Buy it cash and resell?

Question

If I'm able to buy a property, all cash, and then resell it for a fee, what are the downsides?  Would I have to wait until the deed gets recorded in my name to sell it?  Is it a bad thing for the deed to be in my name?  Never been able to buy all cash before so I'm clueless!

Will Barnard · Answer

It is not always financially appropriate as some states (such as CA) have high entity fees, but the simplest way to avoid title changing issues and several other issues is to simply buy a property with all cash in a sibgle asset entity (LLC is usually the best for this) and simply sell the LLC to your end buyer. Title has not changed hands, only ownership of the LLC which actually owns the property and not person to person. Speak to your RE attorney on how to properly format this transaction.

Of course your end buyer will also need to be all cash as they will not be able to get a loan in the LLC's name (in most cases)

Harrison Painter · Answer

If you are going to record deeds and flip quickly, look into setting up a Corp.

There is this thing called a "Dealer Tag" that the IRS can hit you with, and you need to consult with your tax adviser to ensure you are making maximum profits!

~Harrison Painter

Ryan Webber · Answer

Well if you are using the same title agent then you should be able to resell it as soon as you want, and it shouldn't make a difference on the deed being recorded.

I would contact your title agent to find out if there are any state laws that may restrict it.

Account Closed · Answer

If it's a fixer-upper, you'll want to require cash or hard money only.  Seasoning won't be an issue.  Some states will allow you to pay a small fee for a rush recording, which I recommend.  I use a land trust when I am using a cash partner, mainly because it describes a partnership, provides some anonymity and protection to the investor.  If you use your own cash, your personal name, an llc or a trust is all fine, since you'll be in and out quickly.

Will Barnard · Answer

If your end buyer is all cash, then no seasoning issues and the only downside is you will have two closing costs to pay for.
If you have a buyer lined up and they are all cash, there is no need to use your own cash to close and re-sell, simply assign or double close.

Donna M. · Answer

Sorry to confuse you!!  
I had intended to wholesale this house with my fee tacked on.  But if I'm able to just buy it, and then sell it at a higher price to my cash buyer, what kind of problems would I run into?

Steve L. · Answer

Depends on your state.  In California, you have to wait one day.  Your transaction records and the next day it can be recorded to someone else.

Donna M. · Answer

Also, would I have to wait until the deed gets recorded in my name before I sell?  I was told that I would have to and that could take a while.

Josh Green · Answer

seasoning of the title may be required by the end buyer's lender.

i'm not quite sure what u mean by 'resell for a fee'?

Will Barnard · Answer

Downside? You have X amount of your cash tied up until you sell.
          Upside - you don't have a martgage payment each month and with an all cash offer, you can often negotiate a better acquisition price.
          
          I am not sure what you mean by re-sell fee either.