Posted by John on February 10, 2007 at 01:15:47:
Clint,
Is this a cash buyer or one with a lender that you are describing. I have done a lot of these deals as well, but sometimes run into problems with the lenders accepting that there is an assignment fee.
how does one do an assignment? - Posted by RogerGA
Posted by RogerGA on December 14, 2006 at 22:43:54:
Current used car salesman here, kinda new to this realty biz…
I’m trying to figure this out, just purchased Joe Kaiser’s abandoned properties book:
I like his ideas on just getting in and out real fast, making a quick buck in the process. It just seems like a TON of work though, alot of driving around, rummaging around in the courthouse for hours on end, and endless phone calls…whew!!!
Assignments: you negotiate a low price and then sell at a low price to an investor, who pays you upfront, say $3k to $5k and then they close with the seller. I guess this works because the seller needs to sell fast and with you only making this little bit of money, it does not offend so much.
But what about the out of area seller? Say I find a property, negotiate a short sale to $70k, property is worth $135k. According to Joe K’s book the goal is to not have your name anywhere, I understand that. I should find someone to pay me say $10k to take over and buy the house at my contract price of $70k. But isnt that unlikely. I just cant see someone paying $10k to me UPFRONT. I’d have to sign some type of deed over to the seller, putting my name in the public record somewhere.
And then this does not take into account those really large deals. Say you find a deal where you can get a property for $100k, and it is worth $300k. You want to sell for $200k. you will have to buy outright at the $100k price because no one is going to pay $100k in an assignment fee. I know people hate to see someone making that much money with no money in a deal.
I guess what I’m trying to say is that it appears to take a ton of work just to make that little $3k or $5k, and I’m wondering are there people hear doing this on a regular basis?
Re: how does one do an assignment? - Posted by Todd-OH
Posted by Todd-OH on December 16, 2006 at 08:58:55:
RogerGA:
I presume the GA at the end of your username means “Georgia”. There are a ton of people in Georgia doing exactly what you describe. You probably should check out the REIA group in Georgia, no matter how far the drive is for you (presuming you live in GA).
You purchased Joe Kaiser’s book, therefore you should ask him your question directly. You could’ve addressed Joe in the subject line on the board, since he answers a lot of questions on the board. Or you probably have more direct contact info for him contained in his course. Just a thought.
If you are afraid people will think your assignment fee is too high, then just lower it to something YOU feel more comfortable with. If you think your buyers will balk at you making $10k, then try $7k, or $5k, or $3k. Once YOUR personal comfort and confidence level increases, then you will give yourself permission to make more money.
Having said that, there is another way to avoid “sticker shock” from the investors you are selling to. It may take you a while, but try to find a title company in your area that will do a “double closing”. This is where you have a contract with your seller, a separate contract with your buyer, and the closings are scheduled back-2-back (I suggest one hour apart). Instruct the title company to schedule you to SELL first, that way the money is there to pay YOUR seller 1 hour later.
You mentioned it seems like a lot of work to make the $3k or $5k. It is a lot of work, especially when you are starting out. But that’s ok, right? You don’t mind “working hard” to create financial indepence for you and your family do you? How hard, and how many hours, are you working on your current job to make $3k or $5k?
Just with anything in life, as you get more knowledge, experience, and develop your skills, it gets easier.
There’s always the possibility that you are making more money on your current job, with less work. Or that your personality doesn’t fit the real estate buseinss. If that’s the case then maybe the real estate investment business isnt’ for you.
You could always find an expert you trust and become a private lender for them, or become a partner and let them do all the work while you just put up your money and/or credit. That way you get to share in the profits without doing any of the work.
I’m Not Joe - Posted by Clint
Posted by Clint on December 15, 2006 at 08:18:58:
However, I have flipped a ton of props. You make a deal with seller A, which is an option to purchase at $X dollars. You then sell option to purchase to Buyer B at $Y dollars.
At the closing (at least how I worked mine) I received the difference between X and Y and it was recored on line 401 of the HUD-1 as I recall…
Very profitable.
Clint