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When an investor has a contract to purchase a property and a sales contract to resell it, he has two separate transactions. If they are completed on the same day, these are considered a whole flip. However, if the purchase contract closes on day one, but the sale can’t be completed until day three, there is a gap between closing dates. This is the most common type of so-called GAP funding. In this situation, the investor must have the complete amount of money necessary to purchase the property. His options are to borrow from friends and family members, from a [...]

As a long-time transactional lender, I frequently encounter this situation. Just days before the wholesaler’s closing with himself as the seller and his end buyer in place, the end buyer decides not to close. Sometimes, the end buyer happily forfeits their Earnest Money Deposit (“EMD”), and at other times, they fight to get it back. The issue is that the investor now faces the dilemma of what to do to replace the end buyer. In an actual incident this week, a wholesaler and realtor® called me to ask what he should do, as we had a double closing scheduled to [...]

The real estate industry is constantly evolving, and one of the most striking developments that has gained traction in recent years is the requirement for a Proof of Funds Letter. When I first started investing in the 1970s, it was almost taken for granted that if a buyer signed a contract to purchase a property, they had the money or the financing in place to close the deal. Sellers and agents assumed that part of the equation. Back then, trust carried more weight in transactions than paper verification. But as the decades passed and the landscape of real estate [...]

I have been funding transactional or “same-day” closings (wholesale flips) for real estate investors for many years. This same-day practice enables investors with limited funds and/or poor credit to engage in wholesale deals and generate substantial profits. Often, these investors have had to put up an Earnest Money Deposit (“EMD”) when they contracted to buy the property. Still, these amounts are minimal in comparison to the amount of money they need to purchase their properties. These wholesale flips are often referred to as an A-B and B-C transaction or “double closing”. The letter “A” refers to the original seller, letter [...]

I’ve watched a lot of “gold rushes” come and go in real estate, but the current surge into raw land is different. Glossy subdivisions or granite countertops don’t drive it. It’s driven by simple math and human behavior. After a long bull market, investors feel like the bargains in houses are gone. Meanwhile, all over the country sit parcels of dirt that don’t produce income and cost their owners money every single year in taxes. When those two forces meet, hungry investors and tired landowners, you get an opportunity. And opportunity in land behaves differently from houses: it rewards [...]

  Shadowing is the process whereby an attorney looks at his client’s closing documents. This attorney is not the same attorney doing the actual closing, rather it’s one of the “opposing parties,” the seller or the end buyer. The most important documents are the deed, title policy, and closing statements. Closing agents/attorneys make a commission from the issuance of the title policy, and it can be 70% to 80+% of the actual title policy cost on the closing statement. This is usually more than the “Settlement Fees” the closing agent charges. This source of revenue is why closing [...]

  The short answer is “no” to both having to go to the A-B and B-C closings. • The usual reason is the inconvenience of having to make a trip to the closing agent especially if you are wholesaling virtually. • The more important reason is that if you sit at the closing table with your seller and your end buyer, you run a substantial risk of either of them trying to get more money (seller) or less profit (the end buyer) from you. • The closing agent will handle any objections about the seller or end buyer [...]

Buyer and seller coming to closing   If your seller wants to close even a couple of days before your end buyer, there can be a massive problem.   The transactional funder runs the risk of funding 100% of the A-B closing and the end buyer (B-C) not closing.   The usual result is a foreclosure action for the transactional lender to recover as much of his money as possible.   Therefore, one of the top priorities of double closings is that they close on the same day with the same closing agent.   No matter how “strong” [...]