Assignment Contract I just closed.

[Anthony Perez]

Hey Guys how are you, I hope all is going well with your RE endeavors. I just wanted to share about  a deal i just closed on this morning.

Details:

I currently reside in NYC, which is seen as "too expensive" to invest in for some people, but not for me. This deal was actually a vacant piece of land in Northern Queens, The Elmhurst area to be exact.

There are many benefits to living in a highly populated area.

1) I can walk to all the properties i would like to buy,

2) My marketing or "getting deals" consists of walking my neighborhood and knocking on doors.

3) There is a surplus of buyers lined up with cash ready to close.

Back to the deal,

1) The property a 20x100 lot that is zoned R4.

2) The lot was not taken care of with grass growing everywhere.

3) The seller live in NJ! Not to far but far enough to forget about the land.

I was walking the neighborhood when I came across the vacant piece of land and jotted it down on my Iphone. After some digging around i found out the seller lived in New Jersey, I was able to obtain his cellphone number and give him a call. Turns out he wanted to sell! he had bought the land back in 1979 from an auction for $3,000. Talk about a steal. Then the negotiation came into the conversation, I believed someone would buy this for 250k no problem thanks to a couple of comps around the area. So i proceeded to ask him "What are you looking to get for the property". Which in turn he responded with 200k. Its not uncommon for people to ask for high numbers so I mentioned my comps which showed LLC's purchasing the exact same lots for 75k-150k so i countered with 75k. Which in turn he asked to meet at the middle at 130k. Great! I'll have a contract for you tomorrow.

The Nitty Gritty/ Problems

While Biggerpockets is a great resource for getting you started, unfortunately it doesn't walk you through a deal once you actually get one. Since this wasn't my first deal I called up my attorney and told him to draft a simple assignment contract. The next day I drove over to NJ and had the contract signed. I tend to do most of my investing currently in Brooklyn NY, and zoning over there is R6 a lot more generous than the R4. What I didn't know though was I couldn't build anything on a 20x100 i would need at least 25x100. Great! so my deal turned out to be a dud. So like any savvy REI investor I called a local broker. After a ten minute chat he told me he had small businesses looking for land to park their trucks. He believed he could sell it for me around the 200k mark with a 3% broker fee involved. A week later we received an offer for 200k which we countered with 250k. We ended up selling at 225k and closed in about two weeks. All in all we made money on the deal but it could've turned from a deal to a loser without the help of the broker.

Ignorance is bliss:

While I was unable to build on the lot, I was able to have someone utilize it for parking. Always ask for help! without the broker I could've lost my down payment on the contract. (Which was only $1,000) Another thing i didn't notice is that the comps i had pulled were in infill blocks. R4-Infill is a lot different than regular R4. You can build more on R4-Infill. 

Numbers:

Assignment Price: $225,000

Purchase Price: $130,000

Down Payment: $1,000

Attorney Fees: $5,000-$6,000

Broker Fee: $7,000

Gross Profit: $75,000

Side Notes:

I offer to pay my clients attorney fees, unpaid taxes, and liens which is why my closings are expensive. By offering this though people become a lot more lenient with the down payment. In the end it turned out to be a great deal. We grossed about $75,000 after all the fees which isn't to bad for a months worth of work! 

I hope I didn't leave out to much, forgive me for any spelling error's. I will start becoming a lot more active on BP as I seek to grow my business and real estate holding's. If you have any questions please drop them below. Happy Hunting!

[Anthony Perez]

Hey @Jason Nunez why yes its the creativity and stroke of luck you could call it that made the deal go through. I started poking around about a year and a half ago and got my first official deal last year. On the bright side I was able to pick up a mentor which I believe really accelerated my growth.