Assigning question

This is just my opinion. I have owned and operated several businesses and still do. This business is like any business. You have to have a product to sell. You must know where and how to get the product. You must know all of the expenses required to bring your product to market. You must know what to pay for the product so that you can sell it and make a profit. You must know your market so that you can determine what your product will sell for.

If you have buyers and can't present them with a real deal, what have you accomplished? You MUST build your buyers list from day one, but what is most important is knowing how to find, evaluate, buy and sell your product. PERIOD!
It would be like having a hamburger restaurant all registered with a fancy website, great advertising and a line of hungry customers waiting to buy tons of hamburgers but you can't supply the hamburgers because you do not know how to buy them and make a profit and please your customers at the same time.

This is the most difficult part of any business, getting REAL deals under contract and executing your exit strategy. This is what you must learn 1st. Everything else will fall into place and is secondary to learning your PRODUCT and MARKET.

Michael Mangham
MD Home Acquisitions LLC

If there are so many investors out there that are buying up these great deals where are they in florida?I've been putting out signs and either no one calls or the police take them down.I also have been putting ads on craigslist and others.Can anyone give somemore advice on what i should do?

Keep doing it! Change your signs up and their locations. Same with your CL ads. Hand out your business cards to every one you come across. Make offers on bank owned properties. Work the pre foreclosure market. Drive your areas looking for rent or FSBO signs. Go to garage and estate sales. Got to as many REI clubs as you can find.

Final question. You have had great deals and no one has purchased them?

Good luck!!

Michael Mangham
MD Home Acquisitions LLC

How does your agent make money in an assignment deal? Also, what if the buyer has an agent. Where would my agent make money?

Kiel

Thank you for the good ideas i will try all of them.

I have never done an assignment deal using an agent. NEVER! I get properties under contract dealing directly with a distressed home owner. I find the deal!! I get it under contract, No realtor on my end.
Then I assign that contract to one of my cash buyers. They don't need or bring a realtor! This is where you must have real buyers in advance! We close the deal.

So what you are saying is your realtor finds you a deal listed on the MLS. You get an assignable contract and assign it to a retail buyer using his agent? Why didn't the retail buyer buy it already? Assigning a listed property to the end buyer may happen but I don't see it in my market. Most investor buyers you assign a contract to won't need or use a realtor.

But, if every one has a realtor the two buyers realtors will have to negotiate a split or all commissions can be increased from say 6% to 9% so all agents get a commission I guess.

Maybe some one that gets an assignable contract using a realtor and then sells it to a buyer using a realtor (THREE realtors. The sellers and two buyers agents!)can chime in on how to make this work. How would your buyers agent know it has been relisted? It can't be put back on the MLS until after you close on the deal.

Back to how to actually implement the assignment strategy. You need your own buyers in advance I think!

Hope this helps,

Michael Mangham
MD Home Acquisitions LLC

Michael-

What I meant was that if my realtor finds me a property off the MLS and I make an offer that I want to do an assignment on, would my realtor not make money at all?

You could pay him a finders fee perhaps. Depends on if that is legal where you are. The buyer that you assign the contract to could agree to use your realtor and he would get the buyers agent commission. I would make sure my realtor that found me the deal got paid whatever it takes.

Good luck on assigning a listed property.

Michael Mangham
MD Home Acquisitions LLC

One way to find legitimate buyers is to look for properties for sale advertising that they have been totally rehabbed. Chances are the seller will be a rehabber..."Hi, I'm calling about the house you have for sale. I am not interested in buying it but looking at the pictures, it looks like a gorgeous rehab. Is that your work?". When you go somewhere, don't always take the easy way home. Drive thru some neighborhoods and check them out. One time I was doing that and drove by a house with a dumpster outside. I got out and talked to the guys and they ended up being the crew for a guy who flipped 30 houses last year. As far as your signs go, try putting them out on Friday afternoon. That way the sign police won't get to them until Monday and they'll be out for a couple of days. As Michael said, I can't stress enough going to your local real estate club meetings to network, learn, and meet others in the business. Hope that helps.

Thanks for sharing!

hey all

Im a newbie, when i do the assignment how would i get paid?
directly from buyer ie. they write me a check
or
from the bank
or
from escrow

i have no idea if the buyer knows the amount i stand to make or if it even matters. And do i even have to use the investors disclosure statement to the seller or not?!?!? HELP PLEASE

RAUN

Am I correct that the formula Dean put out in his book is FMV * .30(Off the FMV) - repairs = price you want to buy the house at.

E.g. FMV= $119,000
Repairs = $3000
Desired Profit $20,000

$119,000 *.30 - $3000 = $78,500(Negoitated Price with Seller)

Then the end buyer pays the cost of the repairs and you resell it for $101,500 which is $98,000 if you add $20,000 profit and $3000 for the repairs to the end buyer in an assignment deal.

Is that correct?

Steve B

WHEN TALKING WITH FSBO OR FOR RENT PROPERTIES THAT OWNERS MAY WANT TO SELL : AFTER GATHERING INFO ON PROPERTY, DETERMINING SELLERS MOTIVATION AND FINDING OUT THE LEAST AMOUNT FOR PROPERTY THEY WILL TAKE, DO I TELL SELLER WHAT MY INTENTIONS ARE THEN OR DO I WAIT UNTIL I DO MY RESEARCH AND TELL THEM WHEN I MAKE AN OFFER.

I am working with an investor who has a property locked up on contract but no buyer. I have a cash buyer but currently do not have a property. Does anyone know if doing a simple finders fee would work here and what the paperwork should consist of or if the other investor can assign his contract to me and then I assign it to my buyer? The other investor is willing to work with me on profit split but I want to make sure my interest in the deal is protected as well as my cash buyer.

I AM A NEW INVESTOR AND I SELL INVESTMENT PROPERTY TO OVERSEAS INVESTORS BUT HAVE A BUYER WHO LIVES HERE IN THE US AND WHO IS BEING FINANCED BY A BANK AND 25% 1ST TIME HOME BUYER GRANT. CAN THIS SCENARIO WORK? I WANT TO RE- ASSIGN A CONTRACT TO THE BUYER, SHOULD I INFORM THE SELLERS REALTOR AT CONTRACT THAT I WILL NOT BE THE ENDING PURCHASER, MY BUYER IS APPROVED AND READY TO GO IN 30 DAYS. HOW WOULD THIS WORK, HOW DO I DRAW UP MY CONTRACT WHICH WILL BE RE-ASSIGNED WITH OUT DISCLOSING ALL, MY BUSINESS TO THE REALTOR WHO MAY KILL MY DEAL? (FLORIDA)

ALSO, IS IT POSSIBLE TO CLOSE MY BUYERS WITH HER LENDER CAPITAL BY JUST ASSIGNING THE PROPERTY TO THE BUYER AT A $5K INCREASE WITHIN THE FIRST 3 DAYS OF CONTRACTING WITH THE SELLER FOR A CASH PURCHASE.

Steve, What the heck!! Your formula is all wrong if you are wholesaling to a rehabber or investor. If you are trying to do contract assignments to the homeowner (actual end buyer/owner occupant) through the MLS on a listed property this strategy does not work 98% of the time, especially with a $20,000 mark up! If you know the seller and the buyer personally and there is a friendly or no realtor involved on a non listed property then chances are better.

Let me go over this again with you. Copy this email and save it

ARV is $119,000
If you are going to do the rehab yourself, then list it on the MLS and sell to the end buyer(homeowner/occupant) you offer 70% of ARV minus repair/rehab costs(or minus 30%, same thing).
It sounds like you are trying to assign the deal so you would need to offer 65% to cover your fee.
So if you do the rehab yourself offer 70% minus repairs;
$119,000 at 70% = $83,300 minus repairs of $3000 = $80,300 offer price
When you add the rehab costs back in, you have paid 70% of ARV, repairs included, you do not add the cost of repairs on top of this!
If you are going to assign the contract you should offer 65% of ARV = $77350 minus repairs = $74,350 offer price.

These are the numbers the investor/cash buyer looks at on this deal.

He/she sells the property for $119,000
Commissions, closing costs, insurance, utilities, holding costs on a 90 day hold = 12% = $14280
Rehab or $3,000
Purchase price of $80,300
$97,580 in costs
He nets $21,420

You make $5900 fee if you buy for $74,350 and sell to the cash buyer for $80,300.

Selling to an investor there is no way to make $20,000 profit on this deal. If you asked that amount the investor would only make $6500 on the deal. This deal would not sell! If the buyer has money costs like a hard money loan it would hardly work with you making $5900.

With all of that said lets go over your formula. You did not do the math correctly!

$119,000 - 30% = $83,300 - repairs of $3,000 = $80,300 offer price, not $78,500.
If you want to make $20,000 you would just add it on to the $80,300 which =
a sells price of $100,300 not $101,500. So your supposed end buyer pays $100,300 then puts the $3,000 into to do the rehab and has $103,300 plus commissions, closing costs etc into the deal. This would be an OK deal for a owner/occupant buyer. Why wouldn't they just offer $101,500 to the agent?
How are you going to find your buyer? You must first get the property under contract. Then find a buyer before your closing date.

Hope this helps Steve!! Gives you some things to think about. Number 1 is you must have a real buyer lined up in advance. Either owner/occupant or investor.
Work the numbers the way your buyer will look at them, not I want to make $20,000.

Michael Mangham
MD Home Acquisitions LLC

In my experience, the title company uses the second closing as a "mortgage". In other words, your buyer is putting up the money to cover your purchase. Your buyer will need to have all the documents, including verified funds (cashier's check) at the title company to do this. Your buyer will have a loan .. or cash.. to cover their purchase from you.

Sometimes a seller knows about hidden defects such as a bad roof that is not real obvious, a bad foundation or no sewer hookup. Be sure that you do a complete inspection before you buy. Unless you are an experienced builder, get a whole house inspection by a professional. I have experience but,I found a property that looked so great that I didn't investigate it as completely as I should have and in one case there was no sewer hook up. That cost me about $10K.

But what if the seller and title company want a cashier's check in which case you would have to have the money available in your account?

So, I have a motivated seller. He has agreed to let me sell his house.

So now I have him sign the contract for assignment, right?

I also have a friend that is a RE attorney/and also has a title co.

So, I need to find an investor...cash buyer and schedule a double closing....right?

The seller wants at least his original mortgage 65k...zillow lists the house at 125,500. He owes about 40k.

So, I'm thinking I can list it at 75k-90k and sell it quickly to an investor....is that too high?

Did I miss any steps?

My motivation is to make enough to pay my rent for a year (9k) and buy dean's products lol

Also, the seller wants me to help him find a new property...a multifamily property. Duplex or more....so I may have two deals here!

I posted an ad looking for investors yesterday on craigslist but haven't received a response yet. So, would love some advice on how to attract investors...just bought a sunday paper and will contact the investors there.

I was also considering doing that house auction to the highest bidder method, but couldn't find enough information on how to carry it out.

BTW, Thanks Dean and everyone for the board and thanks in advance for the help on my first of many deals!

When you are doing an Assignment on a property you get from a Real Estate Agent, how much different is that from an Assignment from a FSBO, or somewhere else?

Can anyone explain the difference and share any pitfalls to watch out for?

Thanks so much!

That's beautiful information for a newbie!! i can completely understand it. this was something i was thinking about myself.

Thank you!

linda

No, Wrong!

1. You get a contract between you and the seller. Purchase and sale contract.
You have a contract to purchase the sellers property.

2. You then find a buyer and assign your original contract to your buyer using an assignment of contract contract.

So you have 2 contracts. One between you and the seller and one that assigns that contract to your buyer, the assignment contract. Take both contracts to your title company and arrange the closing date.
There is no double closing when you assign the contract, only one closing.

As far as evaluating the property you asked did I miss any steps. The answer is YES.
1. Never use Zillow (or any website) to determine ARVs. You must have a realtor pull sold comps, currently listed comps and under contract comps to determine what the property will actually SELL for in the market today.
2. You have no estimates of rehab/remodel on the property that will allow you to sell at the estimated ARV.
3. You can not list a property you do not control, unless you are a licensed realtor. You can represent NO ONE but your self in these deals. Get it under contract and then market YOUR property.

Michael Mangham
MD Home Acquisitions LLC

Hi kvictor81,I feel your your pain.The difference is that I'm 3 kids and a wife.I to have that strapped for money syndrome,credits is blah.Money is choke tight..bottom line to a point u sound like my twin . I hope u get Q to ur A becuase those r some Q that I would like answered. I'm looking in to wanting to do some bird dog and assignments to get my feet wet,get that knowledge. Much success to u.

I e-mail my end buyers non-circumvent agreement. I have not received any responce. I am not sure what to think or do.

Brenda

Sully: I have just entered the program and have read many of your post.. i really appreciate you.

you are not buying it with credit you are using cash

You all are amazing people! I see newbies (myself included) and those who have been involved for a longer time and I am so impressed with how you all just help each other. I came to this thread because I have some challenges of my own to overcome and thought I might get some ideas. Although, my specific questions were not answered, so I'll ask. I am a mom with 2 little ones and needing to add a LOT of names to my buyer's list. Does anyone have certain suggestions? I am not able to go run to auctions and REI clubs like I'd like to due to babysitting costs among other challenges, so I'm trying to get creative and figure this out. I'm not afraid to work, just need creativity and some more experienced minds. Please PM me if you'd like, I'd appreciate any and all help!

Thanks so much for all you do here, it's so encouraging!

Lori

Can"t wait to put this info to good use! " The Lord helps those who help themselves"... not from the Bible but it's true that when you really try to do something( be diligent) sooner or later you meet someone whose vision coincides with yours!! Happy R.E. education/action follwed by success to all!!