Wholesale Fee Vs. Trade Through
Let's compare a simple wholesaler's deal to to the same deal as an exchangor:
ARV is 200k,
Repairs are 30k,
As is value 150k,
Purchase price is 70% of ARV minus repairs and 10k assignment fee so 100k.
Wholesaler assigns contact and makes 10k..love it.
Exchangor has same house worth 150k(as is value) that he/she owes 100k(contract price). The 100k is due at close. The exchangor brain thinks, "What should I do with my 50k in equity?" The answer is: anything that will close and payoff the 100k debt in next month. So exchangor calls up a flipper and offers the 50k equity for one of the flippers double wides with land at a discount to 40k. The exchangor remembered from the last marketing session that the flipper has a free and clear double wide worth 40k rented for 700 a month. (Flipper probably picked it up for 20k couple years ago and he was complaining about management too). So flipper thinks 100k and his double wide is not a bad deal for him. Flipper took house, flipped it, made money, and got off the headache management. Result for exchangor is a free and clear double wide worth 40k that is making 350 a month net..love it more. What's exchangor thinking? "What should I do to improve my position with my 40k in equity that has income with out a time constrant?"...............
Who made more? If you need cash to eat... wholesaler made right choice. If you are building wealth, then exchangor made 4 times as much. Questions?