When to Close and When to Assign

When is the best time to assign deals and when does it make sense to close on the property to maximize your profit/ROI ?

I want to speak about that topic today and give everyone my top 3 tips on the subject.

Tip #1

If these is a massive amount of upside on a deal (2x,3x or 4x) if you close on the property, then I think it makes sense to close on the deal to extract that profit. You will have additional holding costs and possibly costs of capital but if its a true good deal, the upside is worth the risk. I have been doing this over the past 6 months and my average profit per deal has tripled.

Tip #2

When the deal is “so so” and there is a large renovation budget required to fix the property, I always like to wholesale those properties to avoid the massive risk. A lot of the time when I'm closing on these deals, they obviously need work but they are not completely trashed. Every time I get a marginal deal I'm very transparent with the home seller and I tell them that my intent is to assign this to somebody else and they are very receptive to the transparency. Also, the location is obviously a major thing. In my market, New York, there are some areas upstate that are very rural so the days on Market is extremely high. I always assign those deals 🙂

Tip #3

When you have too many deals on your plate and you have too much capital on the street at the moment, I always like to assign a small amount of those good deals just to offset my risk. I've been in the position before where I was overwhelmed with properties I was trying to clothes on and I had to sort out which deals were true winners and how do I get the capital to close on those deals so I can really squeeze all the juice out of my inventory. It's always good to assign 2 or 3 out of 5 so you can keep the cash flow strong and have money waiting on the sideline for more good deals to close on.

I hope a few of these tips are helpful.