I am in the process of building a system to generate consistent leads for purchasing buy and hold real estate across the Denver metro area. At the time I will not be able to act on more vested ventures such as, Flipping or the BRRRR strategy, due to having a baby coming in late January. Due to this I plan on wholesaling any promising leads that I come across.
In order to do so I need to find a standard contract that will allow me to do a double close. All comments, suggestions and ideas are welcome, thanks!
Colorado uses a standardized contract for purchase and sale. I would suggest hiring an attorney that specializes in real estate investing to draft the supplemental language you need. Then you can add that addendum to your contracts. Long Law is a good place to start.
Depends on what you mean by double close....
If you mean actually buy it, then immediately resell it.....no purchase contract disallows this (unless you’re buying a Fannie REO)
If you mean using the end buyers money to fund Your purchase....this is not a purchase contract question, but a legality/title co issue.
Thanks guys. I will look into a title company and / or attorney to review my options.
The search tool is your friend. Please use the Colorado DORA contracts.
@Jonathan Batson so technically for a double close you need two contracts. Not two different ones, but a contract to purchase the property and a different one to sell the property. If you want to do it all with only one contract, you need to have one that is assignable. The DORA standard forms are what 99% of most deals are bought and sold with. Use those. To do an assignable deal, you need to add a clause in the additional provisions sections of the standard form contract stating that the contract is assignable.
Thanks for the input Bill. I will be using the standard state contracts.
Do you plan to double close or to assign the contract? Each of those strategies is used under specific circumstances. Let me know if you're double closing or assigning, and I can help point you in the right direction depending on your approach.
I planned on doing a double closing so I could just use the standard state contract. All suggestions or input are welcome though.
Double closing is used when you have a decent profit spread -- over about $10k or higher than about 10% over what you paid for it. The other common reason for a double close is if you cannot Assign the contract (such as with a short sale or HUD deal). The last reason is when you want to conceal from the End Buyer the amount you paid for the property. In a double closing, you will need to have both the A-B Purchase and the B-C Sale both occur at the same title company and close the same day (A=Seller, B=Buyer, C=End Buyer.) Not all title companies are investor-friendly and do double closes, so let me know if you need a referral to one that can handle this type of closing.
I see that Kittredge is in the foothills west of Denver. Do you plan to do most of your buying and selling in the Denver metro area?
@Jonathan Batson In case it wasn't clear, you can do an assignment with the state contract you just have to add an additional provision to the contract that allows you to assign the contract.
Thanks for the clarification Bill.
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