Nope. I’m actually starting this with about $2000 to spare. Can’t afford a bunch of bum deals and lost earnest money.
I’m just looking at the worst case scenario - I.E. What happens if I make a mistake on the calculations of MAO and I can’t find a buyer to sell to before I’m supposed to purchase. Can I back out because, quite honestly, I don’t want to rehab these houses (yet)!
You can use an inspection clause with a late date, if the seller will allow that. However, as the pros here say, you had better be ready to close even if you don’t have that next buyer found in time, or you shouldn’t be doing flips.
Depends. If it’s a specific perfomance contract (instead of liquidated damages) then a seller could drag you to court to try and make you perform (which would be to buy the property).
But regardless, do you want to spend your earnest money for houses that you don’t want to buy? Sure it may be a cheaper alternative in the long run, but best to avoid the loss by setting the deal up correctly. And Brent is wrong I wasn’t referring to options, although it could apply, but again, not likely if set up property.
Posted by Brent_IL on December 09, 2000 at 12:28:19:
If you have an option you cannot be forced to purchase the house. That’s why it’s an option. I believe DewCO meant that your investment career would be short-lived if you view losing option money regularly as a sound strategy.
Are the standard real estate contracts performance contracts?
My main problem is that I want to get a few deals under my belt so that I have some capital to work with for deals if necessary (if I can’t find a buyer and what not).
It’s actually beginning to sound like it may be better if I went with Lease Optioning instead of flipping since I’m not liable for anything including performance
And, yes, “tie”, as in “tie up with a contract”. Still the correct word.
No, I wasn’t referring to an option. Her question was about a contract and that was how I answered. I guess GF-M has lots of earnest money to burn if it’s not big deal to lose it.