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simultaneous closings - http://www.dealmakerscafe.com Forums

Original message

jasonhardy

"simultaneous closings" , Tue 13 Mar 15:06

I thought I understood double closings. Say you l/p from a seller, and got a tenant / buyer to l/p from you w/ better terms. At the end of the term, the tenant/buyer wants to execute the option. To the simultaneous close, I have to line up my financing conventionally to hold title for 1 min or whatever, and then my tenant/buyer instantly replaces my financing w/ his/her financing that they have.....is this right????? I've heard so many people saying "NO, you don't have to line up your financing at all, The tenant / buyers financing will just be placed in escrow, and that is the only financing that needs to close the deal. The tenant / buyers financing will go through directly to the original seller.

What is the truth??? Don't I have to line up my own financing first w/ the original seller, close the deal and take title, then close the tenant / buyer's financing right after, replacing my financing? Or can the tenant / buyers financing just slide right through me to the original seller????

Thanks!

Jason Hardy

Replies:

Lynn
Moderator

"Re(1):simultaneous closings" , Tue 13 Mar 16:22

Hello Jason,

You DO NOT need to get your own financing. This could cost you thousands of dollars in transaction costs.

Here’s a simplified explanation of how it works:

Your purchase price = $75,000
Your tenant buyers price = $100,000

Tenant buyer gives the attorney/closing company etc. a check for $100,000 (from their lender or rich aunt)

Your seller gives the attorney a deed from himself or herself to you
You give the attorney a deed from yourself to the tenant buyer

The attorney puts everything together on his desk and then sorts it all out. He simply does the math on the money. He deposits the $100K into his escrow account and writes a check to your seller for $75,000 and you get $25,000. The deed passes from the original owner to you and then to the tenant buyer.

No need for any more money to be there because the $100K is enough. The attorney will not let go of anything until he has ALL the paperwork together.

That’s as simple as it gets. This scenario doesn’t include the closing expenses, but they would be calculated in according to what the contracts stipulate. Any liens etc. would also be deducted from the appropriate parties funds.

We did our first flip in Arkansas a few months ago. I didn’t even mention to the closing agent that I wasn’t planning on bringing any money to the table. I intended to wait until the last minute to see how she was going to handle it. Guess what? She called me the day before closing and asked “would you like to fund your purchase with the funds from your buyer?” I said “yes” and she said “okay.” It was really that easy.

Happy Investing!
Lynn

Knowledge is important but all the knowledge in the world is worthless without action! How many offers did "you" make today?

JasonHardy

"Re(2):simultaneous closings" , Wed 14 Mar 08:10

Lynn,

I understand what you are saying. But, in your example. I have a lease purchase contract w/ the original seller for $75,000. My tenant buyers price is $100,000, and they have a lease purchase contract for that amount. Before the tenant buyer can excercise their option to purchase from me, since I do not have title, don't I have to excercise my option w/ the original seller to obtain title? I mean, what happens to my option to purchase, wont it expire and I'll lose my position all together and the original lease purchase with the seller becomes null and void since I didn't excercise my option?

I'm a member to many online discussion boards, and all boards that I have posted this on, the "experts" have said that YES, you have to have your financing in place to take ownership or title for 1 minute or whatever, and then the tenant buyers financing replaces your financing w/ the simultaneous closing. This makes sense to me because you do have to excercise that option to take title before you can transfer it to the tenant buyer. Comments and or suggestions...any help????
Thanks!!!

Jason Hardy

Lynn
Moderator

"Re(3):simultaneous closings" , Wed 14 Mar 11:48

Jason,

I never hold myself out to be an expert at anything because I am always learning, but quite frankly these other so called experts are full of crap. Maybe they have never done a double closing?

You are exercising your option to purchase and your tenant/buyer is also exercising their option to purchase at the same time.

You are making it wayyyy to complicated!

Let's say you have a dog for sale and you want $100. I know a guy who will pay $200 for the dog, and I want the spread. So I tell you that I will pay you $100 for the dog if you will meet me at my attorney's office at noon. I also tell the other guy to show up at noon with his $200. My buyer with his $200 goes into the attorney's office and gives him the $200. My attorney says thank you and please step into the lobby for a moment while I wrap up the paperwork. Now you come in with the dog. The attorney gives you $100 and you give him the dog (you go home happy). Now the attorney calls my buyer back into his office and gives him the dog as promised (he goes home happy). Now the attorney has $100 left and it is mine. Neither you nor my friend even know that I'm acting in the middle. It doesn't get much more complicated than that! As long as my buyer shows up with the funds, we have a deal!

The real estate transaction works in much the same way. I can contract to buy a Ten Million dollar building, sell it for Twelve Million and through a double closing I can pocket Two Million without ever investing a dime or getting any financing.Geez, I like that example!

There can be double, triple, quadruple closings. As long as the funds are there so that everyone gets paid, it's up to the attorney to handle the paperwork.

Be careful of the advice you get on other boards. MANY times people who claim to be experts have only BOOK knowledge and they can steer you wrong. I'm no expert, but I have done several of these double closings. It will work for you too!

Happy Investing!
Lynn

Knowledge is important but all the knowledge in the world is worthless without action! How many offers did "you" make today?