How do you perform a wholesale?
I’ve heard its the same thing as a double close, but how is this possible? You don’t have any money, the investor does.
And the investor won’t give you any money to buy a property unless you’ve already bought it.
What do I do?
Wholesaling is usually not a double closing. That would be bad because your closing costs would double and there’s a huge risk, namely what happens if you buy the property but then the guy who buys from you bails? You’d be stuck.
What wholesaling is: you find the property, you find/contact the seller, you negotiate with him/her and eventually sign your name (or your company’s name) on the sales agreement. You then go and find a buyer, and you ASSIGN the contract to your buyer for a wholesale fee. You can be more or less involved than that; some people order title, some people attend closing and some don’t. But in the end, it is your buyer who uses his/her own money to buy the deal directly from the original seller.
True, the easiest way to avoid double settlemt costs is to assign the contract. If you are a traditional wholesaler, you purchase properties on the cheap, then resell the properties to either rehabbers or to those looking to move in.
Settlement costs will include real estate transfer taxes, title insurance and other settlement fees. If you assign a contract, you basically find a property that others do not know about, put “and/or assigns” on the purchase agreement, and give yourself time to remarket it to someone else who has the cash but not the time or the knowledge to find the property. Your name never appears on the title to the property in an assignment. Theoretically, you can do assignments for just the cost of an earnest money deposit. If you find a property from a person who is not actively marketing it, then you can get away cheap. if you find a property from a real estate agent, you will not get away with a small deposit, as the agent will want to see a serious buyer before takiing the property off the market, not someone looking to assign it to someone else.