He Becomes The Buyer Named In The Contract- And You Drop Out Of The Picture

Category: Finance, Real Estate.

Wouldn t it be nice if you could become a wealthy real estate investor just by filling out some paperwork?

One of my favorite ways to make money in real estate is to get a property under contract and then find another buyer before the closing date in the contract. Well, you can! In order to do this you have to be able to fill out a real estate purchase contract( i. e. , the paperwork) correctly. Have a real estate attorney review your contract before you get the seller s signature. You won t need a large down payment or good credit to make this work, but you do need to be a stickler for details when you make your offers( i. e. , fill out your real estate contract) . Now that there are a lot of foreclosures on the market, I often get calls from families about to lose their home. In a situation like this, I get the house under contract and then assign it( that is, sign it over) to another investor who is going to do buy the property, do the rehab and put the house back on the market.

They want to sell quickly, but their house needs repairs. Let me show you how it works. Their kids are in the backyard playing with the dog. Imagine you re sitting at a kitchen table in the home of a couple you ve just met. They offer you a glass of iced tea while you look through their mortgage documents and verify the amount they owe on their house. "How soon will you be able to move? " you ask them. They look at the piles of stuff in the living room- everything from stacks of unopened mail, to half a, to dirty laundry dozen used pizza boxes.

The man and woman look at each other. No one has cleaned in months. Don t even get me started about the bathrooms. The odor of sweaty shoes stings your nose and the carpet is fuzzy and gray from dust balls. For anyone who works with people facing foreclosure, this is a common scene. Something happened here.

I see it all the time. One of them had a medical emergency and they didn t have insurance. Or he bought a boat and then had to buy a truck to haul it to the lake. Or she lost her job. They got behind financially and before they knew what happened they couldn t make the mortgage payments. But it never happened. For a couple or three months they really thought they d get caught up.

So they gave up. The sheriff s sale date is just a couple of weeks away. Now we re sitting at their kitchen table. I m here to buy their house, save their credit and help them get on with their lives. They agree. But before we sign a contract, I explain that I need to show their house to the appraiser, the termite inspector and to a couple of different rehabbers to get bids on the work.

I also ask them to sign an assignment document which simply states that they acknowledge that another person may step into my shoes and buy the property. As I leave, I put a For Sale By Owner sign in their front yard with my phone number on it. They agree to that, and sign the, too document. Within the hour I get phone calls from other real estate investors who know the house is on the sheriff s sale list. The following day I show the house- in its deplorable condition- to a couple of investors who specialize in rehabbing property and putting it back on the market. They want to view the property and make an offer.

The nice thing about working with other investors and rehabbers is that you don t have to clean house first. You don t have to mow the lawn. You don t have to bake cookies for an open house. You don t even have to clean the bathrooms. They re looking for structural problems. See, investors and rehabbers aren t looking for a house to live in.

They re calculating the cost of paint and carpet. No problem. Water heater doesn t work? The only" bad" thing about dealing with other investors who want in on your deal is that some of them overstate( make that" lie about" ) their ability to close quickly. You sign over your rights in the contract to the other investor in the assignment contract. The guy who can guarantee he can close the deal before the date of the sheriff s sale is your guy. He becomes the buyer named in the contract- and you drop out of the picture.

Everything is negotiable, including your fee and when you get paid. Your assignment fee may be$ 1, 000- $3, 000, depending on what it s worth to the other guy. If you ve never assigned a contract to a particular investor before, be sure to get your assignment fee( cashier s check or money order) upfront when you assign the contract. It s up to you. However, if you ve had a good experience working with a certain investor before, you may agree to wait to collect your fee until the closing date. Now that you know how simple it is to" buy" real estate with no cash and" sell" it before you own it, or good credit, not having money, or access to financing can never keep you out of the real estate investing game again.

You can become a wealthy real estate investor just by filling out paperwork.