BiggerPockets

Here's the challenge: I have a few cash buyers in place ready to go on 2 short sale deals in my pipeline.

Yesterday , my attorney says that she thinks there is going to be an issue with double closing on these as there is a NEW law passed in NY State that says there must be a 60 day period between closings or something like this. We are supposed to talk today so I can get full clarification. Apparently the banks are catching on to flippers making profits on short sales and are trying to put the kabash on any proft being made from the immediate buying and selling of the property for a profit. I guess if there is a profit to be made the bank wants it on their books.

Anyway the attorney says that the title company that she uses said they will not provide title insurance for my double closing scenario. She said she could try some other title company but that it may be risky. This all means that both my pipeline short sale deals could blow up as my exit strategy was to double close with a rehab investor.

I'm thinking either do the flip myself (not what I intended but the profit potential is very attractive to me) or some how JV with one of the cash buyers on the deals?

I was also thinking if a) transactional funding lasts for 60 days it would put me right where I need to be. b) If I had a private money source I would also be in a good place to flip it to a rehab buyer after the elapsed 60 day period and just pay a nice chunk of interest for the use of the money.

Either way. I gotta do something and I need feedback.

This is sort of a hybrid issue about financing/wholesaling and short sales so apologies if I posted in the wrong forum. - Mike

I agree 100% Steve! Banks are big boys, they have expertise, they should be able to deal in their best interest without passing more laws to protect them from their incompetence.

But that doesn't help the deal at hand. Sell an option to your buyers, leas it, give possession prior to closing, close on day 61, when they will pay the last ten bucks of the deal! Your buyers might have the property to sell the day after they close, assuming this flip law only applies to REOs.

Good strategy Bill. I still have to buy the property which is my conundrum. My initial exit strategy used transactional funding for a day. Using the lease option property I'm gonna need financing for 60 days and I don't have any private lenders lined up.

What law is that???? Never heard of any such thing.

Your attorney must be mistaken. First of all, it would be a restraint on alienation and the government cannot restrict how or when you transfer your property.

Perhaps your attorney is thinking of a covenant in the contract, imposed by the short sale lender under HAFA, restraining a purchaser from reselling for 60 days?

If there is a selling restriction on the deed, you're likely not going to find a "creative" way around it. Best choice is probably to purchase outright and hold for 60 days, or rehab yourself and resell to a retail buyer after 60 days.

Mike,

What was the update with your dilemma? Did you get the deals closed and sold?
Good news we hope...

Mike,

Be sure to let us know how that turns out. Was it difficult to convince the buyer? Did you actually set up a corporation, or is it an LLC? I'm assuming he will pay you xxxx amount to take yourself out so that he owns it alone.
Interesting!

Mike. When reading the beginning of your post I was going to suggest the route you ended up taking as it is becoming a popular practice.

If you come across a buyer who does not want to partner or purchase the corporation from you and you are restricted to the longer hold period, Aegis RE Partners offers transactional funding for up to 60 days.
http://www.aegisrepartners.com/transactional-funding/

I do not know of any other transactional lender that will go this long of a term, but I may be mistaken. Otherwise the best option if you do not have or want to use your own cash a private investor or hard money loan may be your only other option.

Best of luck!