work.Lets say, for example, after rehab the property would

Wholesaling 101 Flashcards Fundamentals of wholesaling1) You get a property "under contract" at a deep discount Step 3Assign the contract to an end buyer/investor.Assign the contract to another investor or a landlord who is actually interested in rehabbing the property and/or holding the property and renting it out. Let's say you find someone who needs to sell his property - call him Jon. Jon lost his job and is relocating to move back with his parents. He needs to get rid of his property as soon as possible. He hasn't had the money to keep up with the property so it needs some work.Let's say, for example, after rehab the property would be worth $100k. But it currently needs $25k in repairs.You offer Jon $35k to buy the property and he accepts. You each sign a purchase agreement.You know an investor from attending your local REIA meetings (Real Estate Investors Association) . You reach out to this investor and offer her a great deal - you'll assign your rights to buy this property to her for a $5k assignment fee.She gladly accepts because she'll be getting a property potentially worth $100k for only $40k ($5k to you for the rights to buy, plus $35k to Jon for the property itself).Even after the $25k in repairs, she'll have invested a grand total of $65k for a $100k property.Step 1Find a motivated seller.This is someone who wants to get rid of their property. The homes to look for will be considerably below market value. ( single family homes or multi- family homes). The best deals are in properties that are vacant or boarded up because these house are unable to be financed.Step 2Get the property under contract.Getting a property under contract means the owner of the property has agreed in writing to selling it to you. You and the owner have each signed a Purchase Agreement in which they have agreed to selling you the property at a specified price within a specified amount of time .Within the Purchase Agreement you insert an escape clause that removes you from the obligation of executing the agreement if certain events don't occur. In other words, if xyz doesn't happen, then you don't have to buy the property.Fundamentals of wholesaling2) You sell or "assign" that contract (& the right to buy the property) to another investor for a fee

ARV (After Repair Value)ARV stands for After Repair Value. The ARV formula is important for understand the maximum amount you can offer to pay for a property. If you get a property under contract, but the purchase amount is too high, it will essentially be worthless. The ARV formula is the

following:The most an end buyer will pay for a property

is...(65%) * (ARV) - RepairsIn the above example:The most

your end buyer would pay for the property= .65 * 100k - $25k = 40k.So as a rule of thumb, you know the most an end buyer will be willing to pay for Jon's property $40k.That means in this example, you must get the property under contact for less than $40k. That difference is going to be the amount you can charge as an assignment fee.