Hi. In a week or so I will be closing on a wholesale deal. I have run into a dilemna. My seller does not have funds to move into their new home (they are renting). They were going to use the proceeds from the sale of their house. However when my buyer signed the contract we agreed that the seller would have all personal property cleared out of the property before closing. The seller cannot move until they get their rental secured but cannot until after the closing. I am afraid to ask the buyer to rent back to the seller for a day. What are my options?
I was thinking of floating the seller a loan for their rental property and having them sign a promissory note to me for that money. Or should I just approach the buyer to see if they will rent back to the sellers for a day. If they say no, what is my recourse?
If the closing falls through how can I protect myself if I float them a loan? Thanks
That’s a pickle!
Does the seller know that you’re reselling? Does the end buyer know that they’re buying something that you don’t yet own? If not, do you want them to know?
Also, delaying the closing, even a day, may have major repurcussions. What if the end-buyer can’t rent back because their buyers have to move in on closing day? If that deal falls through, then your deal falls through. Can you close on the deal, if your end buyer doesn’t close?
I’m assuming that your seller will be getting some funds at the closing table if that’s what they’re waiting on to secure their rental. If that’s correct, then simply loan them the $1000 or so and take out a lien against the property that your buying. It’ll be refunded to you at closing.
If that’s not the case, then I’m sure that you’re making some profit in the deal, correct? If the $1K or so isn’t a deal killer (it shouldn’t be), then do a personal loan and get them OUT. If they don’t pay you back, then they don’t pay. You still made a profit for one day’s work, right?
Raj
Yeah, a promissory note will work. Just make sure to have it notarized.
The end buyer is not moving in. They are rehabbing it and then going to sell it. They are investors.
Everyone knows all parties involved. The sellers know I am flipping it to an end buyer and the end buyer knows I am not the original seller.
I will go the promissory note route. It seems to be easiest.