Mike,
Why not just keep it simple?
You could simply state in your assignment form that yourt assignment fee is $xx in cash plus a 5% equity payment when the house sells, which will be documented by a lein being placed on the title of the house, securing the 5% payment, or the seller quit claim deeds 5% interest to you, or some such arrangement.
I’d go for the lien myself, easier, and should get paid when the buyers get financed, because the title company will contact you for a payoff.
Let’s suppose that I’m selling a property and the buyer and I have agreed that a portion of my wholesale profit will be in the form of a small ongoing equity stake, how would one go about properly documenting this?
For example, say I have a good $100k FMV rental property under k for $70k and plan to assign my k for $10k to a landlord. If I were to negotiate receiving an ongoing 5% interest in the property (to be paid when the buyer either refi’s or sells) in exchange for a reduction in assignment fee to let’s say $5k (so all we’re doing here is exchanging $5k of cash for $5k of equity), how would I document this?..equity sharing arrangement, warrant, put/call option, lien w/ an escalation clause? I’ve tried searching the archives, but I can’t find anything on this particular technique.
Of course, I need to be certain that I could record such documentation to create a cloud on title to protect myself.