Welcome Back to the Discount Property Investor Podcast Episode 8! Thank you for sharing some time with us today. In this episode David Dodge and Mike Slane discuss various options when closing wholesale deals. What is a Double Close? What is an assignment? When should you double close or use an assignment. The answers are simple and explained in Episode 8. Remember when you are making offers you may hear no a lot but if you reach an agreement don’t be afraid to take yes for an answer and start writing up the contract. A lot of sellers need your help to guide them through the process. Lean on your Title company and other real estate investors in your area for help.
Welcome to the discount property investor podcast, where we show you how to buy real estate at a discount, so you can create wealth over time and income today. Our mission is to share what we have learned from the experience of others and help you make more money investing like a pro. We want to teach you how to create wealth by investing in real estate the discount investor way. Thanks for tuning in.
David: Welcome back discount property investors, your host David Dodge and Mike Slane. Today we are going to be talking about closing the deal. Very exciting stuff, I’m super excited. Closing the deal is when you get paid!
Mike: It’s the fun part.
David: It’s the fun part. So, closing the deal we have kind of touched on this a couple of different ways in the past. Once you have done all your marketing, you have got your motivated sellers calling you, emailing you, saying, Dave, Mike, come by our house, you have them sent them offers, you have gotten contracts accepted, you have taken those contracts to your title company, you have opened escrow and you have networked with all of your cash buyers and you have sold the deal. You are at the finish line at this point. Very exciting stuff. So once you get to the closing which is the very last step. We have previously talked about the different ways that you can close a deal. You can do an assignment. Now if you do an assignment you’re done. Once you get the assignment signed, and you deliver the original contract, the assignment, and any escrow money — or earnest money into escrow with your title company — you’re done. You either get paid right then and there, whenever you sign the assignment with your cash buyer. Or you have to wait till closing and the title company will pay you. But essentially you are done. If you do a double close, the double close — you will have to go to the title company, you will have to close your original A to B contract, and you will close your B to C contract and you can get paid at closing right then and there.
Some title companies, I know in the State of Missouri where we live. They are very investor-friendly so we can actually close our B to C, thirty-minute, and hour, two hours prior to closing our A to B, and we can use our C buyer’s funds to close our A to B transaction. Now, not every State is going to be investor-friendly. Also, title company by title company — are going to have different policies on this, but where we do business, we can double close a deal with zero money out of pocket. The only investment we have made would have either been in our time or our marketing which is really awesome.
Mike: Call it dry funding.
David: Dry funding.
Mike: Is the term we use for that and — if your State or title companies or attorney with isn’t able to do that, if that is not an option, you can still do deals with no money. You need basically gap funding or a short term long from a hard money lender. And again, if it’s another step you are going to have to go through, but it’s no big deal.
David: Gap funding, transactional funding, hard money loans, all these are different options, or private money. There is a lot of guys in our market that — they partnered up with people who have money. They are in the IRA’s and they will lend them that money to close on transactions. There are sometimes you may even have to do a double close different — yeah double close different day. So — sometimes you can’t line those deals up perfectly, which is ok. But let’s just say your seller needs out next week and your buyer is out of town and you can’t close till the following week. That’s ok, you got to close it whenever you can close your A to B, then you just close your B to C a little later. So in situations like that, gap funding you may need — for several hours, you may need it for several weeks. Hopefully less — but definitely those situations do arise. So Mike, let’s talk a little about finding the right title company.
Mike: Ok. So finding the title company is — don’t get scared, it’s not that complicated, you are going to pull up your computer or a phone and you are going to type in this thing called GOOGLE, you are going to type ‘title company’ and a list is going to come up and you are just going to start calling them.
David: Call at least six, eight, ten of them.
Mike: I say that jokingly but it is as simple as that. Look for title companies, call them ask them if you can talk to one of their closers, and ask them a couple of questions. The things you are going to want to ask are, can you do a double closing for me? Can you do –?
David: Are you ok with assignments? Some title companies are weird about that.
Mike: Will you require me to — bring cash to closing for a double closing? If I am wholesaling the deal. And if they don’t really know what you’re talking about — just thank them for their time and move on to that next one.
David: That is a very good point. If they need you to explain their business to them — they are not the right fit for you.
Mike: Right, because there are title companies in your area that know how to do a double close, know how to do a wholesaling.
David: They are going to know more about it than you are because they are dealing with tons of these transactions — that’s the idea, you want them to be able to coach you and help you through some of these transactions because, sometimes the transaction will get a little goofy, a little difficult.
Mike: If I am the smartest man in the room, I want to leave, something like that. So you want to get to the title company — you want to go to an expert, that’s why you are going to the title company because they know how to research the title, they know how to clear the leans or clear any issues with the title. That’s why you’re going to them so — you want a title company that is an expert at — in working with investors and doing these things for you. Then once you have done a couple of deals you can start asking them for a discount — you are building a relationship with them as well.
So that is extremely important, just call them and ask if they know what a double close is. It is simple as that and you can wait until – – I wouldn’t, but you could wait until you have a contract before you start screening them. Just say I am ready to open escrow and — most of them are looking for business to. Their business is closing deals so — they want your business quite frankly.
David: Yeah, absolutely. Now the title company will also provide other services to you as well. The title company can do what’s called running title on a property. So sometimes you may have a deal. Let’s say you have a property under contract and — you don’t know what the existing leans are on the property, you don’t know if there are sewer bills or back taxes, sometimes you can look that information up but — often times there is information you can’t lookup. So the title company is also going to be — your best friend when it comes to doing your due diligence and knowing all the details involved with the transaction. This is a rare situation or a rare scenario but it has happened. I will have a great deal on a property, I have — got a contract signed between me and the seller — I take it to the title company and they come back and they say there is $42,000 worth of taxes or leans and my offer is $18,000 and boom the deal blows up. So — they can also be your best friend by helping you do some of the due diligence —
Mike: Sometimes they clear leans.
David: Sometimes they can clear leans.
Mike: It really just depends on your situation and your title company is the one who does that for you so — they are your best friend.
David: Call a lot of them, get to know them, ask them questions and if they are local to you, drop in their offices, get to know them, ask if the owners are present — in the State of Missouri usually an attorney will be present at a title company or will be the owner of the title company. See if he is available, go meet him, shake his hand, and — sometimes title companies in our area at least are investor-friendly, others aren’t. Some title companies will even kind of specialize in certain types of deals. For instance, there is a title company that is known in the St Louis area for doing subject to deals. They are the best in the business for doing those types of deals.
Mike: So let’s talk about — about the closing too. So you have got the deal, you got the A to B contract, hopefully you have already opened Escrow and you got the B to C contract. You are going to bring that to the title company as well. You — I remember my first deal, I was like — how do I make sure I get the B people in and use their money and all that. Don’t worry about it, that’s the title company’s problem. Just make it clear to them that that’s what you are doing. If you say hey I’m going to be selling this deal or flipping this deal — prior to closing on it and they know that, just let them know the contract for the B to C is the same day, we are going to close everything up. As long as they know that — they are going to tell you what they need from you if they need you to find transactional funding. If it’s something they do, they probably have some — they can refer to you as well if it’s something that’s needed in you —
David: Yeah — if you need transactional funding, they are going to know who’s doing it because they are going to have other clients coming in using it. So they are going to be able to refer you to transactional funders, or hard money lenders. That is a really good point, Mike.
Mike: It is — you get excited and nervous and — but again the title company is the one that is going to handle it, you bring it to them just explain what you are trying to do and they will help you through it. If you found an investor-friendly company like — you asked them if they know what double closing is — and if they can do that, if they can do dry funding. Yeah.
David: So let me give you an example of how I do it. I work with a title company that is maybe — four, five miles away from our office. They know me at this point because I send them a lot of business and I am constantly calling and e-mailing them with different questions or sending them deals. So I will have one, two, three, A, B, C street under contract — I will e-mail the title company and I will say here is my A to B contract, I will be in this afternoon to open escrow with my $10 or $100 earnest money deposit. Then let’s say I sell that deal in seven days from today. I will get either my assignment contract or my B to C contract. I will scan that into my computer and I will e-mail that to them as well. The subject on that e-mail will be, B to C contract for one, two, three ABC Street. Usually, I don’t have to open escrow a second time; it’s up to the end buy, the cash buyer. If it’s an assignment they maybe want to transfer my earnest money. Regardless, I am getting off-topic but — that’s it. I will send two e-mails. The title company may respond back and say, Dave — we need the name and the phone number and the e-mail of the seller, the name the number and the e-mail of the buyer, and I will provide that to them and they — go out, contact them via e-mail or call them. They get all the information that they need if there is a marital waiver that is needed they get that, that’s their job.
So you don’t need to worry about all the ins and outs of closing the deal. That is why we use title companies that’s why we hire them. That is their job. Their job is to make the transaction clean, their job is to co-ordinate all the individuals that are in the transaction to meet on a time and a day to sign all the paperwork. Their job is to contact all the leans and make sure they know all the figures on the deal. Pay those existing leans off when a transaction occurs. Transfer the title, which is called a deed in the property case from the seller to the buyer. If you are doing a double close that transfer will transfer into your name for twenty, thirty minutes sometimes, sometimes less. Then right into the end buyer’s name. So — don’t overcomplicate it, find a good title company, that is the hardest part. Doing a little bit of research in the market and maybe doing a little bit of — interviewing with these other companies out there.
You make get lucky and find three or four title companies that are like yeah we are super investor-friendly. We do assignments, we do double closes, and we can make it easy for you. Great, so at that point, you just get a list of prices.
David: Shop the prices a little bit. Some — everybody is in business to make money, that’s why you are listening or watching this episode here today, is to learn how to start doing wholesaling. By the way freewholesalecourse.com. You can learn a lot more about it and we are offering tons of free information on there. But they are in business to make money so — maybe shop them or say, hey title company here on this street is offering a price can you match it? 9 times out of 10 they are not going to say no, they are going to want to retain your business or earn your business and they are going to say yeah, that’s fine let’s do it.
Mike: Absolutely and it’s — it gets more important the more deals you do to — yes and no. It is one of those things where we are doing say 15 deals a month and — 500 dollar difference that’s $7500. That’s a lot of money. And you are talking about that every month that’s huge. So again, you want to shop around first, find someone who can do it for you — then you can kind of shop for price. You do sometimes get what you pay for. There have been title companies I have worked with in the past where — I really did feel like I was doing a lot of the work, like co-originating times with everyone. You will feel like that on some transactions too. Just depends.
David: They may need some of your help, which is fine, sure.
Mike: You still need to be involved in the transaction because you are still working with that seller. And you are still working with that buyer developing that relationship. So there is — it’s not 100% hands off process but — as far as the heavy lifting your title company should be doing.
David: I agree. One more point on this is — it’s always a good idea to have at least two or three title companies that you can work with. How many do you think we have worked within the last couple of years, 20?
Mike: A lot.
David: A lot. However, at this point, we have two or three that we use. We use one for just our — main wholesaling because they are quick, they’re cheap and they know what they’re doing. So we tend to go to them. However, they sometimes can’t do certain types of deals. So we have another company that we use that will do those types of deals. Another one we may use for — subject to deals. And additionally some companies, can do it in four to six days as I talked about in the last episode, others — may take three weeks or four weeks. So just depending on — if you need to do something fast you may want to choose one company over or another. Of if you don’t really have a time frame and you can get a better price by waiting three weeks then go to that one.
Mike: Every deal again is — deal by deal. Every time sometimes comes up, something comes up and it is — it’s a variable and there are so many variables you can’t account for all of them upfront. Just got to learn to think on your feet as you are doing the deals and — yeah roll with it.
David: Roll with it. That’s right. So closing the deal guy, it’s not that hard — let the title company do the bulk of the work for you. If they need you to assist them — obviously do what you can to help but — it’s not that hard. E-mail the contracts, deliver the contracts to the company, and then that’s it. They will handle the rest for you so — if you have any questions you can contact me at [email protected]
, you can contact Mike at —
Mike: [email protected]
, we are happy to answer any question and help you guys along. If you want to learn more there is plenty of information out there online. We have all our properties for sale at the discountpropertyinvestor.com, as well as a link to our freewholesalecouse.com. And that is going to have links to contracts as well as all the other information we have talked about in today’s episode.
David: Absolutely guys, so next week we are really going to start jumping into some case studies. We have really gotten through the core components of wholesaling, marketing — sending offers, meeting the sellers at the properties, getting contracts signed, taking those contracts to the closing table to the title company, and getting paid. It is so basic, it is so simple. When I first got into this business I tried to learn everything and I overcomplicated everything and — it took me months to do my first deal, but now I am doing deals weekly. Just keep it simple, don’t overthink it — so next week we are really going to focus on — some of our recent deals, some case studies — what can you do today? You are in the marketing business. Don’t forget it, real estate is your product, but you are an expert marketer. After listening to these episodes or watching these episodes hopefully, you have picked up a ton of information and gained a lot of knowledge. You are a marketing pro now. So get out there, do some marketing. Buy a list, send some letters or postcards, put some bandit signs up, get to your local R.E.I.A.
So your action item for today is — do more marketing if you haven’t already started marketing ok, very simple. Guys check us out online at discountpropertyinvestor.com, you can subscribe in the top right-hand corner. Again, there is a free wholesale course that we are offering, freewholesalecourse.com. We would love to hear from you and — Mike let’s go ahead and end this episode with a quote.
Mike: “Risk comes from not knowing what you’re doing”
David: So true.
Mike: Thanks for listening guys, see you need a week.