Today I paid a 100,000.00 Assignment fee !!!

[Jay Hinrichs]

AS all you know I am not all that keen on newbies thinking the road to real estate rich's is paved through wholesaling.

And today I just paid a 100,000.  assignment fee.. can't think of any bigger at least that I knew about  LOL.

I brought a cashiers check to title co.. and the contract was assigned to me.. I have to then put up another 50k in EM for that contract by sept. 1...

Details

3 phase development in Canby Oregon... one chunk will go to neighboring adult care facility to build 80 units.. another phase will go to bigger regional builder and last phase to Lennar..  although I would not mind pealing off maybe 20 lots for our own build's.

7 mil purchase price upon plat approval and final engineering and appeals expiration... another 100k EM non refundable at plat approval.

4.5 million to build out the subdivision...   Letters of intent from these 3 different entities for just under 16 million..

Including assignment fee/  Pre plat engineering and all permits to get to that point I will spend just under 400k in cash.. There are no real estate brokers involved ( except me) although I am now the owner ... so 11.5 all in say 15.5 exit  profit 4 mil  400k of risk capital. IE it craters anywhere along the line and I am out 400k..  18 months start to finish.

Now the buy and hold crowd will not like this because I will have to pay ordinary income tax on the gain of about 1.2 to 1.6 million with a net in the jeans of 2.8 to 2.4 million.. or market craters and bye bye 400k..

Oh well no risk/ no reward.. will update along the way and let everyone know how we are doing.

What do you all think..  Too risky   crazy  ?  or would you go for it as well. ?  curious about feedback.

[Jay Hinrichs]

@Jeff Petsche  this is not my normal deal that's why I posted it.. its the first time I have bought something like this that was not direct from the land owner and paid a assignment fee.. now to be fair the person I paid his business is to tie up these larger deals and flip them to home builders.. And he has done a lot of the leg work .. he is the one who has the presales of the plat put together.. structured the contract in a way a developer like myself would actually buy the dirt etc etc. so he brought a lot of value.. But at the end of the day to make the big money you have to take this to buildable lot.. And other than the flip of the one plat to the senior living company.. what would be really cool is if I could build out the other 120 lots  that would be a retirement type project for me.. profits would be in the 10 mil range and even with tax's net would be 6 mil plus... and that would just about do it for me.. and call it a career.. we will see.. most likely though the scenario as spelled out is how it will go down.. if I can peel off 20 lots and make another 1 to 1.5 mil net building those I might do that.  Really depends on what my bankers let me do and where the market is at the time..  in this town of 50,000 there currently is not ONE lot on the market.. NOT ONE.  And this is a PRIME piece of dirt.