JV is written. Who is the buyer, Aegis or the investor? Are they closing in their name on the A-B transaction? Then just take a fee on the B-C? I guess I would need to invest the $1K to find out more.
I see the benefit of a transactional lender that is open to 90-120+ days funding. This could be heaven sent. This could be combined with other “gurus” techniques and really make it outstanding, making it an extreme win-win-win. You can schedule your A-B closing and it their is a complication on your B-C you don’t have to sweat it. It will cost you more but you don’t have to go back and postpone your A-B or juggle the seller and the bank that want to get rid of the property.
I look forward to what you can come up with the hedge funds. I believe competition is good and needed.
Gracias,
José
Maybe another transactional lender will step up and offer an additional 30 day loan that piggy backs the Aegis program.
So, on the 90th day if your FHA sale has not closed the newer lender steps in and buys the property from Aegis and gives you an additional 30 days at a fair rate, providing the deal is still solid.
Hey, I’m sober when I wrote this…
Toby
LOL! Well, I’m not since somebody spiked my coffee with Bailey’s Irish Cream this morning but here goes…
In the Aegis JV agreement it says that you can “negotiate” to go past 120 days but if you haven’t made that agreement at the inception of the JV then they KEEP the house at day 121. So, good news is there is a provision. Bad news is it’ll be expensive and you could potentially lose the house altogether if you haven’t prepared for that in advance.
You guys looking for a transactional lender to “step up” and start offering 30 day or more financing…remember what that’s called? A hard money loan. And it’s WAAAAY riskier than a transactional (1-day) loan.
And keep in mind, Aegis isn’t offering “financing” here. It’s equity partnering.
For the record…
…jp