Need Advice On A Concurrent Close
I am in the process of negotiating a contract with a seller to purchase a property that is significantly under market. We are giving the seller a 10% good faith deposit and he is giving us a contract for a 60 day time frame to purchase the property.
My thought was to flip the deal to another investor so that I don't run into the holding costs or suffer the tax consequences that I potentially would if I bought it directly and tried to sell it thereafter. This is my first deal like this and I have a couple of questions:
1) Should I make sure that I record the purchase agreement with the county so that it puts a block on title and he cannot circumvent me in escrow?
2) I am thinking that I want to set up the contract to be in my name 'and or assigns', that way I can assign my contract to someone else and close concurently. My question is how do I do that? Do I need to have someone who is making an all cash offer? If they are financing the property, won't I have to provide him with a detailed purchase agreement that shows my interest in the property through the assignment contract?
3) Does anyone know of any reputable escrow companies in the Los Angeles area that do concurrent closings of this sort??
Please advise ASAP, I need to set all of this up before Thursday of this week!!
Someone Please answer this persons question...I'm in the same situation :-?
My thoughts:
1. You should record either the purchase agreement itself or an "affidavit and memoradum of agreement". This affidavit will cloud title. You should seek legal counsel as each state has very different and specific requirements on what needs to be contained in such a document.
2. You mention that there are negative tax consequences if you bought the property directly. I don't see how because you are only taxed on your profits. Would you give up $20,000 to avoid paying $5,000 or so of tax??
3. Assuming you plan to flip the property to another investor. There are 2 ways this can be done. First you can sign your contract and/or assigns. Then you would simply sell that purchase agreement for a cash fee up front. Secondly you can have him fill out a 2nd purchase agreement from him to you, and you can use your first purchase agreement to actually buy the property. The end buyer's bank will likely dictate closing and it is pretty easy. You may want a skilled attorney available if there are any problems preparing closing docs.
GOOD LUCK