I. Overview
A. WDCFCT fundings are not loans. Instead, they are Joint Venture Partnerships( JVPs)— a form of equity— between CTF and the REW Pro; this is achieved via 50 / 50 split of the resulting net profit: The wholesaler brings the deal, CTF puts up the purchase money for the first close + any costs to remove CTIs.
B. Obviously, all the paperwork involved( for both closes) has to be carefully crafted to offer maximum protection to all parties, with appropriate security and collateral issues spoken to successfully, which is why we require that doc prep, title and escrow functions all be assigned to service vendors chosen by CTF.
Problem: The property was burdened with several Clouded Title Issues. Unless and until those CT problems could be solved, the seller was stuck due to a lack of money to pay them off, plus he had pretty bad credit. To make matters worse, if he did not sell the house very soon, he could lose it in a matter of weeks to creditors and receive no money at the end.
C. When CTIs are involved, very close attention to detail takes on added importance. It is often the case that it can take many days, in some cases, to achieve 100 % clear title— especially when there are multiple liens or other loans on the property that each need to be dealt with successfully.
Solution: A commercial loan broker reached out to my firm for help. Once all the needed paperwork was set up properly, we agreed to fund the property purchase for the wholesaler. The amount we funded included enough money to pay off each of the CT debts that plagued the property. It took a few days to get clear title; however, in the end, it was a winwind for all parties.
Wholesalers Double Close Financing: Clouded Title
Following is information about the Wholesalers Double Close Financing( WDCFCT) program from our firm, Creative Transaction Funding( CTF). The WDCFCT program is available to experienced Real Estate Wholesaler Professionals( REW Pros):
A. Who need money to fund double close deals, i. e. those that include two separate escrows.
B. There are Clouded Title Issues( CTIs) that may block the acquisition of the property unless and until the CTIs are fully resolved.
C. CTIs( as CTF defines them) may include( but are not limited to) the following types of problems: property tax lien, preforeclosure, mechanics lien, HOA lien, lawsuit, lis pendens, divorce, probate dispute, IRS lien, state income tax lien.
II. Features, Benefits, Costs
A. How it works: We form a Joint Venture Agreement( JVA) with the REW Pro.
B. CTF’ s profit comes from a 50 %/ 50 % profit split with the REW Pro.
C. We do not require any upfront, outofpocket fees from the REW Pro. There ARE of course“ overhead costs” involved with every deal to cover: backoffice expenses, administrative costs, underwriting expenses, document preparation fees, closing costs, referral fees, etc. Those overhead costs are fixed at 15 % of the funded amount for all deals. The 15 % overhead amount is deducted from the gross profit at closing. The remaining net profit is split 50 %/ 50 % between CTF and the REW Pro.
D. We provide WDCFCT funding nationwide.
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