Assignment to Rehabbers, Anyone Done it?

...there's enough profit margin in it for the rehabber. You want to make 9K
just to assign it, & expect him to do all the rehab, including the putting up the money, contractors, permits, & re-selling to only make 18K ???

Interesting site'i will get back with more input gotta get out the door now.Patrick

Since the property has been vacant and unfinished for yrs,(there has to be a reason why) I would suggest looking into the code violations and construction permits for the address.

Did the current owner buy it Oct 2010? Check it out.

Negotiate with seller and buyer and you can make a few bucks just for assignment.

I know you have done similar deals in the past. Do you think I should then lower my assignment fee to make this successful?

Can the town clerks office provide me with the contstruction permits that were applicable to the build?

We do the rehab ourselves, but I think the purchase price of 48 - 50K is way too high to start, especially if the owner paid 20K & hasn't done anything. I would shoot for around 25 to 30K for purchase, then assign for 7 to 10K.
The contractor would obtain any necessary permits from the town/county. Now
your buyer can sell quicker at around 90K, & make 30 to 40K. He happy & will look for more deals from you!

What the neighbor neglected to tell me was the following, which I found out after talking to the seller. (Posted prematurely as I was waiting for him to call back)
Seller removed a previously existing home that was in tear down condition. This created the front lawn area. He also poured a slab w/ radiant heat and erected the existing home which is in the pics. He has also moved the electric pole on the property and ran new lines to tie into the existing town water/sewer. Reason why I post the above info is now it somewhat justifies the spread between purchase price and current selling price.

Insurance- Talked to Academy and she expressed concern about being able to insure the project and the fact that this could be a leverage point. I called my insurance company just to see what they would say and emailed them the pics I took. Based on what they saw they said they would insure the project but would need a timeline with expected completion date. I told them I would be the buyer and applying for a constuction loan to get this info. This just gives me piece of mind for the rehab process. That way my cash buyter wont come back at me later on.
Meeting with seller tomorrow to discuss further.

Update: We have come to an agreed upon price and I presented him with the Assignmnet Contract that I developed with an Attorney. He was confused about some of the terminolgy so I clarified the specifics and have clarified that one of the contingencies is Financing. So basically if my financing falls through or for whatever reason I am not approved, then I would have the right to assign the interest in the contract to a business partner in order for the deal to still go through and he would still end up selling this property for the agreed upon price. He understood this part and we took out some other specifics about Lead Based paint etc, as the house is just an unfinished shell. That was yesterday. Today he was still hung up on some of the terminolgy so I again explained it to him and asked if he understood, he said yes, but he was going to have his girlfried(who works for a local real estate attorney) review the contract and compare it to others she has worked with. I am reading between the lines on this one and know that she will prob present it to one of the attornies to review and come back with a "Yes" or "No" based on what the attornies at her office say. My question is this: If they are going to come back with a different contract and we decide to use it, as long as I have "and/or assigns" in it I should be able to transfer the rights of that contract to my buyer, correct?

Are you showing him the Assignment of Contract Agreement (the one you and the buyer sign) or the Purchase Agreement. You know what happens when they have their girlfriend or Boyfriend look at it, lol. The lead thing protects you, but you shouldn't need to use that. A simple 1 page Purchase Agreement is all you need. Sometimes I like the KISS method better.

that also states in that contract that I have the right to assign it to another buyer. It has the normalcies of your traditional P&S (at least I thought) but also has the clause about being able to assign it. Maybe you're right, he did say he was a little overwhelmed..

Contract has been signed and it is time to Market to Buyers. Sent out my email blast last night using Sellpoint and as well as all my other contacts from Networking. Contract has a tight timeline (unfortuneately he wasnt going to budge so I have my work get out before June 30th!) so I am hoping to get a cash buyers asap and get this thing closed and move on to the next.
We met made some slight alterations, got the basics in and of course my "and/or assigns" verbage. It was actually a blessing that he significant other was there as she works for another local real estate attorney's office and clarified a lot of the verbage for him (seller). Eventhough, I had previously clarified it for him, he seemed to take it better coming from her. Whatever it takes, right? Keep everyone posted.

I thought you had a rehabber lined up.
What are the final numbers?
Purchase price?
Actual verified rehab/construction costs? (bids from 2 or more contractors)
Your sell price?
Actual ARV verified by sold, listed and under contract comps?
Were all permits pulled for the construction performed by the owner?
Title free and clear, no 2nds, liens, judgments?
If there is a mortgage, is owner current?

Good luck!
Michael Mangham
MD Home Acquisitions LLC

Hi Michael:
Thanks for checking in..
After presenting the deal to my rehabber he backed out. He claimed it was too far from his territory, "with the cost of gas etc", he stated. It was only a 25 minute drive to the site? I dont think he was the cash buyer I precieved. He was looking for something else I guess..So I have called 4 or 5 more contractors that have worked on my house in the past (General, Siding, Windows etc) to see if I can spark their interest or if they know anyone looking to purchase something like this...Within 2 hours I got 3 calls. Meeting one today at 1PM at the house. He is an Industrial Contractor. Calling a couple realtors today to see if I can get an "entry only" ad on the MLS and what the fee will be. Investor friend of mine told me about this one. Not sure if you are aware of this but you can list on the MLS for a fee for say 3 months. You do the write up, pics etc and instead of the contact info being the Agency, its you. Exposure of the MLS but your the contact.

Final number ending up being: Purchase price of $49K, Rehab of $18-$20K, Assing to buyer for $55-$60K. ARV of $110-$120K. If rehabbed and rented, would fetch $850-$950 month as 2/2. Verified from Realtor who pulled comps for me. His comps where pulled based on finished homes,same sqft etc. Permits and title were clean. No mortgage, owns free and clear. I am moving my search for a buyer closer to the property location, so I have presented to a number of contractors out towards the property.
I know this is a deal and has plenty of upside, either for a flip or rental. Just have to make it happen and find that buyer!

Congrats on taking action.
If your having a hard time finding buyers, try networking with other wholesalers and give them a piece for bringing a buyer that closes. I think the norm is 1500 for bringing a buyer. If you have a REI club in the area bring a bunch of flyers with details and a pic of the property and hand them out. I assume you posted it on CL and other sites as well. I would even try putting a flyer up in a home depot or other building supply places where contractors go.

good luck
Richie

I actually just printed out a bunch of flyers to put at Home Depot and Im on my way. My 1PM appt today cancelled and "has to talk to the wife". I've heard that one before, so I will follow up. No REI clubs up here so its old school networking through contacts etc.
Thanks for the info.

What city is this in?

It is in the town of Poultney, VT.

Ok. Have you thrown out bandit signs? made the posting on Postlets and/or Craigslist? If so, post that bad boy to Facebook & all your Linked-in people. If numbers are what you say they are, you should have a great deal, and nobody would give you the old excuse that it's too far from their place to drive. But, way to go. Put those bandit signs at entrances and exits of Home Depot and Lowes, and market market market!