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Don't be outrageous with your end-buyer's earnest money deposit request or you could kill the deal.   I have seen new investors ask for a 20 or 30% earnest money deposit or EMD from their end-buyer and quickly lose the deal. The EMD you get from a buyer not only shows motivation and good faith, it also helps you cover your loss if he doesn't come to the closing. Specifically, here the guidelines for what amount of EMD's to require: Number one – generally, your end-buyer's earnest money deposit should be 2 to 5 times what you [...]

Hedge funds and iBuyers are the “buzz words” in the wholesale industry because of their seemingly unlimited buying power.   They are continuously purchasing thousands of homes, always raising money to buy more properties, and there always cash buyers. This would make them a logical prospect for wholesalers to sell their deals and many are doing exactly that. What these buyers are looking for is a very minimum rehab on the property, and preferably cosmetic only. Most of their transactions come from listed properties that wholesalers can get under contract slightly below the list price, this source [...]

There are two major risks involved with transactional funding. The first risk is when the transactional funder loans the funds for the double closing. The second risk is for the investor if anything goes wrong, and he can't get the funds timely or at all. The transactional funder faces five specific types of investor fraud of which the investor may or may not be a part. The transactional funder's primary risk is having to foreclose and get his funds back if the original seller is paid out at closing and the end-buyer doesn't close. While all these [...]

For most investors having a Proof of Funds (or “POF”) sets up their credibility about as high as it can go with a seller or a listing agent.   The ultimate proof of funds is one where the investor's name and address are on his personal or corporate bank statement. Unfortunately, having a balance in the bank, in the name of the buyer to purchase the property, happens on less than 2% of the offers made to sellers. The rest of the time, the investors have to show someone else's proof of funds or manufacture their own. [...]

While this question is not exactly related to a wholesale flip, it's important to investors doing deals.     When investors think of the term “partnership” the immediate thing that comes to mind is that the profit of the deal will be split with a partner, that's the reason the partner is putting up the money for the rehab or double closing.   Unless the investor makes it very clear to his “partner”, before he becomes a partner, the partner may assume a split of 50% of the profit.   In a wholesale flip or same-day double [...]

The simple answer is “yes”, but in the real world, hard money lenders are more complicated. At first thought, it would sound simple to get a hard money loan and buy a property. However, the investor borrower must find a hard money lender who is willing to work with the investor based on his credit, funds available, the project itself, and a myriad of other issues. It's not uncommon for an investor to tell the seller that he's a cash buyer believing his hard money lender will be bringing cash to the closing. Cash to closing is [...]

The resistance to doing double closings is mostly because investors don't want to pay any closing costs.   Saving On Double Closing Costs In the assignment or sale of a contract, the amount of the Assignment Fee or Sales Price is a net profit to the investor. However, with a double closing, the investor may have to pay closing costs on the purchase and the sale of the property. I suggest if the investor’s profit is less than $10,000, he tries to assign his contract to save closing costs. However, if the seller, end-buyer, closing agent, state [...]

The most asked question I get is, “Do you fund the Earnest Money Deposit?” Funding Earnest Money Deposits Even if you are doing contract assignments, you may still have to put up an earnest money deposit with your original contract, depending on how savvy your seller is and how your contract reads. Of course, you'll have to put up an earnest money deposit if the contract you are signing requires one for the contract to be valid. The options for funding earnest money deposits are: Number one - Borrow the money from a friend or family member, [...]