Re: Flipping and Assignment questions (semi long) - Posted by LeonNC
Posted by LeonNC on December 27, 2000 at 10:51:05:
- Are there any up front fees when you find a buyer and sign a Contract to Purchase with them? (ie Title Co. costs, filing fees, etc). I know that closing costs (if any) are tacked on at the end. What about with assignments? How much does a title check cost and can that be built into the backend by most title companies?
If you really want to know what it will cost IN YOUR AREA you need to do your due diligence and get on the phone and call around to find out. I know the costs in some areas prohibit you from doing a simultaneous closing. When you get a property under contract and have the intent to wholesale it you should have a title search done first. In my area it’s about $100.00. You will have to pay an earnest money depost…as little as you can negotiate. I did it with $10.00 onetime. If I’m working with a realtor it’s usually $500.00.
- If you assign your contract to another investor or buyer, do you still go back to the original seller and close? or is that done only when you purchase and then sell to another buyer (non investor)? or does the new “buyer/investor” now take over from there? Doesn’t the original seller find out about it? Does this become an issue? Especially if they like you and think they are selling their house to you, not someone they don’t know. (people are attached to their homes after all, even if they are selling)
If you assign your contract and you have the right to assign the contract you are not obligated to tell the seller you are assigning it but personally I’d feel kind of funny if I didn’t. I tell the seller and have them sign the assignment agreement and a release of liablity. Once everyone signs the assignment agreement and you get paid, your buyer takes over from there and you are out of the picture. Done!
- What is a good length of time to tie up the property? I’ve heard 60 days is good, but doesn’t that blow the “Fast close” usually advertised out of the water? Aren’t you being misleading if that’s the case?
It’s good to tie it up for as long as you can. But, you need to put yourself in the sellers shoes and ask yourself would I let someone tie my property up for this amount of time. I usually go with 30 days. It usually doesn’t take that long to flip it if it’s a good deal!
- Many investors recommend getting a home for about 60-70% FMV to make it a good deal. Homes around here are averaging about $165k. With a 65% factor, that would mean I’d have to try for $107.5. That’s a mighty big spread (almost $58k!). I know that hard money lenders will only go up to 65%, so that would only be a concern to me if I needed to take advantage of a loan from them for this purpose. When you’re dealing with lower value homes, 65% doesn’t mean that much of a difference. So my question is, with higher priced homes, what’s a little more of a realistic number to work with that I can factor on for an assignment so we both make money and I can still find more deals instead of waiting for the EXTREMELY motivated seller who will take $108k?
Don’t just use a number like 65% of fair market value or after repaired value. If you haven’t bought a course yet I would recommend doing so or at least buying some books and learning exactly how to structure an offer on these. You can’t worry about how low the offer is. You need to focus on what number WILL WORK for YOU. One that Ron Legrand uses is (Fair Market Value) X (70)% - (Repairs) - (Your Profit) = (Purchase Price). And remember you usually need to find a motivated seller to do this.
Where at in Northern CA.?
I hope this helps. Good Luck