Double Closings? Assignment? Wraps? Pass Through?- What is the difference?
since these are just terms you can pick up a book, youtube, google these or other terms to understand these more in depth.
Legally there are very different in some subtle ways. At the highest level they are broadly similar.
As someone else suggested, you can research the terms and get a pretty good idea of where they differ. I suggest you make a table and you break each one down. Focus on who ones what and when they own it. Also look at what might happen to the existing financing if there is any. How many times does the title change hands for each one.
Before I explain how to use (and profit with) 3 of the 4 investing strategies… I’m ashamed to admit, while I have plenty of experience with the 3 I’ll help you with, the “pass-through” mortgage I’m completely clueless about, because I’ve never worked with this particular strategy before.
Double closing is when you put a home under contract with YOU as the purchaser, then you write up another (separate) contract with with your buyer. Back in the day, this was my go-to strategy for a vast majority of homes I’ve wholesaled. However, as times have changed double closing’s have gone the way of the dinosaur (not all the way)… not completely EXTINCT… but rarely seen working either.
For example: You put a home under contract for $40k, then you write up a contract with your buyer for $50k.
On closing day YOU CLOSE 1st w/out money. Then your buyer would close and pay their 50k. The title office then takes YOUR BUYERS 50k and pays off the 40k you owe from the first closing. After expenses you would walk away with (50k-Closing fees) - (40k-closing fees) = Your PROFIT.
An Assignment (the most basic form… there’s some other tricky stuff that I don’t have time to get into) is when you put a home under contract with the seller, then you find someone to “Assign” the contract to for a profit. Essentially your buyer is paying to TAKE YOUR POSITION in the contract.
When you hear people talking about “Wholesaling” this is often what they are referring to.
For example: You put a home under contract for $40k, then you ASSIGN your position in the contract to your buyer for $8,000. He/she is essentially paying you for a great deal you found on a house. In terms of the closing, your buyer will close with the seller as if nothing happened because he/she will bring in a check to pay you outside of closing.
By Wraps, I’m assuming you mean wrap around Mortgages (keep in mind you can stack these things to do no money down deals too)… These are pretty cool and extremely profitable once you know how to work them out. Here’s how they work. Let’s say you find a home in your market with a “Current Market Value” of $130k but the owners are willing to let it go for $100k and they owe $60k on a first mortgage…
You would offer them 100k, they would continue making payments on their first mortgage for $60k and then would add a second subordinate mortgage for the remaining 40k… The HUGE advantage to wrapping a mortgage vs. doing a lease option is the buyer actually takes title to the property
The advantage to this being you get to control the property without getting a mortgage. The seller However, things really get interesting when you start stacking these (somewhat similar to a sandwich lease option).
Obviously, this isn’t a “Quick cash strategy” unless your the one selling the property (the quick cash would come from the NON-REFUNDABLE down-payment.