Posted by Joe on April 17, 2006 at 11:46:04:
Can you handle it this way? Sign an assignment contract separate of your purchase contract with the owner. The assignment contract specifies your assignment fee. Then deliver the original purchase contract and the assignment contract to the escrow/title agent, and have them distribute the funds accordingly?
Help Possibly my 1st Wholesale Deal - Posted by Bill
Posted by Bill on April 17, 2006 at 09:41:40:
Good evening everyone, I am really seeking some experienced advice right now. I think I may be on the verge of putting together my 1st wholesale deal. I came across a fixer upper for 40k. It needs about 10k in repairs mainly cosmetic work,sheetrock etc. The structure & foundation are fine. ARV is 96K- 105k. My question is Should I assign my contract over to the rehabber? How willing would he be giving 10k before assuming all rights to the property? or Should I do double closing? and If I do a double closing would that require me to come up with money to purchase the property outright @ 40k. Then turn around and sell the property to the rehabber for 50k. & incur all the closing cost in both closings?
Re: Help Possibly my 1st Wholesale Deal - Posted by Bill
Posted by Bill on April 17, 2006 at 19:03:50:
Thanks everyone for your expert advice I really appreciate it.
Re: Help Possibly my 1st Wholesale Deal - Posted by Chris in FL
Posted by Chris in FL on April 17, 2006 at 12:12:58:
Bill, Yes, no, maybe, and maybe. Yes, you should try to assign your contract. It is neat, simple, clean, and you get paid. $10K is not an outrageous assignment fee, as long as it leaves a decent profit on the table for the rehabber (by the way, not wanting the rehabber to see you getting an outrageous assignment fee is the main reason you would consider double-closing as opposed to assigning). Any rehabber worth their salt doesn’t care what you make, because it is what they stand to make that matters. However, if you were going to make an insane profit, and their deal was going to be very thin, then you might consider double-closing. Maybe, because a double-closing, done correctly, means you would not have to come up with the purchase price (the simultaneous sale to the rehabber would fund your purchase). Maybe you would have to pay closing costs twice… Double closing means closing costs would have to be paid twice by someone, though not necessarily you. If a double closing was necessary, a good negotiator might get the seller to pay all closing costs on the purchase, and the rehabber to pay all closing costs on the sale. Also, I say pay closing costs twice, but, a minor distinction, some portion of the closing costs would likley be reduced as duplication (check with title company for specifics). Best wishes!
Re: Help Possibly my 1st Wholesale Deal - Posted by Joel
Posted by Joel on April 17, 2006 at 11:51:38:
Good find. First, make sure it’s under contract if you haven’t already done so.
As for someone giving you 10K for an assignment, it just depends on if the Rehabber has enough cash. From what I see, it looks like a good deal.
If you sell it to the rehabber for $50,000 + $10,000 in repairs, let’s add $3,000 for contingencies and holding costs… he’s into the property for $63,000.
That’s a profit of $33k - $42K.
I don’t think a strong cash buyer would have a problem with that. That’s who I would focus on, considering this is your first wholesale deal.
BTW, how did you find this deal (MLS, FSBO, classified ad, flyers, birddog, bandit sign, etc.)?