What kind of Assignment fee for $2500 contract?

Question

Hey BP

I just put a deal under contract at $2500. So Im trying to figure how should i ask for an assignment fee?
 A little about the deal...
It in the rough part of town. Not to the worst BUT close enough!

Here's the deal
There's 2 properties on one lot.  With both of house the outsides are decent (needing paint).
The Main house needs a COMPLETE rehab. It is 95 percent gutted and has been re-framed.  The other is a small 1bed/1bath house needs a rehab but not as much work. ( sink... plumbing paint...etc)
 Prob. a simple question but... just asking.
Thanks
DG

Demetrus Gibson · Answer

Thanks 
  A little analysis paralysis...
 
4-5k is the number that it will sell about 2k for the fee.

Joel Owens · Answer

Yeah you have to know also what the rents will be.

You can have 2 properties identical.One is in a much better location and each need 20,000 in work.

You will get a higher price for the better area because investors sometimes will take less margin for a better location.The rents may or may not be the same.

In the war zones I have investors that buy but the cash on cash on other returns have to be much,much higher to make the extra risk worth it.

So I don't look at just repairs with these types of properties.Some of these older houses it's almost  a loser if you get it free.The old house would take more work and cost than the ARV value when finished. Then you are left with tearing it down and demo cost and the worth of the empty lot only at that point.

Unless you have commercial or valuable land afterwords it would be better to buy a developed lot in a subdivisions already then raw land on a small lot unless you can sell to the neighbors for a bigger yard.

J Scott · Answer

It's pretty simple -- how much would this deal be worth to another investor?  Take that number, subtract $2500, and that's your potential assignment fee.

For example, if an investor would happily pay $10,000 for the deal, you can take an assignment fee of $7500 (the sale price minus the purchase price).

The key, of course, is knowing how much it's worth to other investors; unfortunately, we won't be able to help you answer that question with the information you've given.

Ricky Ostrom · Answer

You offered $2,500. for the whole deal?

Carlos Flores · Answer

You should have know that and all the numbers before putting it under contract.  Just a few basic questions: What's the arv?  How much will it cost to rehab?  Would anyone in their right mind take on a project like that in that neighborhood?