I love it when people write to us and complain that something is impossible in real estate investing simply because there is a little roadblock in the way.

Recently we received an email from a frustrated newbie investor who all but quit trying to get started in real estate investing because he has been trying to invest in REO’s… but banks have changed a bit recently.

Here’s his problem:

“I’m convinced that buying REO’s is an almost impossible way to get into the wholesaling real estate business.  The banks have been putting non-assignability clauses in their contracts and have been enforcing them everytime.  Now, I can’t wholesale these contracts to my buyers.  Is there a way to go around this? J.M. California“

Well J.M., some savvy investors out there (the one’s who look for solutions rather than problems) have developed ways to get around the non-assignability clauses that banks have been enforcing recently.

Personally, I don’t do a whole lot of wholesale deals, so I haven’t encountered this situation.  However, I know many investors around the country who are effectively getting around the non-assignability clause.

The way that many investors are getting around this clause is this:

1. Find the property, work the #’s, and determine the numbers work
2. Make your offer by the name of an LLC named after the property (i.e.- 123 Oak st LLC)
3. Offer is accepted by bank
4. Go out and set up the LLC 123 Oak St LLC (usually costs between $50-$100)
5. Now, go out and find a buyer for the property. 
6. Once you have a buyer, instead of assigning the contract over to them… draw up a contract where they purchase the LLC (which the bank has already agreed to sell to) for the amount of your assignment fee.
7. Your buyer can either pay you the assignment fee ahead of time, or usually the best way is to get your money at settlement.

Wow!  Amazing what a bit of critical thinking will produce. 

Using the above strategy completely avoids the non-assignability clause because there is never any assignment of the contract.  You are simply selling the LLC for an amount that equals your assignment fee.

Now, as you know, my specialty is investing in income properties so wholesaling isn’t a big part of my business.

—————-

For about 3 years I really never understood what wholesaling was and exactly how to wholesale real estate.  Every article I read about wholesaling gave me outdated information that led me to be like the guy (J.M. from California) who wrote that frustrated email that I referenced in this article. 

However, I found the guy who we over here at The REI Brain consider to be the #1 most honest, straight shooting, real estate expert who also happens to be an excellent teacher anywhere.  Not only that, but his materials are the best priced for the extremely high value you get. 

His name is Steve Cook and the tip on avoiding the non-assignability clause was part of his full day workshop on wholesaling.  They put the dvd video of this workshop up for sale a few weeks back for $47!  I’m not one to use hype or point our readers to educational products… I’d rather give all the info I can give for free.  But, this dvd set (for only $47) is the greatest value we have ever seen for this type of quality information and detailed step-by-step tips. 

The way I looked at it before getting this dvd set, the time that it would take for me to search the internet for hours and hours looking for this type of information would be at least 5, 6, 7, 15 hours.  Now, right now my time is worth about $50 an hour and if I had to look for this information for free on the net, it would cost me at the least $250 in my time… which is more valuable than my money.  So, for me it was a no brainer to get the dvd’s for only $47, especially when there is a money back guarantee.  Check out Steve’s entire 1 day wholesaling workshop dvd’s here.

If you are looking for the best information on wholesaling anywhere (we don’t throw this around lightly and we NEVER promote products from “gurus”), I would suggest you save your time and head over to Steve Cook’s website and get the best possible step-by-step down to earth education anywhere.  In addition, Steve is a very spiritual person and has the highest integrity of anyone that I can think of in the real estate education industry.

If this sounds like a product pitch, I apologize… it’s not.   But, when I found this resource, I felt that it was my obligation to pass it on to our readers because of the extremely high value that it provides.  It isn’t even worth your time to read 20 or 30 of my blog posts that will give you the same information that Steve gives on his workshop dvd’s that you can put in your player and watch at your leisure. 

Steve also has some other education that I have also gone through from A-Z and it is the best anywhere on wholesaling from a guy that still does wholesaling everyday as his main source of income.  His real estate investing business plan and at home study course are well worth the small investment if you are serious about being successful in REI… and don’t want to waste your time or money buying crappy educational products (like Carlton Sheets stuff… I was really disappointed with his products)

Steve’s other wholesaling education

Good luck with your investing and remember to keep your questions coming our way!

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