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Wholesale real estate investing (i.e. "quick-turn" or
"flipping" real estate property) is conceptually very
simple. Here's how it works:
First, "Investor A" finds a great real estate deal with
a lot of equity. Typically, Investor A will have spent
a significant amount of time, money, and expertise to
find the deal, negotiate the terms, and get the property
under contract. By putting the property under contract,
Investor A now has control of the property, and the
equity in the property.
(For this example, imagine that Investor A has found a
property worth $200,000 and has set a purchase price of
$115,000 and he also knows that there are $15,000 in
repairs, which leaves an equity position of $70,000).
Second, "Investor A" finds another party, "Investor B".
Investor B recognizes that the contract that Investor A
has established is worth $70,000 in equity, and so he
strikes a deal with Investor A to turn the deal over to
Investor B in exchange for some amount of cash, called
an "assignment fee" (we'll use the value of $12,000 in
this example).
So Investor A is giving up $70,000 in "potential" profit
in exchange for $12,000 in current profit. And Investor
B is paying $12,000 because he believes he can make more than that on the deal, since there's a full $70,000
of equity built in.
This deal between Investor A and Investor B is called
an "Assignment", because Investor A is assigning the
contract to Investor B.
Third, Investor B does his "due diligence" (i. |
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