Double Closings Explained: When They Actually Make Sense in Land Investing

Imagine being able to close an extra 5, 10, maybe even 20 extra deals this year by leveraging what is known as a double close play. My name is Anthony Wyler and I've been a land flipper for, gosh, I want to say 4 or 5 years now, and I've coached hundreds of students with getting their first deal under their belt while being able to grow and scale their land flipping business properly. Now let's get into what a double close is. Now, a lot of land investors mess up because they leverage what is known as JV funding, which is absolutely great with getting started. but there is a new strategy that has absolutely taken fire within the last 2 years of land investing, which is a double close, which is great because if you were to leverage a JV funder, they're going to eat up anywhere from 40% to 60%, sometimes even 70% of the overall profit. But when it comes to a double close, you're looking at anywhere from 0.5% to 5% as the absolute most of the profit that's going to be taken from the deal. And there is very minimal risk for pretty much everyone involved. So let's go ahead and jump into it. So double close is also known as what is called a double-blind HUD transaction. And how that works, for example, there are 3 parties involved. So it goes from A to B to C. And so where you are in this is that you are going to be B, is that you are essentially the middleman. And how this works is you do your traditional outreach like normal. You're reaching out to landowners in the area to see if there is any potential interest in wanting to sell. And so we're doing our outreach and this is the person that we're reaching out to. So this is the seller, and here we have the end buyer. So again, we're doing our outreach, we're reaching out to, we're reaching out to A, and those are the people that own the land right now. We're trying to acquire it. And so for an example, let's say you're doing your traditional outreach and you're trying to get stuff anywhere from, let's say, 30 to 50% of perceived market value. So for easy math here. Let's say it's a 5-acre parcel. Let me write this down. So we have 5 acres and let's say the market value equals $100,000. So in situations like this, we're going to offer $50,000 is what we're normally going to offer. And like, hey, you know, the offer is cool and all, but I actually need $75,000 to $80,000 to make this work. And it's like, well, no JV funder is going to take that. And if I leverage a private money lender, let's say they're going to take 20% annualized returns. Over the life of the loan, then it's like, it doesn't really make sense at the end of the day. These numbers aren't going to work for me. But this is where a double close play comes in, which is absolutely fantastic. You could say, hey, $50,000, I give you all cash for that right now. And I could close within 14 days, a very quick and simple transaction. However, if you are looking for more money, give me, let's say, 90 days, for example. And you could partner with your investors. You're going to have to market the property to show that it's marketable. And you could get them the number of what they're looking for, let's say, $75,000, and that's going to be a way better deal for them in comparison to the $50,000. Because if you've been doing marketing and you're speaking with sellers, a lot of them are going to want at or above perceived market value. And so, excuse me, where it gets really tough is that it's like, how can we get more deals under our belt? And if we're able to get it for $75,000, let's say we're able to sell it at the $100,000 mark, that's still $25,000 of profit at the end of the day. That's absolutely fantastic. We want anywhere from $25,000 and above per deal. So this looks great. So, okay, that's great. But how does this actually work? Right? So I said something, I'm not sure if you caught it, is that we are going to be marketing the property. So how the double close works is that we reach out to the seller and we get them under contract. So how this works is let's do A, because A is the seller. We get them under contract. And then what we're going to be doing— actually, let me erase this right here— is we get seller under contract, our contract, and then, then we list before buying, which is completely different. I wanted to write this out for you just because a lot of people they don't understand how this actually works. So again, we get the seller under contract and based off the double closing, what we have in our contract, that gives us the right to market the property for however many days we have it listed in that contract. So normally double close is going to be anywhere from 90 to 120 days. So think of anywhere from 3 to 6 months of a listing timeframe. Now, ideally we want it to be within 3 months because one of the biggest pushbacks you'll get is, well, why don't I use a realtor? And realtors are normally going to lock you up for at least a 6-month to a year-long contract. So that's one thing to keep in mind. I really do like 3 months instead, 90 days, but you really, really need to take into consideration that you have to make that sell very quickly. If not, you're going to have to extend the contract. And if they don't want to extend the contract, you lose out on the deal. So again, with the double close, you have them under contract and then at that point you have the right to market the property. Now, you really want to make sure you do your research on where this is allowed because South Carolina and Oklahoma are the two states that do not allow double closes. Now, I don't believe there's other states that have been included, but there are some states that require what is known as an Attorney in Fact, otherwise known as an AIF. And so what the Attorney in Fact states is that it's a legal document giving you the authorization to be able to list the property. And there's some states to where you just need a simple purchase agreement that states you're able to do that. So this obviously requires a little bit more research in comparison to a traditional JV funder and just being able to buy it within 14 days. Now what you're going to do now, since you have it under contract and you have it under contract for, again, the amount of $75,000, and we know that this could sell for around $100,000. So what we're going to do is we're going to be marketing this property everywhere. We're going to market it on the MLS and you're going to be doing so by leveraging a flat rate broker. And if the spread and margin looks good enough, you can, believe it or not, you can use a real estate agent to be able to list it for you. There are some real estate agents that are investor-friendly and that just becomes extremely helpful because a lot of real estate agents, which was very surprising to me at first, they don't understand what a double close is and they don't really know how to work with investors. So if you have a real estate agent that is very familiar with the double close and how that works, it just makes that process a hell of a lot easier because when you're speaking to potential end buyers and there's an agent representing them, the red flags come up like, is this a scam? How is this allowed? There's just— I get it can get very messy. You're going to have to explain the process, loop in the title company that you're working with as well to just to help explain that process and how that works. I actually helped a client, I think it was last month, beginning of the month, where she had a $30,000 double close online and there was a real estate agent representing the end buyer and they were absolutely flipping out thinking that this was a scam. Then at the end of the day, the real estate agent's like, oh my gosh, this is awesome. Let's do deals in the future because he ended up making a great deal of money on that. He's like, now I can partner with, with her and we can do the strategy over and over again. So it's just really interesting to see how that works. So again, you really want to understand how this process works. And I just want to give you a good high level because a lot of land investors, they just don't know where to start. So again, you have to have the right contract in place. Reach out to people, see if they're interested. We have this person in our contract and we're currently listing it for sale. So some of the things that you'll get will be, again, one, skeptical agents. So you have to be able to explain the process to them. Another one that I briefly mentioned is title companies or closing attorneys. So we want investor-friendly We'll put TC or CA, which is title company or closing attorney. And then what you're also going to need is going to be a transactional funder. And so let's just say we have— again, it goes A to B to C. Whoops. A to B to C. And again, we have we have the seller, we have us, and we have the end buyer, right? So what I'm getting at is, let's say that we're in a contract, we find an end buyer, like, okay, great. So what we need to work on first is we send all this to the title company. What they're gonna work on first is going to be this transaction right here because they're gonna be two separate transactions. So this is going to be transaction 1. And so what we need is we actually need the $75,000 to be able to buy this deal because we are technically still buying it. But how this works is everything happens within the same day. And so again, we need $75,000. So, so what we need is we need a transactional funder. Whoops, that's supposed to be TF. So we need a transactional funder to fund this deal of— let's just put $75,000. And what they're going to take is normally, again, anywhere from half a percent to 5% is normally the rate that they take. So let me pull out my phone here because I'm terrible doing math off the top of my head. And let's just say Let's pull up my calculator here. So we have $75,000. Let's just times it by, let's do it by 3%. So by 0.03, and that's going to be, so again, if we did it by 3%, that equals $2,250 here. So that's, I mean, that's extremely cheap. So we have 70 all in. Let's do all in of $77,250. And let's just add— let's just add $3,000 for closing costs. And so we have closing costs. So all in, all in all now is going to be— let's just put $100,000 in $250,000. Oh, I'm sorry, $80,000 in $250,000. This is the perfect example why I said like, I'm not going to do math off the top of my head. That was That was extremely embarrassing. $80,250. So all in all, we still have around $20,000 of overall profit from this. So we need the transactional funder though, right? Until we have the transactional funder, we let the title company and the closing attorney know, and they are going to wire the funds the same day. So this one right here is happening right now, the A to B transaction. And this has its own own HUD and settlement statement, which is why it's a double-blind HUD, because the seller is not going to see the HUD settlement statement that is going to be from B to C, for example. So again, C and A are not going to see these two separate transactions. So the seller again is not going to see the end buyer, um, the end buyer's transaction, right? And then the end buyer is not going to see the seller's transaction, which is why it's also known as a double-blind HUD. So again, we have A to B, and then the separate one or the second one after that is going to be B2C. So see how us right here, we are the middleman right here and we're facilitating both transactions, which is why it's a double close. And this all happens same day. So very minimal risk, which is why transactional funders have such a low rate because it is very, very, very low chance of the deal not being able to go through and they lose their money because how that works is they wait for the B2C transaction to technically happen first. And what I mean by that is the end buyer actually sending over their funds and they can see that. I'm like, okay, perfect. I can wire my funds now. Everything can all happen at the same time. Very, very minimal risk. And at the end of the day, again, we end up with around $20,000. So again, high-level overview of how a double close works and the intricacies behind it. There are obviously a little bit more T's and C's that go into this, but hopefully you find this helpful because this gives you such a better strategy from an acquisition standpoint with being able to lock deals up. Because as you know, if you've done any marketing already, there are plenty of leads that are going to want near, at, or above perceived market value. And if you're able to offer a little bit more and still make $20,000 to $25,000 and above per deal, absolutely, we need to have this as an acquisition strategy. We cannot rely solely on JV funders and private money lenders because transactional funding is going to be huge. My last two coaching students I'm working with, Clyde and Tracy, both locked up deals. Clyde was, I think, $41,000 on a double close, and Tracy was around $31,000 from a double close. That's an absolute killing being able to do that. And you don't have to rely on a JV funder, which you have practically full autonomy being able to do what you want. So again, start leveraging double closes if you haven't already. If you have any questions, feel free to reach out to me in my school community. I'll be more than happy to answer some questions for you. And I'll see you guys in the next one.