Assignment of Contract Deals; Worth the Effort..

An Assignment of Contract is something you should utilize in all your basic contracts when dealing in Wholesale properties. It allows you to “Assign” the transaction contract over to an interested 3^rd party. You can exercise this option and generate a few thousand dollars.

Deal#1

-Property was a FSBO in down town ABQ.
Two story abandoned building with a basement. My thoughts were to buy, and market as a potential 4 separate 2br/1ba apartments with office potential. (zoned C1 & R1)
-Asking Price——————à $87,500
-Estimated Repairs———–à$4,000
-After Repair Value———-à$105,000
-MAO—————————à$69,500 (NEVER PAY THIS)

*Remember to subtract your 20% acceptable profit & 3% Hedge Factor (holding costs)
-Offer#1————————à$42,500 (Counter offered at $52,000)
-Offer#2————————à$49,900 (Accepted)

I placed a $100 earnest deposit with the Escrow Company, ran this Ad:

Handyman Special
Cheap-Cash
(my Business phone #)

Ad ran for 3 weeks and then another Investor/Contractor inquired on the property. We met on several different occasions both at the property and for luncheons.

We discussed various options. In the end I “Assigned” the contract over to him for approx. $2,800. This whole deal took me no more than a few hours to put together and then I sat on the property for 3 ½ weeks. It cost me $100 for the earnest money and $52 for the Ad Not a bad deal!

Deal#2

-Property was another FSBO located in upper downtown ABQ.
3br/1.5ba with fenced front yard.
–Asking Price——————à $99,900
-Estimated Repairs———–à$6,400
-After Repair Value———-à$115,000
-MAO—————————à$74,100 (NEVER PAY THIS)

*Remember to subtract your 20% acceptable profit & 3% Hedge Factor (holding costs)

-Offer#1————————-à$57,057 (Counter offered at $75,000)
-Offer#2————————-à$65,000 (Counter offered at $69,500)
-Offer#3————————-à$67,500 (Accepted)

We were too close on the deal in 21 days. I had a contractor already lined up to perform the repairs. During the Escrow period, I posted the property to my website and ran another ad. The Ad this time was more driven to entice a buyer. I used key words and focused on the amenities the house had. Plus the price that I was able to offer ($90,000) was the big key. This was due to me following the “Wholesale ARV formula”.  I ran this Ad:

Price Reduced $25K! Must Sell!
New Carpet, New paint, Upgraded Bathroom.
Charming little Home in quiet Neighborhood.
(My phone # & website address)

I received a full purchase price offer in 12 days. We split the repair costs and this meant I would be buying the house and selling it the same day within a matter of an hour! This is called a “Simultaneous Closing”. This is also known as a double closing by most escrow officers and Realtors.

Let’s recap deal#2. I bought the property for $67,500 + $3,200 = ($70,700) for my share in repairs costs (negotiated with new buyer). I sold the property for $90,000.  That’s a $19,300 Profit!!! All in a days work and you too can accomplish this kind of deal.