Assining or Double Close or Neither?

[Alex Locklear]

I'm 22 years of age and just starting off the RE investment world; I believe going down the wholesaling path is the best route for me starting off, as I need to build up some cash flow.

My question is, which is the better method to go and which is more accepted by lenders? Assigning a contract or having a double-closing?

Are there any other methods that are simpler?

Thanks so much

-Alex

[Jason Hanson]

Alex,

I wouldn't be dealing with the lenders. You will be much better off dealing with the homeowner (which means you want to buy the property before it goes to foreclosure). You will make more money this way and when you are wholesaling, you will want to assign the contract to another investor.

[Patrice Cunningham-Washington]

I agree with Jason. You'd want to assign the contract to another investor. Double closings are unfavorable if you were to deal with a lender and can be a mess if your attorney or title company doesn't know what they're doing.

Good luck in real estate. I became a licensed agent at 19, broker at 22 and haven't looked back. Even when times get tough, I still wouldn't imagine what else I'd rather do!

[Jonathan Grassi]

Banks generally won't allow you to assign properties. So - unless you have $$ on hand to buy them and then re-sell them right away to your buyer (dual close), you'll need to stay away from foreclosures.

Just make sure when you enter a sales agreement with the seller that the contract IS assignable. It's also a smart move to build a buyers list BEFORE you have a property, so you know you can move it. Plus you'll know what your buyers want, then you can go find it.

[Darius Wilkins]

A great way to move a property fast is to use Temporary Owner Financing and focus selling the property to people with challenged credit.

[Charles Whitaker]

Assigning the contract is fine if your buyers know you well or the assignment fee is somewhat small. If you are to make 10K off of a deal then i would double close, this keeps the buyer from knowing what you made on the transaction. Either route will require a good title agent that is used to working with investors.

[Alex Locklear]

Thanks Everyone; Much appreciated.

[Ryan Webber]

Originally posted by Alex Locklear:

My question is, which is the better method to go and which is more accepted by lenders? Assigning a contract or having a double-closing?

Are you referring to when you are buying a property from a lender (REO) or to the buyer's lender when you are wholesaling a property?

If you are referring to REO's then Bakerpark is right on. Banks don't allow assignments, but he's off about dual closings. You normally don't need $ to double close. You can double close any property. I would agree with Patrice that double closings can be a mess if your attorney or title company doesn't know what they are doing, but this statement is true for ALL transactions. My advice for ANY transaction would be to find an investor friendly title company that DOES know what they are doing.

I also disagree with Jason here. You can make money buying from lenders just like buying from homeowners. Wholesaling is not about WHO you BUY properties from. Its about WHO you SELL them to (i.e. other investors, hence "wholesaling"). Who cares who you are buying them from? Figure your numbers the same no matter who the seller is. Yes, motivated homeowners are your biggest focus, but if you aren't looking at other avenues you're leaving deals on the table.

Assignments and double closings each have their own advantages and disadvantages. Assignments are simpler and maximize your profit, but can not be done with REO's or short sales. The buyer and seller will also know exactly how much you are making with an assignment.

Now with double closings you will have to pay closing costs so your profit is decreased. Your profit will NOT be disclosed to the buyer or the seller, and most of the time neither party even knows that you are double closing.

Now if your question is in reference to the buyer's lender when you are wholesaling a property then the main factor is that you need to be wholesaling to cash or cash equivalent buyers. Cash equivalent is hard money, commercial loans, or commercial lines of credit. This is because conventional lenders won't roll assignments into a loan and only a select few will overlook seasoning requirements with a double close.

Oh and, no, there aren't really any simpler ways to wholesale.