Hello everyone,
Just wanted to know the in’s and out’s of when, why and how an assignment loan is used. Thanks in advance. :biggrin
An assignment loan is a new term to me. Could you please explain what you understand it to be?
I’m not sure what an “assignment loan” is either?
Are you talking about having someone take over your position in the mortgage?
I’m not too sure myself… but what I have come to know about it is that it’s a means of gaining temporary control of property of interest so that you can reassign and or sell for profit.
I suspect you are really asking about a contract assignment. You find a property then get it under control by getting the property under contract to purchase.
You assign your contract to another investor who has the cash to close the purchase, and collect a nominal assignment fee for your efforts. You can set your fee to anything you want, but the number I have seen used most often is 10% of the equity in the deal for your investor.
For example, you find a $100K property that a motivated seller will let go for $65K. The property needs $5K in cosmetic repairs, so the investor who takes over your contract sees that this property only has $30K in equity after he has paid for the repairs. Your assignment fee would be $3K if you base your fee on 10% of the equity left after repairs.
Does this help?
:biggrin thanks so much Dave T It was greatly appreciated. Good looking out.