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Author Topic: Help! With Wholesale/Assigment Deal  (Read 1553 times)

Offline laprops

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Help! With Wholesale/Assigment Deal
« on: October 01, 2007, 01:39:40 pm »
Hello All,
Please help. I am new to real estate investing but I do understand the basics of getting a piece of property under contract and ASSIGNING it to another investor for a small assignment fee. However I am lost when it comes to how this works when the property has an existing mortage on it. For example:

I found a vacant "run down" property in a very desirable section of town in Los Angeles. The comps there for properties that are at least a 95% match to my property are averaging $900,000-1 Million. My subject property has a current loan balance of $677,000 on it and the original loan amount was for $645,000. Obviosuly the owner cannot pay the mortgage and is several months behind. So how does this deal work?

When I make an offer should the offer be discounted from numbers based on the ARV/Comps? Meaning if I want the deal at a 30% discount is it 30% off the ARV/Comps? or is it 30% off what is owed on the loan. Is the below (using ARV/Comp numbers) correct? And should those be the numbers I need to be using?

Here are the numbers:

Seller: Very Motivated & Distressed

Subject Property: ARV $900,000 (Based on reliable comps.)

Current Loan Balance on Property: $677,000

Offer to Motivated Seller: $630,000 (30% off $900,000)

Cost of Repairs To Property: $80,000

Total Cost to Repair & Acquire Property: $710,000

*Selling Price Of Property: $800,000

 Profit: $90,000

Last question: This is a deal I would ASSIGN to another investor. Any advice as to what I should charge for this deal? What is my assignment fee bassed on? I was thinking 1-2% of the ARV. Is this fair?

*Property is sold at $100,000 less than comps in order to make a very very fast but reasonable profit. Seller takes the $630,000 made from the sale and negotiates a deal with his lender.

Sincere, Sincere Thanks!

Offline matt-gerchow-real-estate

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Re: Help! With Wholesale/Assigment Deal
« Reply #1 on: August 05, 2008, 04:34:40 pm »
This deal is probably long gone by now.

If the seller is extremely motivated the offer price would start at what they owe.

I would probably tack $20k on top of this and call it a day. If you don't get greedy your buyer won't try to cut you out along the way.

Problem you might face if the new buyer doesn't have $20k to give you outside the mortgage.

Do the contract directly between the seller and buyer and have yourself paid as a consultant...or...simultaneously close the deal. 

File an affidavit of interest on the deal because it will probably take a while.

Talk to the president of your local REIA concerning this as well.
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