Financing at the end of 12 months - Posted by jason hardy
Posted by jason hardy on March 14, 2001 at 14:43:01:
I’ve posted messages here about financing at the end of the lease term. I’ve been told that we have to excercise our option w/ our own financing at the end of the 12 months, and then the T/B’s financing will then replace the loan that we’ve obtained. This is known as the double or simultaneous closing.
So in other words, we do have to obtain financing to excercise our option BEFORE the T/B can excercise his/her option. The T/B cannot just filter his option and financing in escrow to the original seller.
Well, I’ve been posting messages on other respectable boards as well and have come up w/ a different answer. Below is a response that I’ve gotten from the board editor of dealmakerscafe.com . This response contradicts what I’ve heard here and so have other responses from other boards about this subject.
I never hold myself out to be an expert at anything because I am always learning, but quite frankly these other so called experts are full of crap. Maybe they have never done a double closing?
You are exercising your option to purchase and your tenant/buyer is also exercising their option to purchase at the same time.
You are making it wayyyy to complicated!
Let’s say you have a dog for sale and you want $100. I know a guy who will pay $200 for the dog, and I want the spread. So I tell you that I will pay you $100 for the dog if you will meet me at my attorney’s office at noon. I also tell the other guy to show up at noon with his $200. My buyer with his $200 goes into the attorney’s office and gives him the $200. My attorney says thank you and please step into the lobby for a moment while I wrap up the paperwork. Now you come in with the dog. The attorney gives you $100 and you give him the dog (you go home happy). Now the attorney calls my buyer back into his office and gives him the dog as promised (he goes home happy). Now the attorney has $100 left and it is mine. Neither you nor my friend even know that I’m acting in the middle. It doesn’t get much more complicated than that! As long as my buyer shows up with the funds, we have a deal!
The real estate transaction works in much the same way. I can contract to buy a Ten Million dollar building, sell it for Twelve Million and through a double closing I can pocket Two Million without ever investing a dime or getting any financing.Geez, I like that example!
There can be double, triple, quadruple closings. As long as the funds are there so that everyone gets paid, it’s up to the attorney to handle the paperwork.
Be careful of the advice you get on other boards. MANY times people who claim to be experts have only BOOK knowledge and they can steer you wrong. I’m no expert, but I have done several of these double closings. It will work for you too!
Does anyone have any comments, suggestions, whats right here?!?!?