In The Middle Of First Deal And I Need Help
I am in the middle of doing my first wholesale deal. I have already met with the seller and signed a sales agreement form. I had a lawyer draw up an assignment form for me a couple of weeks ago. I have 2 questions.
1. Do I just need to have the assignment form signed by the investors that I wholesale to or do we have to fill out another sales contract?
2. In the sales contract there is a place to write down the name of the title company and the amount of earnest money that I put down but when I turn around to wholesale it and assign the contract should I just hand write that John Doe gave me $500 in earnest money?
If anyone can help me out I would appreciate it. I do not want to come across as a complete idiot with the investors that I am dealing with.
Thanks
hopefully you didnt use cash as your earnest money, and have a check copy, cashiers check carbon copy, or money order carbon copy. Its good practice to keep a paper trail. Use what you need, leave the rest in your folder for future reference.
I haven't done a wholesale deal yet, but I asked a similar question to a member of my local REIA and they told me that they setup an assignable escrow. They would find the buyer and request whatever amount for the assignment fee and tell the seller near close that he would be closing in his partners name for tax purposes. He said the seller wouldn't care because he was still closing and they were getting their cash. The deal finder would then contact the escrow company and say the escrow is now assigned do investor "X" The wholesale investor would simply go to close at said title company and close. Everyone was happy.
HTH
how does the escrow company know to give you your assignment fee or do you just collect it from the investor yourself?
If you can open up escrow as an assignment, that is the best thing to do.
First thing you do is collect your fee that you are wholesaling the property for including deposit. Then contact escrow and tell them who you are assigning to and they will draw up an amendment for you to sign. Done deal.
You dont need another contract. You dont want the seller to know you are wholesaling the property. Tell the seller you are wholesaling to your partner for tax reasons. So in order:
#1-Open escrow as an "assignment"
#2-Collect your fee from new buyer
#3-Call escrow and have then assign
your escrow to new buyer.
#4-Call seller and tell them you are
closing in your partners name.
#5- Call you new buyer and tell him
the escrow has been assigned to
Tell him he can call escrow to verify.
Best Riches,
Jeffrey Adam
_________________
"The only place success comes before work
is in the dictionary."[ Edited by JeffreyAdam on Date 02/24/2004 ]
Tthe method that has been described requires the person that you are flipping to, to come up with the cash before the closing, which of course would be the prefered method. Is the the most common way it is done? If I get a killer deal under contract and stand to make 40k on a flip can the ultimate purchaser work my 40k into his loan if his LTV is ok or will he have to come up with 40k cash?
Thanks John
John:
I have run into this problem several times before and come up with this solution.
-Draw up a "Second Trust Deed" payable to yourself just prior to the close of this deal. Have your new buyer sign it. After the deal closes, record it and you get paid when he retails the property.
I have done this several times and it works out great.
-If your new buyer has excellent credit, he might be able to get creative and get
some money back to pay you or take a second out and pay you.
-My suggestion to you is to wholesale it to you buyer, collect some cash on the
front end and the rest on the back end.
Your interest to be secured by a 2nd Trust Deed. He wont be able to sell it
without paying you off.
Best Riches,
Jeffrey Adam
[addsig]