Wholesaling in California
I am hoping to verify the process required to wholesale SFR in California. I've studied the Legrand course in Wholesaling and the procedure in a nutshell is as follows. Find seller. Have seller sign purchase agreement. Verify title. Once verified, put ad out for investor/buyer. Once prescreened buyer found, setup simultaneous closing with title co.asap and close deal. My concerns are that I've spoken with lawyer and escrow companies. They assure me that I cannot close through a title co. I have to go through an escrow company to setup closing. The escrow company I've dealt with thus far is more than willing to do a double closing but cannot do a simultaneous closing as they want me to take title to the property first, record it, then close the next day with my buyer. I would have to put up a large deposit (in 5-10 thousand $ range) to start escrow. Does this sound right so far??? Am I wasting my time going in this direction or is there a better way??? I am more than willing to research what is necessary, I just want to be sure I am on the right track. I do not wish to put up large deposits unless there is no other way. Your advice would be GREATLY appreciated.
Thanks,
John Adorno 
Landshark,
Glad to meet you.
This method of Creative Real Estate Investing sounds a little dangerous to me.
The Title company sets the rules on closing on a deal, so I would assume that the policy is pretty much standard in your area.
What happens if your buyer backs out at the last minute and the house is in your name. Seems like you would be stuck with the house and your cash tied up. You could probably work out of it, but this is not the way I would approach real estate investing.
There are many creative ways to invest, watch this board and ask questions if one of them appeals to you.
Welcome a board this board. Hope to see you posting many times.
John $Cash$ Locke
Thank You JohnL,
I will talk directly with a title company and see what they have to say. Also have inquiries with two Real Estate Investment Clubs. One in LA and one in Orange Co. I want to meet people who are doing this and pick their brains as well as meet new friends. In anycase, you will be hearing from me again soon. Thanks again,
John A
John A,
Let me know how you like the real estate clubs, I have never been to one.
I would like to know if they share as openly as we do here at the Creative Investor.
I have heard pro's and con's from people so it would be interesting to know.
John $Cash$ Locke
john,
to give you some feedback on our local rei club. it's the best thing i can advise any newbie to do: join ga. reia. the big meeting is only about seminars and networking. it's the subgroups (max. 20 people), that really is about sharing and helping each other, people, that you get to know and trust. that you can call if you need a form and that you turn leads over to, if you're not interested. or people, that you become friends with, because you have a common interest (or more than an interest). it's your support group, when all your friends and family don't understand rei and tell you you're crazy.
just my thoughts
michaela
Thanks Michaela. Your reply is very helpful. I'll look into Cal. Real Estate Investment Association and see where it goes.
Why not act as the Trustee for the Seller?
It could work this way:
Seller places his home into a Land Trust for Asset/Liability-Protection purposes.
(This is known as a simplified Land Trust)
Then the Sellers either can Assign you some Beneficial Interest (saay 90% NOT ALL) forfeiting the 10% upon the sale.
This should allow You to handle and/or control all of the Escrow/Title formalities of the sales transaction in a "Owner's" capacity.
Now line up your Retail Buyer who has the cash to CLOSE. Collect your check and off to the next deal!
NOTE: Check with your local Title/Escrow/Legal Experts regarding this arrangement.
I'm sure that if you set it up properly you'll find it to be---
Completely LEGAL, QUICK, and SAFE b/c it doesn't risk your capital(down payment).
Derrick Ali[ Edited by tcimoderator on Date 09/01/2002 ]
Did I say act as the Trustee???
You may have to handle a lot more Personally than you care for, or want to for that matter.
Always best to use a third party corp. Trustee who acts at the direction of the Beneficiaries.
Why would a seller place their home inside a Land Trust? TO GET THEIR TURKEY OF A HOME SOLD QUICKLY and for the PRICE YOU TWO AGREED TO!
How do YOU get your PROFIT? either as a Trustee's Fee if you want the headaches!
or
Letter of direction of Proceeds from the sale to the Beneficiaries(You and the Seller) paid to you from the Trustee from proceeds after your Retail Buyer has Paid off the underlying sales-price which you and the Original Owner agreed to!
Yeah Baby!
ciao-4-now! <IMG SRC="images/forum/smilies/icon_biggrin.gif"> [ Edited by DerrickAli on Date 09/01/2002 ]
If I was to do a quick resale transaction like Landshark wants to do, I think I would buy "Subject to" and then sell by "Contract for Deed" (land contract).
To me this is the most direct and easiest type of transaction and the California escrow companies are familiar with the set-up. Check with Stewart, Orange Coast, or First American. They and the other biggies can take care of you.
John
Hi Derrick,
I believe I understand the concept of your method. Owner puts property in Land Trust, he can assign me as beneficiary, I then control the property. I can then sell or lease/option my interest to an acquired buyer or tenant/buyer. Why wouldn't the buyer give me 100% assignment? If you can guess/estimate, what would be my expected out of pocket expenses to complete a transaction where my purchase price to seller is 200m and my buyer is buying for 220m? My concern is I see a gross profit of 20m, but what are my expected escrow and or legal expenses and deposits?
LandShark:
You Wrote---
Why wouldn't the buyer give me 100% assignment?
LS since I am assuming that you will be Quick-Turning this deal , then I'd say there is nothing wrong with the owners giving you 100% interest in the LT!
Personally, I like to hold my LandTrust Transactions for atleast 2-3 years. In this instance I can obtain the Tax Benefits, keep them for myself or or re-sell these goodies to the Tenant Buyer.
You see the IRS requires a minimum of 10$ BI(beneficial Interest) in order to qualify for the write-Offs!
Also, by doing it this way you can create a Much Greater Return (Profit Center) on your deal! ie. Appreciation, Equity from principle reduction, not just the bumped equity from re-sell.
If you can guess/estimate, what would be my expected out of pocket expenses to complete a transaction where my purchase price to seller is 200m and my buyer is buying for 220m? My concern is I see a gross profit of 20m, but what are my expected escrow and or legal expenses and deposits?
However, there is nothing wrong with walking away with (5-7%) return on your 10% mark up---Before taxes? This should be about $10K or more!
Much Success!
DERRICK ALI
[addsig]
Thank you Derrick,
That was helpful.
JohnA