Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
Some recent BP forums on the same subject got me thinking. There seems to be a problem inherent with double close, wholesalers with no money of their own etc. A recent post suggested by Will B got me thinking. He suggested the person set up an LLC(single asset) to furnish the POF. Then have the 2nd buyer provide the real $$ though concurrent closing.
Why couldn't someone just start a business doing just that.
1.Form an LLC
2. Get a letter from the Bank President for POF.
3. Use the POF for wholesaler to get offer accepted.
4. Prepare the closings and get it done.
5. Person that formed the LLC receives a fee for having the POF and facilitating the deal.
The LLC never had money at risk and only needed the letter of POF. It seems someone could make a lot of money doing that on BP and helping out the wholesalers etc that are in the pinch. What you think?? Problems with it? Rich
J Scott- Why do you think there seems to be so many problems with this interim period? Why don't you do it more , and for others? Could you do it WITHOUT using your funds and just a POF? Thanks. Rich
These are good questions, and questions I've been thinking about a lot lately...
Certainly, if I could find investors/wholesalers who were strictly doing simultaneous closings, and where I would never for a minute have any money at risk, I would do as many as I possibly could.
Around here (Atlanta), most investor-friendly title companies are only willing to double closes, where the wholesaler must close the first part of the transaction with his own funds before reselling to the end-buyer.
Because of this, there is some small risk that the second transaction will not close, and even in the best case scenario (where the loan is secured), I end up with a property that I don't necessarily want.
I would be happy to do these deals more often, given one of three scenarios:
1. The investor is doing a simultaneous close, where my money is never at risk;
2. I know the investor well and am confident that he'll close both sides of it so my risk is very small;
3. I don't really know the investor, but I'm willing to do a good bit of due diligence to ensure that if for some reason the investor can't close the second part of the transaction, I'll be happy with the property I get in return.
My current situation with my investor friend is #2 above. I'd love to do #1 above if there were investors around here who could do simultaneous closings. And as for #3, I might be willing to do these if the return were decent, but it's a good bit of due diligence for the small flat fee I'd be receiving.
The nice thing about #3 above is that after a few deals with the same investors, they start to move into the #2 category, at which point I can do less due diligence on each deal.
I currently do this for an investor friend of mine. The only difference being, instead of doing the simultaneous close, I actually provide him the funds to do a double close (his title company won't close with the end-buyer's funds).
Both closings take place at the same table (or at least within an hour or two), so my money is not at risk.
J Scott- Why do you think there seems to be so many problems with this interim period? Why don't you do it more , and for others? Could you do it WITHOUT using your funds and just a POF? Thanks. Rich
This sounds a bit like transactional funding, and I had previously PM'd you a bit of info regarding that. Except that no funding actually occurs from the transactional lender. I recall that some title company had issued a warning about transactions of that sort, where the end buyer's funds were used for the first transaction. Things like certain disclosures might be needed, but I only recall vaguely as this is not an area that I work.
J Scott- Why do you think there seems to be so many problems with this interim period? Why don't you do it more , and for others? Could you do it WITHOUT using your funds and just a POF? Thanks. Rich
These are good questions, and questions I've been thinking about a lot lately...
Certainly, if I could find investors/wholesalers who were strictly doing simultaneous closings, and where I would never for a minute have any money at risk, I would do as many as I possibly could.
Around here (Atlanta), most investor-friendly title companies are only willing to double closes, where the wholesaler must close the first part of the transaction with his own funds before reselling to the end-buyer.
Because of this, there is some small risk that the second transaction will not close, and even in the best case scenario (where the loan is secured), I end up with a property that I don't necessarily want.
I would be happy to do these deals more often, given one of three scenarios:
1. The investor is doing a simultaneous close, where my money is never at risk;
2. I know the investor well and am confident that he'll close both sides of it so my risk is very small;
3. I don't really know the investor, but I'm willing to do a good bit of due diligence to ensure that if for some reason the investor can't close the second part of the transaction, I'll be happy with the property I get in return.
My current situation with my investor friend is #2 above. I'd love to do #1 above if there were investors around here who could do simultaneous closings. And as for #3, I might be willing to do these if the return were decent, but it's a good bit of due diligence for the small flat fee I'd be receiving.
The nice thing about #3 above is that after a few deals with the same investors, they start to move into the #2 category, at which point I can do less due diligence on each deal.