When mortgage is owed

2 Replies

I'm new to the investment of real estate but have what I think to be a great wholesale deal.

Stats: $15,000 owed in mortgage, market value is $40,000.

I talked to the woman who owns the property and she said she's willing to just give it to me for $20,000. She's moving to another state and can't until she sells this, so she's desperate.

My question is, it's simply a number's game, correct? If I put her under contract for $20,000, and assign the contract to a cash buyer for $30,000, I get $10,000 profit, right? When I assign the contract I'm making sure it's worded to where the end buyer takes over all interests, rights, liabilities, etc. The $10k is simply known as an "assignment fee"? Just making sure guys, any help is appreciated!

I would potentially complete that deal however i would want the mortgage to be directly paid out of escrow to reduce liability, so she would really walk away with 5k cash or profit.  

you are correct in this 

My question is, it's simply a number's game, correct? If I put her under contract for $20,000, and assign the contract to a cash buyer for $30,000, I get $10,000 profit, right? When I assign the contract I'm making sure it's worded to where the end buyer takes over all interests, rights, liabilities, etc. The $10k is simply known as an "assignment fee"? Just making sure guys, any help is appreciated!

I take it there are no rehab costs? 

Cash buyers generally want property at 70% of ARV- REHAB cost.

If everything is ready to go and house is in nice shape then 70% of 40 is 28k, which is what you would sell to the buyer and collect 8k assignment fee. But if it needs a 50 rehab (doesn't take much) then you would sell for 23k and collect 3k. 

Make sense?

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here