First Wholesale/Contract Flip

[Ray Rhoads]

Ok, need advice! This will be my first deal! 

I have a 9 unit apartment building under contract and want to assign the contract to a buyer. In all the books, articles, and podcasts Ive read/heard they make it sound so simple, but it’s all worded differently...some say to take your assignment fee up front so the buyer can’t walk away, some say you get it at closing, and some say it’s the difference in price that the buyer buys it at compared to what you have it under contract for.... But I have questions!

1.) how do you determine the assignment fee? And when do you get it? I want to spend no money here. 

2.) what happens if the buyer doesn’t close? How do you protect yourself if this happens?

thanks!!!! I’m sure ill Have more questions after. Haha 

[Jonathan Greene]

A 9-unit apartment building is not the best way to start from a delivery sense, but it could be in a profit sense. Your wholesale fee is the difference between what you have it under contract for and what you will sell it to the end buyer for. You get the fee at closing and in order to properly market a 9-unit building off-market for wholesale, you should be spending some money. You should be documenting as much of the units as you can with photos (no cost, you can do it on your phone as a wholesaler), but since you are in FL and COVID-19 is running wild now, you may want to invest in Matterport so you can send the deal to your list and they won't need imminent access to write a contract.

Do you have all the leases? Do you know the utilities and insurance and all expenses? Do you know the CAP rate? Do you know when the leases end and can you present it as a value-add for an investor? Your questions are all about how to get paid or how not to get stuck with it, but you should be worrying about whether you know 9-unit buyers, how to reach them, and how to present the opportunity for a big spread for you.