So,I know there are numerous ways to buy a property(subject to,short sale…etc.)But if I’m just assigning a contract,does any of this matter to me?If so can you guys explain this to me?I’ve read that the properties that you wholesale should have lots of equity,if so what’s the least amount of the percentage paid on the mortgage I should work with?Thanks you guys
If you’re a wholesaler, you need to write up a contract with the seller before you can assign it to an end-buyer. That’s what knowing Sub2s and other types of offers have to do with you. However, I would recommend you do a lot more reading, based on your questions.
You should probably look for “junker” houses with a lot of equity (probably 50% or more). Forget about Sub2 or lease option deals. Just start out with simple all cash offers and flip them to your end-buyers.
To determine equity, you first need to figure out the house’s ARV. If the seller owes more than the house’s ARV (or what it’s worth), then they’re upside down or underwater. Tell them you can’t help them, unless you know someone that does short sales. Then, you can refer the deal to the short sale expert and collect a referral fee.
If the owe less than the house is worth, then there’s equity. If they owe less than half the value of the house, they you’ll have more than 50% equity to work with, however, you still have to factor in repair costs.
We’ll just end the lesson here, for now.