Hi Everyone,
I have a pocket listing that I have been working with a broker. I have run the numbers and looks like we’re close to agreement at a 12% CAP for a 50 space park in Texas. This is based on detailed 12 month rent roll and operating statement, also I also manually inputted increases in property taxes, 5% management, etc based on the sales price.
I don’t have the free cash to finance it, but think I could still make a little by bird dogging this for an assignment fee.
What are some strategies and terms people have used to assign contracts? What is the typical timing (e.g. how early or late in the feasibility period)?
Thanks!
Put it under an assignable contract. You need to control it at some point and you seem like you already know that. From there work out an agreement with a pre-qualified buyer to either pay a fee at closing, or do a simultaneous closing at a higher price. The key for you is to put it under contract first. This is the only way you’ll have a level of control.
Birddog fees are nothing more than a fairy dust! For one, they are technically illegal. Second, under a birddog agreement, where is your enforceable fee agreement? We pay them simply because we value great relationships more than screwing people over, but in reality these bird dog arrangements are worth about as much as a handshake in today’s business environment. Not much. Bottom line is that you should strive to control the asset if you are wanting to flip contracts.
For feasibility, that depends on your buyers. Most sophisticated buyers need a minimum of 2 weeks to perform all of their on-site and off-site diligence. The more complex your deal, the more time you need to build in. If you want a round number, give your buyers list more than 30 days.
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Hey thanks for the steer Charles, great information.