Posted by Redline on January 26, 1999 at 12:05:31:
If you assign the contract(what we’ve been talking about) and do NOT do a simultaneous close you will call your investor and say “I have a house at 123 Main Street for $x. Check it out and let me know”. You should give him your price and be pretty firm. Moving all over on the price makes it seem like you haven’t thought it through and don’t know your numbers. If you’ve done your homework and figured out what the rehab will cost, along with carrying, his profit, etc … you should be within a few dollars either way of what he’d consider worth it.
So, yes … he agrees to the price and you hand him the contract he’s going to see what you agreed to pay and he’ll know how much you made. Should be OK if he thinks he’s getting a decent deal also.
On a simultaneous close, you go to close … buy from the seller, go to another room and sell to the new buyer (using two different purchase/sale contracts mind you). This way the new buyer has no idea what you paid for the property and how much you’re making on it.
Yet another flipping question? - Posted by d.newton
Posted by d.newton on January 25, 1999 at 17:49:13:
I am a still a little confused. Let me get this straight, first i find some good rehab investors and get some good contracts together. Then i find the property with some good equity and a motivated seller. I then put a purchase contract on the house and if seller agrees with contract. I then contact one of my investors to look at the property. If they are interested i assign the contract to them and i am done with the deal or do i go to closing and buy the property and then assign it? If i do just assign it before closing what do you tell the seller? Wouldn’t they be a little skeptical about the whole deal?
Those that buy fix and sell are usually the ones to want to find out their buying criteria. Why- because they do more deals. The buy and hold for rent rarely is liquid often enough to do you much good. If you have down a number of deals with an investor(the above guy) he will probably be willing to give you money for the contract. If it is the first time he will probably not until title insurance can be obtained(3 days to 2 weeks). Most of these flips are REO, preforclosure or some other property that needs work. Once in a while you will find a deal on a decent property because you were first, could react quickly while being a real smooth talker. The sellers are MOTIVATED and don’t care as long as you get them the cash when promised.
Escrow is the answer - PLUS Another Question - Posted by John (KS)
Posted by John (KS) on January 26, 1999 at 10:37:41:
On Bud’s title insurance remark, I believe you could work it so that you didn’t have to do a double closing by having the flip money put into escrow until the closing. This protects the investor in case there is a problem with the title and he doesn’t close and it protects you because if he does close you get your money.
A question for Bud, when a flip occurs should I tell the investor that I want $10K for it when I only paid $3K for it. He will know how much I am making, and I don’t want him to feel like I am robbing him. Or should I ask him how much he wants to pay for it, then if he offers me $10K, I think I would still feel like I was robbing him. I think the way around this is a double closing, but this seems like a headache. What are investors thoughts on this?