Thanks JP,
Hurol

I like it! I was listening to Flip or Treat on the way home last nite and heard you talking about this. Now, I’ve used a straight up option before to try to purchase a property (obviously, I was shopping for an end buyer) but I never even thought of using an option the way you propose in the video. Brilliant. I’m gonna do it!

Thanks!

Carey

P.S. The Pending Hi-Jack was genius too!
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JP: You got it!

i heard of another way before and its that you start a contract with the owner and put your earnest money out at whatever you choose like due on 45 days or before, then find an end buyer even if he is retail and start another contract. if he is cash you can do a back to back closing, if its retail you keep both those contracts around but do not give them to title. I guess for security just in case or so you can act as a principle i guess. But you start a 3rd contract between the homeowner and the end buyer and put an INVOICE as your payment. By law all invoices MUST be paid out first prior to any closings. I guess some assignments are gone around by investors and you lose all your profit so this is the best way. heard of this?

JP: I wouldn’t recommend doing this – it’ll get you in hot water for basically practicing real estate without a license. When you create that 3rd contract between your seller and your end buyer…you’re not a principal in that transaction, so any money you collect from that transaction would probably be considered a disguised commission if ever challenged.

The seller or buyer could pay you to release your contract so they can step in, but I wouldn’t think that would be something you’d put on the HUD of the end transaction.

Just collect any assignment fees as a line item on the HUD…same deal as your “invoice” method, but you’re still an equitable interest holder. Just my $0.02. As always, talk to your own lawyer or RE pro before following any of my crazy advice.

…jp

anyway, if you had a home you were selling and needed to sell it and i came along and said, “Hey i will try and see if i can find a buyer, sign this (option)” then i find a buyer for say $5,000 more than what the owner wants, am i paid up front by the buyer or out of escrow? Cause if the seller can cancel then my investor just lost his money to me!

Also, if there is no purchase agreement first, then i find a buyer with the option contract and he signs, does he just go to the seller and start a purchase and sale?

now if i was marketing for ANOTHER wholesaler and i used this with him while he had a purchase and sale contract with the right to assign, then it makes more sense to me. Basically i would find a buyer, he signs my document, gets in touch with the person with the right to assign, assigns to him and they all go to closing and we are paid out of closing right?

I just don’t want my buyer to feel like something might not go through and he just dumped me a check for 5k. Small walk through on this maybe?

Thanks!

Dwight

Hey, Dwight! Great questions…and I think all your questions are pretty much answered in my responses to other people’s comments here. These comments weren’t published yet when you originally posted your question – I’ve been playing a bit of catch up on blog comments today.

Let me know if anything’s still fuzzy and I’ll do my best,

…jp

I have a somewhat related question:

How the heck did you get a 13 minute video on YouTube? I thought that they were capped at 10 minutes

Justin

Thanks, Justin! YouTube has lifted their 10 minute limite recently. (Hooray!) Not sure what the new limit is, but I think we’re still limited to 100 MB or less for non HD video. I think HD has a different (larger) limit, but I have no idea what it is.

…jp

So, it might make sense for someone for a long-term hold. However, I don’t want to get tied up myself (I don’t want to take on the mortgage), I’m new at flipping (so have to generate a buyer’s list, and not confident I can find buyers in a short time), plus I’d like to set the seller’s mind at ease about tying it up. So a flex option might work.

Have you ever written a flex option subject-to, or suggest what one might look like? (And, is this just too wacko?)
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Hey, Eric!

Admittedly I’m not a big fan of long term sub2 deals. For me, it’s only ever a short term solution. Just doesn’t suit me and feels too risky.

Having said that, no, it’s not a wacko concept at all. You can wholesale/flip sub2 deals just like any other kind of deal, and a flexible option would work as far as I can see.

My best,

…jp