Can someone help with a few logistic details?

Question

I am trying to complete my first wholesale deal. I am offering 15k for a 1600sqft property and want to wholesale it for 20k. The ARV is about 80k minimum, 90k on a good day. Needs about 20-25k in work. I may already have a buyer, but I am very unsure on how the process works. From what I understand, I sign a contract with the seller that allows me to assign the contract to someone else. Do I then hand over the contract to the flipper or do I create a new contract. How exactly do I get paid that assignment fee? Is there a step by step guide for this? I haven't found anything too clear.

Account Closed · Answer

I don't recommend putting and/or assigns on the buyers line. That brings up more questions then you need. In the middle of the contract it should say you can assign the contract. If you are selling the contract for more than $10,000 profit, I suggest you do a double close rather than assigning the contract. These investors don't want us wholesalers making much money. Any time I am selling a property where I am making less than $10,000 I then assign the contract and get paid by the title company. If you assigning the contract then all you need is a 1 page assignment contract. It says that you are assigning the contract on this property for a stated price.

Nirmal Khanderia · Answer

Hi @Christian Baker,

Let me try one more time for the link.

https://www.biggerpockets.com/renewsblog/2015/01/3...

For finding investors, you can try the following.

1. Put up the deal on Craig's list, backpage, and Kijji.

2. Go to local REI, and meet with potential investors.

3. Go to local REI, and pitch your deal.

4. If you know a HML, he will be able to point you to investors.

5. Pull up a list of properties sold for past 1 year within 3 miles of the subject property. Filter out the ones bought by investors (typically LLCs), and contact them.

Good luck. Getting a good deal is a big step forward.

Christian Baker · Answer

Hi Nirmal

@Nirmal Khanderia

The link provided does not work. It looks like their are a few characters left off the end.

Your numbers definitely look correct. However, my list of investors is slim and this deal may not even go through. I have not heard back from the investor on whether or not he will purchase the home. I am really trying to find motivated investors to wholesale to.

Nirmal Khanderia · Answer

Hi Chris,

You have step by step wholesaling guide available at

https://www.biggerpockets.com/renewsblog/2015/01/3...

From the numbers you have, I think you can make more in wholesaling profit.

MAO= 0.7 x ARV - rehab cost = 56K - 25K = 31K

If you buy the property at 15K and sell at 31K, then you are making 16K profit (20%), and the flipper is making 24K (30%) profit.

Does this sound correct?

Roland Paicely · Answer

The buyer pays all normal closing costs.  Of course, that's negotiable also.

Christian Baker · Answer

What about closing costs, fees, etc? Who normally pays?

Christian Baker · Answer

@Chris Eaker

Thanks a lot Chris! (Who has a strangely similar name).

I'm trying to raise capital between flips. I appreciate the help!

Chris Eaker · Answer

@Christian Baker

Congrats on your first potential deal. You will fill out a regular purchase agreement with the seller, making sure to write "and/or assigns" after your name. Then you will fill out an assignment of contract form with your buyer, which you can find on the FilePlace here on Bigger Pockets. This contract will have a place for you to put in the assignment fee. Your fee should be paid at closing by the closing attorney or title company.