Quote from @Will Barnard:
Quote from @Scott Johnson:
Quote from @Tom Gimer:
@Scott Johnson What @Will Barnard means is there is no need for an A-->B closing and a B-->C closing (and in the process incurring 2 sets of closing costs and recording 2 deeds), which is the standard double close scenario.
Instead, you can do an A-->B closing where B is an entity formed specifically for this purpose. Either prior to or simultaneously with the acquisition by B, the end buyer becomes the 100% owner of B. There is no assignment of the original contract and only one deed gets recorded.
I may be a bit confused. Is "B" in the second scenario "C" in the first scenario?
Tom answered your question correctly on my behalf. A = Seller B= Wholesaler/buyer C = End buyer. So with a double close, you have seller A contracting with wholesaler B and then wholesaler B selling to investor buyer C. If you have buyer C lined up in advance, creating a single purpose entity or trust to make the offer in the name of the entity/trust from You (party B) to seller (party A). Then at the closing table, you already have buyer C in hand who is named as owner of the entity (or beneficiary of the trust) and you sell your position in the entity (or assign new trustee in the trust) for your wholesale fee. No double closing with two closing costs needed.
Okay, I follow you now. It's brilliant, but my question is, Do I need a separate corporate attorney to handle the interest transfer part of it? I guess that's more of an attorney question.
I see the risk in the cost of forming the entity, but that's not a lot here in NC. Also, I have to make sure the buyer will play ball with the new corporate entity. Sounds like a play that would be used with purchases of larger properties instead of SFRs, since single properties aren't always put into a corporation. The trust would make far more sense for single properties, depending on the fees.
So I guess I'd just have a trust on stand-by (with whatever minimal requirements are required for a trust), Make an offer on behalf of that trust to the seller, and after closing sell my interest in said trust to the buyer. Or do you get it under contract with the name of a trust that doesn't necessarily exist at the time of signing and form it right after signing? The method is sound, but the execution is scrambling my brain. It's likely my lack of understanding of how trusts work, so back to the legislation I go.
It doesn't sound like something I would necessarily use for a normal wholesale, but definitely something to consider if the person I'm buying it from insists on assignments not being allowed.
