Using a letter of intent/1099 with a cash buyer

3 Replies

Hey guys, I've sent out my first mailer and I'm having trouble deciding on what type of contract to use for my wholesale. Here's my issue:

Assignment contract: I live in the Bay Area, price transparency is super high and owners will be pissed if they find out I'm just marking up their properties.

Double close: not crazy about the idea of paying closing costs twice

LLC transfer: Possible - haven't explored this a ton. But CA has an $800 Annual LLC franchise tax.

I thought about working with a cash buyer on a 1099 contract basis. Or possibly using a letter of intent, stating that if this property closes, then the cash buyer compensates me with X.

Any suggestions here? Just trying to keep things legal and I'm not sure which of these are in the gray area/how to keep things smooth with the seller.

Armand,

Use a standard " Subject to" contract

Jim Sakalis

@Armand Farrokh

I thought about working with a cash buyer on a 1099 contract basis. Or possibly using a letter of intent, stating that if this property closes, then the cash buyer compensates me with X.

That is known as being a bird dog. It is also illegal as "acting as a broker without a license."

Double close is the cleanest option. Sometimes paying the cost of double closing is just the cost of doing business. Just figure that additional cost into your numbers when making your offer.

Hey @Armand Farrokh I agree with Ned.  As a wholesaler double closings are the best vehicle for keeping sellers and buyers emotions out the picture.  Always work the closing costing into your numbers.  Good luck.    

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