Escrow Account Question

5 Replies

I am not sure if there is another type of account out there for the situation I am about to present... escrow is the closest term I can think of.

Is there some type of escrow account in which a private lender can deposit their cash for my use, perhaps at the title company that I use, for easy access by me when I find a deal and need to move quickly?

Just to spell it out because I am not the best communicator... the above arrangement instead of finding my next deal, contacting my lender, waiting on him/her to wire funds, and hopefully making a cash offer before someone else with immediate access to cash.

Have the family friend wire funds to your bank and go in and get a bank check. Typically there is a $5-10 fee to wire funds, but you'd pay this fee with a hard money or private lender too 

It is best that you have a written agreement between you and your lender before you do anything. Then have an agreement with your lender that he or she has the funds sitting in a savings vehicle like a CD or savings account and can get access immediately. When a deal is found have them wire the funds to a title company or lawyer. It is best you never handle the funds let a third party like a title company do that so you are very transparent.

By having the funds wired to a title company a paper trail is established. If you were ever audited 2-3 years later by the IRS and they ask you to verify why $75K was put into you're checking account now you have to justify your transaction to them. If the money is sent to a title company which has recorded the paper trail then there is no question as to the source.

When I run across a cash sale deal, I have an accepted contract which I fax to my title company that then opens escrow. Then I email a list of investors I have and ask who wants to fund the deal. I have yet not had it funded in 48 hours.

If you have someone put funds with a title company and the try find the deal you put unnecessary pressure on yourself to buy something and could make a hasty decision that may come back to haunt you.

Good luck in your endeavor.