$35K profit double assignment

[Brandon Ingegneri]

Recently, another investor that I have done tons of business with over the years called me because he came across a house that he knew I would like.  Up and coming neighborhood that I knew really well, multi family that needed work.  Fit exactly what I like to buy, fix, and keep.  He and I meet the seller who lives in the property, and we negotiate the price.  $75k.  This investor tells me that he will assign to me for $10K which we have done a number of times together.  

Because I have the absolute worst luck of all time, 2 other houses that were bank deals that I had been working on for months finally call and say that we need to close in 30 days. These other houses are in a city where I can get the same rents, but a better tax rate.  Only thing, this up and coming neighborhood as wildly appreciating values.  So, I make the hard decision to get a piece of something instead of all of nothing.  It really killed me not to keep this property, but the handshake agreement that my buddy and I had became an assignment where I cut him a check for $10K, and now he was out of the deal.   

I then contacted an agent that I work with extensively and told her to create some buzz about this property and that we were looking to wholesale it and fast. She couldn't legally list it, but she could talk to contacts and let them know what was coming available. Once we had enough interest, I had every single investor show up at the house at the same time and told them the property was for sale for $50,000 and that they had to close in 10 days. Make your highest and best, because if we need to close on this thing, they can fight over it like a piece of meat once it hits the MLS.

Long story short.  Very profitable bidding war.  I Signed the second assignment for $120,000 and let the end buyer close on the property.  Walked with $35,000 and that funded a large chunk of my rehab on one of the other two properties that I later closed on.    

[Brandon Ingegneri]

@Bill Gulley, while I appreciate your opinion and commentary, I do not believe that it applies to me or that there is a lack of knowledge or a predatory manner in which I do business.  I certainly respect your opinion in regards to this deal, but must politely disagree.  I have done my fair share of deals over the years in this area, and I have built up a steady business and a reputation of reliability.  I am forthcoming in every deal that I do on a purchase, a sale, or dealing with my tenants.  I take pride in this business, and I don't feel guilty for the years of hard work that it took to get to this point.  Yes, I am in this business to make money. Yes, I negotiate with people, and they agree to the terms.  There is no flowery language, nothing ambiguous.  My sales contract is one page, large text, double spaced, and reads as easy as a bill of sale for a car in a private party sale.  Everyone is made aware that I invest in real estate, and that my end goal is to make a profit.  If someone negotiates money off of the price of a car at a dealership in order to get a better deal, is that wrong also?  

Also, it wasn't like these people wanted 200k for their house and we paid them $75k, they were in the ball park and were realistic about the condition of their house.  I didn't hunt them down, they approached us to do this deal, and they were represented by their own attorney.  Now, having said that, we listed this house at $50k.  How would we know that a bidding war would jack up the price as high as it did?  I would have been happy to get 95k or 100k for the house.  We never expected this type of demand, especially with 3 feet of snow on the ground at the time.  The purchaser after me had to invest 85k into this house after he bought it.  There was 1 floor of the 3 with working heat at the time.  1 tenant was using her stove to heat her unit.  The house was covered in lead paint, needed 46 windows, and the list goes on, but the house was a major project to say the least.  

To follow up the story, we negotiated 7 months rent free for the original sellers prior to them moving.  Where did they move after 7 months?  You guessed it, they are tenants of mine today and are very happy.  They live in a safe, clean, single family house that they rent below market value, and they have a pile of cash in the bank that they never had because of me.  They even give me rental referrals to this day, and they know all of the circumstances surrounding that house.  They are so happy in fact, that they sent me a birthday card.  I certainly do not think they feel taken advantage of.  

Doesn't sound like the story of what was described in your post.  While you are entitled to your opinion, I do ask that you at least ask further questions before drawing conclusions about my knowledge base, ethics, or business practices.  If you ask those questions, then you will not lack the knowledge of the details surrounding the deal and can make a more informed comment.  I absolutely do understand the thought behind your post, and would like to think that it was not directed in a malicious or accusatory manner, especially now knowing how it played out after the fact.  Thank you.