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Today I want to share a sly little wholesaling trick I learned recently from one of our fellow moguls. And this one’s all about helping you minimize the possibility of spooking your seller with that fat assignment fee you’ll be making on your next deal.
You know what I mean, right?
You’ve got someone’s $250K “problem” property under contract for only $75K, cause you did such a wiz-bang job of helping the seller understand just how big of a problem those repairs really are.
Bottom line, a savvy investor can probably get the repair done right for $50K give or take, so you know you’ve got a smoking deal on your hands. You reach out to all three of your VIP buyers, and before you know it you’ve got one chomping at the bit to give you $125K for it. And he’s happy for you to make that cool $50K, cause he’s a player and he understands how the game works… but he’s also not willing to just write you a check. You’ll have to wait till closing to get yours.
No biggie. You can wait, it’s all good.
But wait a sec… eh… just thought of this…
What happens when your seller realizes you’re making a fat $50,000 assignment fee?
I mean, he’s not exactly what you’d call “sophisticated” in the ways of real estate investing.
This could be a challenge for him to really understand. Or even if he understands it, he might not like it at all. It might actually make him really uncomfortable to see me pocketing what he earns in a year on this… especially after I negotiated so hard with him on the repairs. He might even feel like he’s entitled to the “extra $50K” himself.
Could he get spooked?
Yes, he absolutely could.
This could end badly.
Until Now…
Enter Jeff Coga…
You may recall Jeff from the unrelenting Third Degree we gave him during our Mogul Live training on Secrets of Flipping Houses to Wall Street. Jeff’s one of the few investors who’s really cracked the code on how to profit wildly by working directly with the hedge funds – you’d do well to listen to the replay of our conversation if you missed it. Just look through the archives here.
The fact is, Jeff’s a machine of a wholesaler in the Las Angeles area – the guy’s just super innovative and creative and has an uncanny knack for coming up with cutting edge ideas for profiting from them.
So let’s take a moment and listen as Jeff reveals his little trick on “Assigning at Par” and how it keeps the seller all warm and cozy…
{Mogul Elite: Download a transcript and MP3 of this lesson in the Power Pack tools for this lesson.}
Well that was easy, wasn’t it?
Now that you’ve learned this sly little spin, you ought to be able to easily apply it, right?
Keep in mind, Jeff sometimes refers to his assignment profit as a “Procurement Fee” and sometimes as a “Consulting Fee”. And if there’s multiple wholesalers wetting their beak on the same deal, he may refer to one person’s profit as “Procurement” and the other as “Assignment”.
Here’s an example of where it goes on the HUD settlement statement…
Bonus for Mogul Elite Members
Here’s a special bonus exclusively for Mogul Elite members – in the Power Pack tools for this lesson, you can download an exact duplicate of the Standard Invoice Jeff uses on his wholesale deals for this tactic.
Jeff was gracious enough to share it with us, so feel free to customize it for your business and use it on your own deals when deploying this tactic.
You’re welcome :-)
When you're wholesaling from individual sellers to cash buyers, consider wholesaling at par and taking your $ as a "procurement fee" invoice, rather than assigning.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.