Hi guys! I was hoping we could start a thread here for states that you know are double close friendly. You can even mention states that you know that it is not allowed as well.
I don’t think it’s a state issue, is it? I think it’s more about finding an investor-friendly title company that is sophisticated and nimble enough to do them for you. @retipsterseth has a list of them throughout the country.
I actually bookmarked that list! My partner was wondering if there were states that were just well known as double close friendly so that way we can start to target new states. I just found out the hard way that double closes are illegal in NC for example.
Hello,
This might be useful as reference: https://retipster.com/wholesaling-real-estate-legal-illegal-states/
Please keep in mind that this list is for reference purposes only and that the information is evolving. As usual, please perform your due diligence.
Hope this helps!
How did you determine that they are illegal in NC? I live in NC and haven’t run across that yet? NC is an attorney-close state, not a title company state BTW.
The definition of a doubled closing that Seth gives in this article is not actually a double closing. He defines it as a situation where an investor
closes on a property, holds it briefly, and then resells it.** Most investors define a double closing as one where they don’t put up the money to close (either through “flash cash” or their own funds) and the ultimate buyer funds the entire transaction. This is also known as “single source funding” because the ultimate buyer is the only one to put cash into the deal.
[quote=“Jim Hunter, post:6, topic:8807, username:DirtGuy”]
closes on a property, holds it briefly, and then resells it.
[/quote] If an investor puts up the money to purchase from the original seller, I don’t see anything wrong with the transaction because that is a situation where there are two closings back-to-back, which happens all the time.
Additionally, there is another way to accomplish the same thing with a novation contract. Instead of the original seller selling to the investor who in turn sells to the second seller (at a higher price), the novatiion contract becomes one between the original seller and the ultimate buyer with the investor getting their spread on the HUD. That is a sing-closing contract.
So there are several ways to accomplish the same end result.
Who told you that double closings are illegal in NC and what examples did they use. Did they cover all of these situations?
Jim, have you had luck explain a novation successfully explaining a novation to both buyers and sellers? I’ve found the old saying is true: “A confused mind says no”. Thanks.
No. I don’t use novations because the original seller and ultimate buyer can see what I make. If I bought low, he/she will be furious. Also, since original seller and ultimate buyer now know each other, they can collude to cut me out, Also, even though a novation is no longer a double close, the people that don’t like them still don’t like them because the only person putting money into the deal is the ultimate buyer. Assignments solve that problem.
What I do is close with my own funds and then resell back-to-back same day. No one can complain about single source funding because I am putting up the lower purchase price. If I were low on funds I would use flash cash.
Helpful. Thank you Jim.
Who told you double closes are illegal in NC? As far as I know, they’re allowed. Were you planning to use your own funds or a lender’s funds for the initial purchase? I’m pretty sure those options are ok, but you can’t use an end buyer’s funds for the initial purchase.
I guess I meant to say that it wasn’t fully illegal in NC, lawyers have been telling me that it is if you plan to use single funding
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Sometimes the real question is whether the title company is double closing friendly. It may be perfectly legal in your state, but if the title companies you talk to are trying to put up road blocks, they will be the real problem.