All Forum Posts by: Shari Peterson

Let me address #2: 

2. For wholesaling in Louisiana- it seems it may be better to use transactional funding instead of just assigning. True? Also- do I need an LLC to use this funding?

Although I am not an attorney nor a licensed real estate broker in the state of Louisiana, my understanding is that you need an LLC. The Transactional Funder will not lend to you in your personal name. You can confirm this with other members of your local REIA Real Estate Investment Association.

States and counties are beginning to enact laws making it difficult to Assign a contract. This is one of the reasons people choose to double close using Transactional Funding. If you are essentially "forced" to double close, you need to keep in mind the costs of funding plus closing costs when setting your selling price. I'd recommend that it be 10% or more above the amount you are paying for the property. That ensures that you have enough profit to cover costs and still walk away with a good amount of money in your pocket.

Ultimately, the numbers have to make sense for the person buying it from you. If it is to a rehabber, calculate it as: your purchase price + profit you desire = his purchase price. Then, + rehab + 20-30% profit = the price he sells it to the ultimate owner occupant buyer. As an example:

$100,000 = your purchase price +

$15,000  = your desired profit

$115,000 = his purchase price +

$30,000 = rehab estimate

$145,000 = subtotal +

$43,500 = 30% profit for him

$188,500 = Price he sells it for to owner-occupants

At the end of the day, you have to feel that this house will go for $188,500 in the current market.

How much have you agreed to buy the property for from the seller?

How much do you want for your assignment fee? 

The answers to these two questions will determine whether you want to Assign the contract or double close.

@David Rosenhaus I will send you a direct message. I don't believe I am allowed to comment on that in these forums.

For each transaction, you'll need to decide if you want to Assign the contract or plan on a double close using Transactional Funding. As a general rule, if you think another buyer will take it from you for less than 10% of the purchase price, or less than $10,000, your best route would be to Assign the contract. For example, if you get a property for $100,000 but you know a rehabber will think buying it for $110,000 is a good deal for them, then Assign it.

However, if you get this same property for $70,000 and you know that a rehabber will be happy to get it at $110,000, then double close using Transactional Funding. The reasoning behind this is that if you ask for a $10,000 Assignment Fee as shown in the first paragraph, most rehabbers will think this is reasonable. If you ask for a $40,000 Assignment Fee as shown in this second paragraph, many rehabbers will balk or worse, walk away. 

The safe way to preserve your profit margin is to buy and close at $70,000, then schedule another closing an hour later for $110,000. 

Hard Money Lending IS available to newbie investors, but you will pay more in points and a higher interest rate. This is because it is riskier for the lender. It is riskier because to do a fix and flip there can be a steep learning curve and many mistakes could be made along the way. The same can be true for buy and hold loans for rental properties. You don't know what you don't know.

That being said, if you have a solid mentor or coach, the risks are minimized.

I can recommend @Tom Gimer at Masters Title and Escrow. He is quite active here on BiggerPockets.

I am not a licensed mortgage or real estate broker in Florida. But it is my experience in 11 years of providing funding that the seller usually will require that you send in your EMD, either by check or a wire deposit to the title company. This is true whether you are doing a double closing or a single closing with no immediate exit buyer.

You can contact Melissa Diaz or Joe Kirkland at CloseTRAK Closing & Title Services at 5860 Ridgeway Center Parkway.

From my experience with HUD deals (regular, not a reverse mortgage), you as the buyer are allowed to choose the closing agent. Unless there is a deed restriction or you have signed an affidavit stating you won't resell within a set time frame, HUD has no say what you do with the property after you have the purchase closing (the A to B transaction). Then, you immediately resell to a new buyer in a sale closing (the B to C transaction).

I have worked with @Shannon Wright on many wholesale deals. Her skills and knowledge about the many obstacles that can arise in investor deals can make or break your closing. I strongly endorse her!