All Forum Posts by: Brad T.

Rare opportunity to acquire 14 units in North East Philadelphia. Units set up as 7 row duplexes featuring four 2bdr/2baths and ten 2bdr/1bath units. 100% occupied. Self managed.

- Brand new roof
- Brand new decks
- Brand new parking lot
- NOI $162K, 6.9% cap rate

Price recently dropped to $2,200,000

Showings to serious buyers only with POF provided.
We co-operate with Buyer Agents!
This is a re-assignment of the contract deal.

Contact me for more info. We also have several other commercial & residential deals in the area!

1 Vote

Philadelphia, Pennsylvania

Quote from @Chris K.:

Quote from @Brad T.:

I tried searching BP for this answer but haven't figured it out yet.

If you're wholesaling a deal in Pennsylvania, where you must pay a 2% transfer tax, how do you structure this in your deal/agreement? I can't imagine a buyer would be willing to pay all of it since that could quickly kill their spread... right?

I read the bulletin PA released back in 2008 and it seems clear.. even if you are assigning a contract, you are still required to pay the transfer tax.

Any info you can provide would be greatly appreciated.

Just to be clear, are you asking about situations where you need to pay additional transfer taxes? The famous 2008 memo largely deals with situations where an assignment may constitute a taxable event.

Dealing with that issue really depends on the precise situation. But that is probably something to discuss with an attorney.

I believe I am, yes. But to be honest, I'm still trying to understand how that 2% transfer tax would play in a typical wholesale deal.

For example, A traditional sale is clear to me; Typically, the buyer pays their 1%, the seller pays their 1%, the 2% requirement is met, and PA is happy.

But as a wholesaler, simply assigning my rights to the contract, how much would I be responsible for if its a A>B>C transaction?

Buyer= 1%

Seller= 1%

Wholesaler= ?

Of course, I understand who pays what is negotiable; I'm just trying to figure out what will be due at closing (% wise). Is the wholesaler responsible for 1%? an additional 2%? That's what Isn't clear to me.

Hopefully, that makes sense.

0 Votes

I have a seller who is interested but can't move forward for at least 2-3 months. What would you do?

1. Would you put it under contract now and set the closing for 2-3 months out?

2. Wait until he is ready-- Is there any reason I should wait?

3. If I was to put it under contract now, how would I handle that on the buyer end?

Any advice would be greatly appreciated!

0 Votes

I tried searching BP for this answer but haven't figured it out yet.

I read the bulletin PA released back in 2008 and it seems clear.. even if you are assigning a contract, you are still required to pay the transfer tax.

Any info you can provide would be greatly appreciated.

0 Votes

Hello,

New to the world of Wholesaling. Have no deals under my belt yet.. still in the learning stage. I feel like I have a pretty solid understanding of the process, and I'm ready to get started but.. I also feel like I should connect with someone experienced in this field before wrapping someone up in a contract. I have no interest in putting a seller at risk because I decided to rush into a deal I wasn't adequately prepared for. I'm sure I'm overthinking a lot of this, but I want to ensure I have everything in order. So I guess my question is... how do I find a mentor to answer my questions or help guide me through my first deal? Is this even a normal thing?

I'm in the Philadelphia area, and I've owned a few small companies over the years so I'm no stranger to negotiating deals. I currently own a software & AI development company, and I've been using those resources to create applications to help find/manage RE deals on the side. Of course, I'd never ask for someone's time for free.. I'd be willing to provide value in any way I can. I'm just not sure where to go from here.

Any advice is greatly appreciated!

0 Votes

Quote from @Jesse LeBlanc:

@Brad T. great questions for a new wholesaler so you know what to expect going into the business vs get pissed later and mad at someone else for your lack of experience. So I appreciate great questions. :)

I believe it's all been explained above already, but always free to clarify anything as I've ran a wholesale company in Atlanta for years, then mentored across the US from 2018-2022 (stopped end of last year to travel and enjoy life every day).

So IF you choose to double close, then the option of paying for your closing costs on your purchase (the AB transaction) is optional but NORMAL. IF in your contract with the seller you make them pay, you can but normally you as the buyer would pay for your set of closing costs. Depending on the state, usually the taxes are a wash as it's prorated, then when you sell same day it's prorated and again a wash. But your attorney or title fees will be on your if you as the buyer pay for them on your AB side.

Then if you double close, when you sell, your end buyer would then be paying for their closing costs UNLESS you already had it in the contract with the buyer that they also pay for your AB closing costs (which I find extremely annoying and rude personally, and if you wanted to do that just build it in the price vs telling them they're paying for your choice to double close when you could have assigned the deal).

Nice segway, so I'll run with it. If you ASSIGN the contract and are transparent with the seller and your end buyer, you'll never need to double close. There will only be an AB closing, then your asssignment fee will just be a line item on the HUD/Settlement statement and your seller will now be direct with your end buyer and one set of closing costs that your end buyer will be on the hook for usually.

If you don't have to double close, then don't. Save everyone time and money. But if you choose to double close for various reasons, keep seller separate from buyer, keep your fee private, someone refuses to sign an assignment contract, the closing team doesn't approve (stupid) or some other reason, then yes, double close.

Depending on the state laws or the closing company will also help make your decision on double closing and your additional costs. Most states you can use "pass through funding" meaning your end buyers funds in escrow can be used to fund your AB purchase. However, some of what I mentioned above won't allow you to use pass through funding and would require a lender (like me) to fund your AB side if you didn't have your own capital in the bank to fund your purchase before they'll close the 2nd transaction (BC) side.

With all that said, try to be transparent with everyone and assign. but if you need to double close as backup make sure to calculate that cost ahead of time and still keep a good spread so you'll make a profit at the end of the day. Then if you're in a state or dealing with a closing company that requires you to fund your AB side, then hit me up since you'll need Transactional Lending (funding) and I'd love to help you or anyone else out. :) :)

Thank you for such a detailed explanation!

1 Vote

Quote from @Account Closed:

Quote from @Brad T.:

Hi Everyone,

New to BP & Wholesaling and hoping someone can help me understand the double close strategy a little better. I get the general concept.. but struggling to understand all the fees.

So from what I gathered, you will end up paying two sets of closing costs (A to B, and then B to C).

Questions-

As wholesalers, we also cover the seller's closing cost to make the offer more appealing. So.. are you paying 3 sets of closing costs to get the deal done?

In Pennsylvania, typical closing costs can be anywhere from 5%-6% of the sale price. So would I need to factor in 12%-18% of the sale price into the deal to cover 2 to 3 sets of closing costs? Or am I way off base?

Sorry if this is a dumb question.. Still learning. I just can't wrap my head around the fees.

Thanks in advance.

That's not a dumb question. The idea of real estate investing is to be profitable and you need to know your costs.

If you are covering the seller's closing costs, that is one set of fees.
When you buy the property in the first closing, you are also paying your fees as well. That's fees number 2.

If you use a Hard Money Lender to transact, you will have their fees also. That is added to your fee list.

When you sell, you will have fees, your own, that you pay.
So, you are paying 3 closing costs and your hard money loan costs if you're using hard money. Plus you pay any transfer fees the state charges. Make sure you talk to an escrow agent to get more detailed information.

Thank you! This definitely helped.

1 Vote

Hi Everyone,

New to BP & Wholesaling and hoping someone can help me understand the double close strategy a little better. I get the general concept.. but struggling to understand all the fees.

So from what I gathered, you will end up paying two sets of closing costs (A to B, and then B to C).

Questions-

As wholesalers, we also cover the seller's closing cost to make the offer more appealing. So.. are you paying 3 sets of closing costs to get the deal done?

Sorry if this is a dumb question.. Still learning. I just can't wrap my head around the fees.

Thanks in advance.

0 Votes

All Forum Posts by: Brad T.

Brad T. has started 13 posts and replied 18 times.

Post: 7 Row/14 Duplex Assignment Deal in Philadelphia

Post: Pennsylvania Wholesalers - How do you handle transfer taxes?

Post: How would you handle a seller like this?

Post: Pennsylvania Wholesalers - How do you handle transfer taxes?

Post: Wholesale Mentor Question

Post: Double Close Confusion

Post: Double Close Confusion

Post: Double Close Confusion