How should the assignment contract be worded to protect me

12 Replies

Hello BP....

I was wondering about the assignment contract and how should it be worded to protect me if the buyer backs down or whatever else that can go wrong.  I may have my first deal on my hands.  A multi-family 5 unit fully occupied no repairs needed deal.  $750,000 cash deal, cap rate 13.2%....I'm thinking a $10,000 should be for myself which brings it to $760,000....Annual:   income $114,288...expenses $15,200....noi $99,088 (what is that)

Is this a good deal for a buy and hold / investment property?  HELP!!!

Call me crazy but to only make $10,000 on such a high sale price deal seems to me a little low.  Its still a lot of money but just my initial thought.  

If you are worried about your end buyer backing out you need to make sure you collect a decent earnest money deposit.  You also should somehow let the seller whom you are getting the unit from that you are not the actual buyer bc if something does go wrong you cant actually pay cash to buy it and you dont want to be using vague contract lingo to back out. There are better ways to approach this deal. 

Good luck

Originally posted by @Curt Davis :

Call me crazy but to only make $10,000 on such a high sale price deal seems to me a little low.  Its still a lot of money but just my initial thought.  

If you are worried about your end buyer backing out you need to make sure you collect a decent earnest money deposit.  You also should somehow let the seller whom you are getting the unit from that you are not the actual buyer bc if something does go wrong you cant actually pay cash to buy it and you dont want to be using vague contract lingo to back out. There are better ways to approach this deal. 

Good luck

Thank you for your input, I sure will get in contact with the seller's agent and make that clear.  I've told her I was a wholesaler but she should inform the seller as well.

Thanks again.

The NOI is Not $99k on a gross income of $114,000, not possible if you use any kind of of even optimistic assumptions about vacancy, repairs and capex. I'm guessing that supposed $15k is just taxes and insurance.

Originally posted by @Wayne Brooks :

The NOI is Not $99k on a gross income of $114,000, not possible if you use any kind of of even optimistic assumptions about vacancy, repairs and capex. I'm guessing that supposed $15k is just taxes and insurance.

 I can honestly tell you, I have no clue.  I never even expected to be in this position this early in the game.  I'm excited but worried at the same time. 

The agent is asking for 10% down of the seller's asking price, $75,000...I'm wondering if that's her (agent) earnest money?

Originally posted by @Curt Davis :

you will run into issues if this home is listed on the MLS with an agent. They are not going to entertain a wholesaler.

 I've informed the agent that I'm a wholesaler and asked her have she ever worked with one.  She answered yes.  I've found this property on loopnet, found out about it from one of the podcasts from here....

Ask yourself this....do you think you can find a buyer on your own who is willing to pay more for the property than everyone else who has seen this property, both agents and their buyers, during all the time it has been listed and advertised to the world?

@Ron Cole

The assignment agreement isn't used to protect you, it is used to assign the purchase contract.

@Curt Davis

The earnest money would have been negotiated in the purchase contract. 

Originally posted by @Wayne Brooks :

Ask yourself this....do you think you can find a buyer on your own who is willing to pay more for the property than everyone else who has seen this property, both agents and their buyers, during all the time it has been listed and advertised to the world?

 If the property is listed then I would obviously say no.  

Originally posted by @Nick Chucales:

@Ron Cole

The assignment agreement isn't used to protect you, it is used to assign the purchase contract.

@Curt Davis

The earnest money would have been negotiated in the purchase contract. 

Alright, thanks for the info. 

Originally posted by @Ron Cole :
Originally posted by @Wayne Brooks:

Ask yourself this....do you think you can find a buyer on your own who is willing to pay more for the property than everyone else who has seen this property, both agents and their buyers, during all the time it has been listed and advertised to the world?

 If the property is listed then I would obviously say no.  

Since you said you're talking to "the agent", I assume it is listed, or at least widely exposed.