Posted by michaela-CA on April 12, 2008 at 09:14:29:
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ASSIGNMENT FEE - Posted by Sparkle
Posted by Sparkle on April 07, 2008 at 18:06:09:
I WILL POSSIBLY HAVE A PROPERTY UNDER CONTRACT TOMORROW. THE EQUITY IS AROUND 98,000 ,BUT REPAIRS ARE AROUND 60,000. WHAT IS THE MAX FEE I SHOULD ASSIGN IT FOR?
Re: ASSIGNMENT FEE - Posted by Natalie-VA
Posted by Natalie-VA on April 14, 2008 at 06:16:45:
I get as much as I can while still leaving the rehabber room for profit. Many times I will make more than the rehabber. If your rehabbers have a problem with that, find others to sell to.
As far as your deal is concerned, it might be too skinny. 60k is a HUGE rehab amount where I deal. If the ARV is 355k and the rehab amount is 60k, I (as a rehabber) wouldn’t pay more than 200k ish for the deal.
Let us know how it goes.
–Natalie
Re: ASSIGNMENT FEE - Posted by Dave T
Posted by Dave T on April 09, 2008 at 03:55:04:
My rule of thumb is 10% of the net equity I am giving the buyer.
If the property has $98K equity but needs $60K in repairs, then the net equity to your buyer is only $38K.
My assignment fee for this deal would be in the $3500 to $4000 range.
at least 5% of the value - Posted by James - Michigan
Posted by James - Michigan on April 07, 2008 at 19:19:42:
maybe a little more…don’t get too greedy!
need more info - Posted by BigV
Posted by BigV on April 07, 2008 at 19:11:13:
what is the after repaired value of your home? For example, if your property is in the range of 1,000,000+, then 100K equity may be just a piece of paper.
However, if the After Repaired value is 200K, then your deal looks much better.
OUCH - SHOUTING - Posted by Rich-CA
Posted by Rich-CA on April 07, 2008 at 18:44:53:
ALL CAPS IS SHOUTING. Has been for a very long time. Can you tone it down, some of us are trying to sleep here.
Re: at least 5% of the value - Posted by Sparkle
Posted by Sparkle on April 07, 2008 at 19:38:00:
do banks/lenders usually prohibit assigning contracts, if so how can i bypass that
Re: need more info - Posted by Sparkle
Posted by Sparkle on April 07, 2008 at 19:35:11:
the arv is 355,000. so should i charge a percentage of the arv or a flat fee
Re: at least 5% of the value - Posted by gy
Posted by gy on April 08, 2008 at 15:06:22:
Do you actually have a buyer/investor waiting in the wings?
If, as you say, the home has 98k equity and you take out 5% of $355kARV as your cut, look at the numbers:
98k minus:
60k rehab costs
17k your profit (5%)
17k investor profit (same as you? i doubt it. they would want more for their efforts)
4k to cover two sets of closing costs, financing costs, holding costs, overhead, etc. (you’re dreaming here. sales/marketing/closing costs to end buyer alone could cost about 5% to 10% of the $355k sales price)
I’d negotiate a flat fee with a rehab investor who can pay cash/who is able to deal with an assignment fee. This deal might be too skinny for a pro. But not knowing your market, what actually needs to be done, the local costs, etc. I could not say for sure. Find a savvy local investor to look at the deal for you.
Re: need more info - Posted by Mike
Posted by Mike on April 08, 2008 at 22:00:14:
Here is a formula that I got from William Bronchick.It
works pretty good for me here in Connecticut…
1.ARV*70%
2.Determine how much repairs will cost *.05(this part
is important)
3.Subtract the repair cost from the amount you get after you multiply ARV*70%
4.This should give you your MAO on the house you want to put under contract.If you go under this number,you might be leaving to much money on the table and it will be hard for you to negotiate…
…Happy Investing
ARV*70
Subtract Repairs
MAO
What is MAO? - Posted by Sharyn SJR
Posted by Sharyn SJR on April 12, 2008 at 09:07:58:
Thanks for the info!