The “Bird Dog” is a good place to start your introduction into real estate. But there are still more venturous things you can do in real estate.
Let’s talk Wholesaling.
#20) Wholesaling Real Estate
The big difference here is that you have some knowledge of how to run the numbers in deciding if a property is worth you getting involved with. You have to learn the numbers to be a wholesaler.
Wholesalers will spend a little bit of money and are willing to put a property under contract. Once they have a property under contract they sell the contract to someone who is willing to do all of the rehab on the property.
A property is worth $200,000
a Bird dog found the property and you agree to pay them $3,000 when or if you can sell the property.
You the wholesaler run the numbers. You can offer the owner $120,000 because it needs $40,000 worth of rehab to bring the property to today’s standards. You are charging $10,000 as your wholesale fee.
The person that’s going to do the rehab needs to pay all $130,000.00 to own the property.
- $120,000 to the old owner
- $10,000 to you (out of your money you’ll pay the bird dog their $3,000) leaving you with $7,000 for signing a peace of paper and making a phone call or two.
The rehabber will spend $40,000 making the property looking great and sell it for $200,000. The rehabber makes $30,000 off of their hard work, skills and knowledge.
The other name for this is “Assignment of Contract”. An assignment of contract is a transaction between a person who has something to sell and you, except that you do not want the asset that the person is selling. You want money. You agree to enter into a contract to purchase the thing that he is selling. You put up $100.00 in order to make the contract legally binding and you agree to buy the asset for a certain price in a certain time period, and you have an assignment clause in the contract. That means that you can assign to someone else your right to buy this asset.
Remember you don’t want it, whatever the “it” is; you want to make some cash on this deal. Basically, you tie up the asset for one hundred dollars, and have the option to pay the balance at a given time in the future (e.g. within 30, 60 or 90 days).
You have a buyer who wants the asset, or you find one. You assign the contract to this person for a price greater than your contract with the seller and you keep the difference.
This method can be done with real estate, cars, jewelry, furniture, artwork on more.
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