Use Caution on Investor, Wholesaler or flip transaction.

The deals may have different moving parts and the parties involved go by different names such as “Investor”, “Wholesaler” or “Flipper”, but they all have one thing in common they involve an intermediatory who in return for their “services”, will receive financial renumeration from one or both parties to the real estate transaction.   For this memorandum, I will call them “Investors”. 

Often, these deals will have similar elements such as: 1) no out of pocket money from the intermediatory, 2) the intermediatory never takes title to the property; and 3) the contract(s) contains assignment or novation language; 4) almost always involves an LLC as the intermediatory; and 5) no actual improvements are made to the property by the “Investor” to warrant the increased price to the 3rd party or the “Investors” fees. 

The issue of concern in any Investor deal is what is the Investor doing on behalf of a seller or buyer and how is the Investor getting compensated for their services? This memo is addressing and proposing that many of the current Investor deals are structured in such a way that they are illegal under West Virginia law.