Let's say you got a wholesale lease option deal going. You and the seller have agreed on a price of 100K. You have a lease/option contract signed with the seller and your intentions are to sign another lease option with the buyer and then assign this contract back to the seller. You hope to profit 3K out of the deal so your price to the buyer is 103K. So my question is this. When I assign the contract back to the buyer is it for 100K or 103k. In other words does the 3k come off the purchase price when/if the tenant/buyer exercises his option in a year or two netting the seller his 100K or does it come off now which still nets the seller his 100K?
Your fee for the assignment is paid to you, then you assign the option with the lower price. If you must get your money at closing you can use transactional funds, buy with your option then sell at the higher price, need to shoot for more than 3K doing that or you'll lose money!
Let's say you don't try to figure things out while trying to make some deal, let's say you get the basics of RE before trying to deal in RE, the flow of transactions, how funds are accounted for in settlement, who is paying what to whom and why. Remember, you're not selling the real estate unless you take title, assigning a contract is simply selling the contract. Study, good luck! :)
for the lease-option assignment this is what I do
First I get a really good value for today with comps not what the seller wants
Then I enter into a lease and option with my LLC
Then in my letter of intent it says that I'm going to sign my contract for a fee
I record my option to purchase in county records
I sell my option to purchase for 3%
I hope that helps
Join the Largest Real Estate Investing Community
Basic membership is free, forever.