Making money in real estate does not always have to entail actually taking possession of a property. In fact, you can make money in real estate by assigning contracts without having to go through renovating or renting property, or even investing in a property at all.
The process of assigning a property essentially entails the tying up of a property and then finding and assigning the contract to the actual end purchaser of the property for a fee. The process requires little, if any, money on your part – however, it can be quite profitable.
How Assigning a Property Contract Works
In going about assigning a property contract, you must first locate a property that is for sale and draw up an all-cash offer to buy it. Once the buyer and seller have signed the necessary paperwork, a title search will need to be performed and a survey will need to be ordered. In doing so, you will have “tied up” the property so that it cannot be purchased by another potential buyer.
In making the offer on the property, it should include the words “and / or assigns” following your name as the property’s purchaser. In addition, you should also ensure that you retain the right to inspect the property before you go to closing. This will allow you to let other potential buyers view the property before making a purchase decision.
In addition, you should also be sure that you include what’s known as an “escape clause” in the contract. This will let you end the contract should you be unable to locate an end buyer. This could be as basic as adding a sentence to the effect of “this offer will be subject to the approval of my business partner.”
Once you have the property tied up, you will then need to locate an end buyer. After you have done so, you will need to draw up an assignment contract with them, which will essentially have them take over your position of performing on the purchase contract, based on all of its terms.
You should then obtain an assignment fee from the new buyer before going to the property’s closing. This fee will be an amount that is mutually agreed upon between you and the end buyer. In addition, you will need to be sure that the new buyer also reimburses you for any amount of earnest money that you had deposited for the property as well.
Holding real estate can also net you a nice amount of profit – even without a lot of work. This is especially the case if you acquire the services of a property manager to handle the day to day duties.
For more information on how you can reap the benefits of your property without having to spend a lot of time, give us a call.