The steps to syndicate houses aren’t so tricky when you understand how to coordinate organization and what the logistics are; you are knowledgeable and efficient enough to come up with the money you need for your house flips. The great thing is that it is much easier and faster to structure deals with investment firms for house flips than to syndicate house deals. Since it’s easily understandable to everyone, the risk perceived is minimal and the profits fantastic. You can easily raise money with a total investment of $25,000 from relatives and friends, and associates.
The Key to Syndicate Houses
The key to syndicate houses is that you’d have to cooperate with a title company that understands how to manage such a transaction in the way you wish. Not every organization understands how to do that. However, plenty do. You will have to simply explain to the title company what you are after and let them tell you if they have done it before.
Let us assume that you buy a $65K house, and you need $25K to refurbish it. Add closing and holding charges, and possibly a little bit more money in unpredictable situations, and you could collect $100,000 from investors. However, you will need four investors for at least $25,000. By now, you should have found a mortgage business that is willing to do this and have conversational investor agreements. The title company will now be told to create your promissory notes. You would have to pay a bit more for this, and you can alter it for each investor when you have a promissory note. Every one of your investors would be contacted to check.
Ensure that the title company is strongly reminded that the four promissory notes of the trust deed must be included. This guarantees every note with the property. If the company cannot do this, consider another company. You inform each investor to make the payment into the closing escrow account of the title company.
When you close, each promissory note and the deed is signed and authenticated. The title company registers the deed so your investors are protected and then mail each investor with the original promissory note. Then you collect a receipt to transfer into your bank account for maintenance and holding costs.
The title company manages the transaction again when you sell the house. You would be asked for a payment declaration, which should include principal and interest to be paid out of the revenue generated, to each investor. You may have to use the title company template or build your version.
The declaration of payment shall contain the name and address of the creditor, the principal sum, interest payable, and instructions for delivering the payment to the creditor; this can be a check or wire transfer. In general, the creditor would ask the title company to sign the payment declaration. You must send them to your title company and they will take care of the remainder. This is after you have gotten a payment declaration from each of your investors.
They will sum up the HUD-1 payment amounts to the individual investors and give the money to them. You never have to hold the money while you interact with investors, and that makes investors easier while also making you look smarter.
Using the concept of syndicate houses is very valuable, and I hope this article gives you a better perspective on how your investors can be organized to flip your next house more boldly.