Hello Fellow Investors
Ive been haveing really good suceess with Bird dogging Thanks to REI Club :beer. The only thing is that I’ve been running into some shady investors lately,didnt get ripped of but i do know that i need something more solid to protect me on these deals so i’m deciding to wholesale now or to atleast get a option I just have two questions.
1St: What is a good out clause i can use so i dont get stuck with the property w/ wholesaleing?
2nd:when i get a option on a house do i have to go through closing or i just assign the option over and just wait to collect my money wants the buyer close? and whats a typical fee for options?
Hello…
I understand where you are coming from with regards to “shady investors”. Unfortunately their are a lot of people that do not do this business the right way and it hurts the ones that are…
Here are the answers to your questions:
- Their are severl “out / escape clauses” you can use, but you can always use the following:
- Subject to “Acceptable” Home Inspection
- Subject to Partner Approval (your “partner” can be anyone)
- Subject to Buyers Approval
Note: I only recommend putting one of the above in your contract as it might cause a “red flag” if you stockpile the contract w/ all these escape clauses. Another point I’ll make is that you should always do what you say your going to do. In other words, only put a property under contract if you are certain you can wholesale it…Of course their are exception to the rules such as the owner withholding information, etc…
Lastly, I think its important to be upfront with the seller and tell them you plan on finding a qualified cash buyer who will be closing quickly. This tip has saved me countless headaches from sellers who thought I was closing on the property!
- You can just assign the option contract and collect your fee at closing. You have the “option” to purchase the property or assign your contract, but not the obligation!
- Typical fees vary across the board depending on city, state, and property…
Hope this helps.
Alex Pardo
- Stick with an inspection clause…Because it is the most widely accepted and it is completely dependent on your own opinion…
Avoid the “Partner” clause because it’s lame and played out…Plus REO companies would laugh you out of any deal with a “Partner clause”
AVOID THE FINANCING clause…Unless you like court or killing your credit in the name of proving your not financible.
- Too many exit strategies to list…with a real option on the home you could:
Sandwhich lease and pull you money out down the road while pocketing cash from payment differences until then.
Assign the contract for quick cash.
Assign the contract for longer term cash.
Part 2: Your fee is completely variable depending on the depseration of the seller and the motivation of you buyers…The perfect high fee equation is:
Desperate seller------->Retail buyer…Then you have to bring in the wheel barrows to haul out your profits…
Good luck