Thread: A few quick residential real estate questions

1) does anyone know if double closings are still legal in Minnesota?
2) are wholesalers/flippers still dealing with the "seasoning issue"? (i.e. laws state a minimum amount of days you must own a home before you can resell it?)
3) do you have a strong opinion on whether or not someone should use their own last name in their business name/business cards? (i.e. Tom Smolson names his RE business "Smolson Properties" versus "Front Door Properties?")

Originally Posted by Sid23

1) does anyone know if double closings are still legal in Minnesota?
2) are wholesalers/flippers still dealing with the "seasoning issue"? (i.e. laws state a minimum amount of days you must own a home before you can resell it?)
3) do you have a strong opinion on whether or not someone should use their own last name in their business name/business cards? (i.e. Tom Smolson names his RE business "Smolson Properties" versus "Front Door Properties?")

1. A double close is generally defined as closing the A->B transaction with your own money and then closing the B->C transaction with the end-buyers money; I assume this is what you're referring to? (By contrast, a simultaneous closing uses the end-buyer's money to close the A->B->C transaction). Double closings are perfectly legal everywhere. That said, not all closing attorneys will do them, but most will (again, as opposed to simultaneous closings, where most attorneys will *not* do them). So, while I can't speak to the specific laws of MN, my guess is that you'll be just fine. Call a couple closing attorneys that deal with investors, and you'll get a definitive answer. Or find an established investor, and get a reference for a good closing attorney.

2. If your end-buyer is going FHA, you'll have a seasoning period (90 days from the date of purchase or the date of deed recording, depending on the underwriter). Most other conventional loans won't have a problem, though there are rumors that some FNMA are starting to implement seasoning. My best suggestion is to start talking to local banks, and find one that will allow your end-buyers to do a double-close without any seasoning. When you find a bank you want to work with, "encourage" your buyers to use them for the loan. If your buyer insists on using his own bank, give the lender a call and ask if there are any seasoning issues that your buyer should be concerned with.

3. Just my opinion, but I don't think it matters. Some people will say that have anything in the company name that denotes real estate ("Properties," "Real Estate," etc) will limit your ability to get funding, but that hasn't been my experience. I've never heard any issues with using your name in the title.

Hope this helps!

Originally Posted by JScott

1. A double close is generally defined as closing the A->B transaction with your own money and then closing the B->C transaction with the end-buyers money; I assume this is what you're referring to? (By contrast, a simultaneous closing uses the end-buyer's money to close the A->B->C transaction). Double closings are perfectly legal everywhere. That said, not all closing attorneys will do them, but most will (again, as opposed to simultaneous closings, where most attorneys will *not* do them). So, while I can't speak to the specific laws of MN, my guess is that you'll be just fine. Call a couple closing attorneys that deal with investors, and you'll get a definitive answer. Or find an established investor, and get a reference for a good closing attorney.

2. If your end-buyer is going FHA, you'll have a seasoning period (90 days from the date of purchase or the date of deed recording, depending on the underwriter). Most other conventional loans won't have a problem, though there are rumors that some FNMA are starting to implement seasoning. My best suggestion is to start talking to local banks, and find one that will allow your end-buyers to do a double-close without any seasoning. When you find a bank you want to work with, "encourage" your buyers to use them for the loan. If your buyer insists on using his own bank, give the lender a call and ask if there are any seasoning issues that your buyer should be concerned with.

3. Just my opinion, but I don't think it matters. Some people will say that have anything in the company name that denotes real estate ("Properties," "Real Estate," etc) will limit your ability to get funding, but that hasn't been my experience. I've never heard any issues with using your name in the title.

Hope this helps!

JScott, thanks for the response.

I was actually referring to the "simultaneous close" as you defined it above. I'm planning to start a wholesaling business (locating the properties and then selling or assigning the contract to an investor like you who then rehabs), but I'm trying to do it the way Jackie Lange described in her ebook, where my end buyer's funds (investor) will be used to close the entire transaction. So I read your note to say that most attorneys will *not* close deals this way these days. I know I can also assign the contract to the investor, but have heard that can get sticky because they see how much you make on the deal and might try to go around you to the homeowner. And I believe REOs cannot be assigned - is that your understanding?

I'll need to dig more into the type of financing my investors will be using, but I was thinking most would be cash buyers or be using hard money, so I wouldn't be dealing with many FHA types. If FNMA has seasoning requirements, it may limit my investors, but my guess is that will be more of an issue for the investor who rehabs and is then looking to sell.

Thanks for your opinion (and you too Randall) on the name question. I often wondered if people did not use their own name to protect themselves from lawsuits.

Does anyone know if there have been any other changes in the market that would severly limit a wholesalers ability to do business?

Thanks in advance!
Sid23