Wholesaling 101 - What are my limitations?

Question

Hello everyone, how are things?

I want to do Co-wholesaling and wholesaling myself. I recently  partnered with two Wholesalers in Jacksonville Florida.

I will be using the Direct Mail to bring in buyers as my focus and sellers as well.

Can i put motivated sellers under contract while in Toronto Ontario?

Do i have to go to the closing or can i get the buyer to go for me?

I want to get homes under contract, but will not be able to go to the closings because i live in Toronto Ontario.

Is this part possible for me?

Jonathan Nelson

Raymond B. · Answer

@Brian G., @Patrick  Henderson,

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Matt Devincenzo · Answer

@Jonathan Nelson there is no need for anyone to go to a closing. I have only ever actually sat at a closing table once when I bought my first property. Every other purchase or refinance has been handled via email and Fed-ex overnight.

I'm not sure I understand what you are getting at with the double closings? A double close is just you actually purchasing the property in your name for a brief moment then selling it to another buyer. These can be "dry" or transactionally funded. In a dry closing the end buyer's money funds their purchase and then the funds disbursed to you are used to fund your purchase from the buyer. Some title companies will not do these. Transactional just involves either you or a transactional lender funding your purchase and then your end buyer's funds are used to pay off that lender and any fees they might charge, the balance being your profit.

This is usually done either because you don't want the seller to know you are selling the property for more, or because you don't want them to see how much more since with an assignment the assignment fee will be shown on the HUD-1.

A double close can actually present greater risk, not less. That is because you are actually now in the chain of title.

Patrick Henderson · Answer

@Johnathan International investing is not my thing, at least so far. So, international Tax issues aside, double closings are going on all around you everyday. It's very common and if the closing company doesn't want to do it, there are many versed in it. They work for me because I'm paying the bills. If you get with the right company ie. one that regularly works with investors. They can be a great resourse.

By Co-wholesaling You mean Jv?

Brian G. · Answer

Have you considered just partnering with someone in/near your local market of Toronto?

Mitchell McCauley · Answer

@Jonathan Nelson

I am in Jacksonville and am trying to get into wholesaling right now! Have you started marketing or looking for sellers?

CK Hwang · Answer

So just for fun, I decided to email an escrow company that i use on almost all my sale to get their take on a double close and this is their response.

I have heard of this, however we cannot do that as one cannot sell a property or go into a legal binding contract on a home they do not already own.  The reason it’s risky is because your name isn’t on title as the owner and for you to turn around and sign a contract stating that you have the ability to sell this home isn’t correct because technically you do not own the home and do not have rights to sell it.  We’ve been approached for a transaction like this before and our office will not take on that liability.   You would have to purchase the home then sign a contract with the new buyers from you to them.  The contract should be dated after the closing of  your home to you as the owner.

CK Hwang · Answer

Hi Jonathan,

To answer your question, some escrow companies can handle something called a double closing in which you close on the property but your buyer also close at the same time, sellers gets paid, buyer gets property in his/her name. Many escrow companies have never done it before, so it can be a hit or miss depending on the escrow company. Or in Florida, I believe they use RE attorneys to handle closing not 100% sure. Either way, if you're not a US tax entity, being Canadian, the need to declare and the escrow company having to carry out tax withholding might make it very difficult to do a double closing.

As far as having your buyer step in to assume the contract at the last minute, I don't know for sure, but from my personal experience buying, it depends on the seller. Some direct sellers/homeowners will be ok, some not (they find it shady). I am pretty dang certain the few short sales I have purchased the banks would not have been ok with it because I had asked if i could close in my personal name after starting the paperwork in an LLC, and basically it had to go through the whole chain of command again to get approval from every lender involved to change the name again at closing time.

Patrick Henderson · Answer

Docusign.

Jonathan Nelson · Answer

Thanks @Matt Devincenzo

i simply just want to do Co wholesaling in the US. I have a partner who has properties and i have buyers on the way. I did a direct mail campaign and am waiting for the call backs.

This part, from what i understand is easy, as my partner agreed to go to the closings.

If, i want to wholesale myself, get properties under contract, can i use your method as you speak to get the properties to the buyers without going?

Brian G. · Answer

@Jonathan Nelson

I think you might find that a lot of sellers want retail for their homes in Florida as well.

Wholesaling, in my experience, is VERY much a numbers game.

If I'm reading your previous post correct, you were marketing for around 2 months before changing your focus to a different market?

In my opinion, two months might not have been a long enough time frame to make an accurate judgment on your local market.

For what it's worth, it took me MUCH longer than that to finally piece together my first deal.

Wholesaling 101 - What are my limitations?

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