All Forum Posts by: Darvin Ezell

You are probably not dealing with an investor friendly title company. Not all title company know how to work with investors.

I do a assignment of contract. My buyer always know what my fee will be when we fill out the assign contract.

Here is my process of wholesalin:g

1. put property under contract.

2. take contract to title company so they can open title.

3. assign contract to buyer for a fee and give copy of original contract with seller to buyer. Also, get some type of nonrefundable deposit($1000) from buyer so you won't get burn by buyer. This deposit will let you know if buyer is serious about buying. You would get the rest of your assignment fee at closing.

4. take assign contract and deposit to title company so new buyer and your fee will be on HUD1.

5. wait for closing to get your money.

That is how I do it.

Hope this has given you some clarity.

T-Funds must be on deposit prior to settlement with your seller, your buyer's funds will need to be on deposit before your T-funding will be done by some lenders, they may not require it in order to make that deposit, but that lender wlll give instructions not to release funds until  your buyer's funds have been deposited. Speak to the lender you're dealing with. 

You may not use your buyer's funds to close your purchase transaction, new ALTA requirements in effect, no title company, closing attorney or settlement agent may use escrowed funds for another transaction. :) 

@Darvin Ezell A hard money lender can provide transactional funding. You would close under your entity's nae (A-B). Then either the same day or a couple of days later, you would close on B (you)-C (your end buyer). Some investor friendly title companies might consider closing with your end buyers fund so you don't have to use transactional funding. This is however, pretty unusual but possible. 

Just keep in mind, double closing is expensive because closing costs really add up. Adding the 1-2 % transactional funding makes it even more expensive so just make sure you have a huge spread.

Usury law in MO is 10% unless you're a registered lender, that is an APR and includes points and fees required in funding any loan on a 1-4 single family dwelling regardless of who it is to or the purpose of the loan.

Some settlement agents will require settlement and use of the funds, technically to close the first transaction and at the second transaction that loan is paid off. I know some simply want good funds in escrow and they use that to payoff the loan.

1 to 2 % is what I've seen as costs as well.

Funds from an end buyer should be required to be on deposit in escrow before transactional funds may be used, if there is a 3 day right of recession funds can be on deposit over that period ready to close and the first transaction can have a delayed disbursement agreed, so that actual funding is simultaneous.

Check state laws pertaining to demand notes and amortized requirements on loans from non-registered lenders on residential properties. If you have issues you can devise a legal note and private notes or commercial notes may be allowed to have prepayment penalties if it's not an owner occupied loan. Use a strong due on sale clause that trips payoff and use a letter of instruction to the closing agent that is agreed to using the new funds for payoff.

Transactional lending can be the safest and most profitable loan, so long as you can keep the money in motion with borrowers, but usury laws can get in the way and it's not worth the effort for me in my area. :)