All Forum Posts by: Shari Peterson

Yep this Fraudster tried to get transactional funding from me too. Luckily I was alerted by a colleague that he was a total scammer before I invested much time in my own due diligence.

Usually, it is underwriting that won't allow it. They won't write title insurance on the transaction. Therefore you'd need transactional funding to fully close the AB before you can close on the BC.

In reference to this question:

2-after reading forums on here i learned double closing is generally for large profit amounts, and needs individual funding upfront, so i am better off making assignments, should i only assign to title          companies?

You are correct in stating that people use Transactional Tunding in wholesale double closes when there is a large profit amount. For deals with a markup of less than 10% or $10,000, Assigning a contract is usually the best way to go. This avoids incurring Transactional Funding costs. 

However, sometimes you are not able to Assign the contract. The reasons include, but are not limited to:

1 - State or county laws and regulations do not allow an Assignment

2 - It is a Short Sale, REO, or otherwise a Non-Assignable contract

3 - The seller is not comfortable having the contract as Assignable. They may want to "know" who the buyer of their house is

Hopefully, that helps in deciding which route to take: Assignment vs. Double Closing.

I have a deal that needs funding for a fix and flip in Maryland. The buyer has a credit score of just over 585. Purchase price $105, Rehab $40k, ARV, $225k. I am the broker on the deal. Can anyone recommend a lender for this borrower who has a lower than normal credit score?

I suspect what your attorney may be trying to say is that you must have the availability of funds to close on the deal, even if your plan is to assign it. So you must have the means to do the deal regardless of it you are able to assign the contract. The link provided above about wholesaling in OH is an excellent reference video.

Technically, when you Assign a contract, you are selling the right for another buyer to step into your position as the buyer. In exchange for this, the Assignee pays you the Assignment Fee. When the contract is Assigned to this new buyer, you are no longer a party to the transaction. Your contract must be Assignable for you to be able to do this. Your attorney can advise you on this

Or, perhaps in this particular case, your contract is not Assignable. If that is the case, you must first close on the property using Transactional Funding (the A-B transaction) and then follow with an immediate second transaction (the B-C transaction) closing with the End Buyer. A=The Seller, B=You the Wholesaler, and C=The End Buyer. That would not be an Assignment; that would be a brand new closing.

I know of two Title Companies in Columbus that do double closings. I think BiggerPockets rules prevent me from posting their names and contact info. If you PM me I can provide you with those details.

I have a scenario where there is a short sale approved for an LLC. Another entity wants to buy the LLC outright, including a property they have under contract, at the time of closing. Since the final entity buying is buying an LLC and NOT the property itself, this presents a challenge in finding funding for the purchase. The numbers are: Purchase $130k, Rehab $35k, ARV $260k. The property is in Maryland. Can anyone recommend a hard money lender that would loan under these circumstances?

This is a great chart, Brian. I know that a lot of Hard Money lenders have done quite a bit of adjusting of their terms over the last 12 months due to Covid. How current is the data in these comparison charts?

If you are planning on a double close to a non investor owner occupant, you will have challenges with their financing. In a double closing, the end buyer must put their funds into escrow with the title company first, and then the transactional funding company sends in their money for you to close. A conventional lender many times is not comfortable with this arrangement. A smaller local bank or credit union would be more likely to fund under these circumstances. FYI, an FHA loan requires that the home has been owned by the seller for 90 days, meaning you couldn't sell it to your buyer until day 91.

In addition, if it is an REO, the asset manager will have established which title company they will close with. Many times that title company will not allow a double closing.

These things being said, it is a super hot market and many properties are getting multiple cash offers by owner occupants. This of course eliminates the financing obstacle. If you can convince the REO asset manager to move to the title company of your choice, then you could still double close. I'd recommend that you offer to pay whatever title costs the asset manager has incurred thus far when they ran title on the property.

I know Clear Title is licensed in Colorado, although they are based in Overland Park KS. They are online at MyClearTitle.com.

In which state is the property located? As @Jim Pellerin says, it’s possible that state laws prevent an assignment of contract.

If it is a short sale or REO then the contract between the A seller and the B buyer probably states that the contract is not assignable.

Both of the scenarios require a double close. With a double close, the parties are the A Seller, the B Buyer (who becomes the B Seller), and the C Buyer. Thus, the first transaction is the A to B purchase, and the second transaction is the B to C sale.

If the B buyer doesn’t have the cash to close the first transaction, she can use Transactional Funding, which will cover 100% of the purchase price and closing costs.