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KYTiger

Closing Questions

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Hi to all from Kentucky.

 

I am new investor. It's good to see the humor and support given by the group.

 

I was going to use the pure option setup. I am getting my plan of action before I make the plunge. I already have several buyers interested and several good seller prospects. But, I am not familiar with the setup with the title company. I plan to do a double close with transactional funding. I have the name of the title company the transactional funding uses. What do I need to send to the title company (in detail)? Do they use the option agreement or do I have to do a purchase agreement? I have purchased 2 houses in the past through realtors who have handled the setup. I was wondering if it would be a good idea to use the release of option agreement by Jonathan to get my assignment fee at closing for the smaller deals? Has anyone had problems using the release of option agreement?Are there any loan restrictions for the "C" end buyer other than can not be FHA due to seasoning issues? Sorry for playing 20 questions.

 

David

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Hello, KYTiger, and welome to The Naked Investor.

As Jonathan said, why do a double close if it isn't necessary? His strategy, which I think you've already seen pinned up on the Lease Purchase forum, details how you can avoid a double close and the seasoning issue. I also suggest you contact the title company you'll be using if you already haven't and run your deal by them and ask how they prefer it to be done. If they're investor friendly and want your business, they'll cooperate.

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Thanks guys for the info.

 

What is a common profit share of a 20% spread? Have you seen a situation where the loan company did not approve the buyer due to the memorandum or the release of the option? How do you explain to the seller what is going on? Would you explain this earlier in the process or wait until a buyer is found?

 

David

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Always explain to the seller what's going on.

I make it a point to let them know that I'm going to make

some sort of profit and that I'm not going to live in the house

personally.

 

There's no need to hide anything from the seller.

Just be upfront and the deal with go alot smoother.

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Jason's right. Full disclosure from the get-go is a must. The homeowner needs to be happy with what the deal means to them. Your piece of the deal shouldn't matter.

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David, I find if you do disclose everything and in a way so the seller and t/b understand why you are doing things the way you are, they appretiate your honesty and want to work with you.

 

Also, when using the Release agreement you are allowing the seller out of the deal with you. Then let the t/b write up a purchase agreement with the seller and then it is presented to the lender and title company/attorney for closing.

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Thanks guys for the info.

 

What is a common profit share of a 20% spread? Have you seen a situation where the loan company did not approve the buyer due to the memorandum or the release of the option? How do you explain to the seller what is going on? Would you explain this earlier in the process or wait until a buyer is found?

 

David

 

What is common? Depends on deal. I like to NET 10 points.

I never had a situation from a lender say anything about the release because it was on SELLER side of HUD. I am not saying it won't happen.

 

I tell the seller that I do want to buy there home but I don't know at this time if I am going to rent it, sell it or do some owner financing with someone and that I do intend to make a profit. I ask if they have a problem just let me know now.

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So the lender does not worry about the seller side as much as the buyer side of the deal. Thanks guys for the advice.

 

David

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