Re 25 to 1 rule

If your offer is accepted you do NOT own the property. You only own the property after you close on it. Typically you submit offers with a 14 day inspection period and 30 day closing period. This means after your offer is accepted you have 14 days to back out of the contract if you can't find an end buyer. To play it safe you should never go passed 13 days. And even more realistically you should have a buyer lined up before you get a deal under contract so you can close right away.

On top of that there are 30 days from the time your offer is accepted to the time you or your end buyer needs to close on the deal.

You can assign your purchase agreement with an assignment of contract as long as you put "your name and/or assigns" when you submitted the offer.

You do not need any transactional funding when doing assignments because you are simply selling your rights to buy the property to the end buyer BEFORE the deal closes.

The only time you might need transactional funding is in a double close, but that's more advanced stuff. Concentrate on assigning deals when you're first starting out because they are simple. Worry about double closes later on.

What about earnest money?

Earnest money is negotiable except for on some bank owned properties. Some banks will reject any offer without 1k earnest money.

Always try to put the least amount of earnest money down on the property for a few reasons:

1. EM goes towards the purchase price. Heres an example: If you get a deal for 50k and put 1k EM on it, that 1k will go towards the purchase price for your end buyer. So if you assign it to someone for a purchase price of 55k, you will make 4k, not 5k.
2. The more earnest money you have out there, the less capital you have to invest with. If you have accepted offers on 10 properties with 1k EM each, thats 10k out in the market doing nothing for you when you could be using that money to invest with.
3. The more earnest money you put down, the greater your risk. We have personally lost 2k in earnest money from making bad decisions. We had the property for 13 days, and thought we could sell it by the 14th. But we didn't. That irresponsible decision cost us 1k on 2 different properties, and we will never let that happen again!

On bank owned properties never put more than 1k EM, and on FSBO properties you should ALWAYS put one dollar EM.

... a bank will not allow an assignment, you would have to use transactional funding, have a buyer already in place, & then double close.

Filled out your profile info.

Learned:

HOW to assign a contract.

HOW to use OPM or TF.

Do you know Values?

WHERE have you been?.... rebounding-thats OK, life gets in the way don't it?

Read any of Dean's books or courses or spent any time on this site?

ALL of the answers are here.
type in search box under Deans chin, 25:1 rule and hit enter on keyboard

I'm not being mean or negative, but, this business takes committment and focus if you want and NEED to succeed.

Best wishes on Your REI journey

When you assign for $5K and have put $1K EMD, you simply have the buyer give you two separate cashiers cks--one for the $5k and one for the $1K. There is absolutely NO REASON that you would lose that $1K!

Karen

Yep, real estate sure is negotiable! If your deal pans out that way, then great!

I was just giving an example if they didn't have any special agreement with the end buyer, for educational purposes. Most people don't know that part.

Always think creatively.

Thanks Karen!

Buying 10 houses/mo. and putting 1k in EM for each house causing me to LOSE $10K does not sound like a financial plan I want to follow!

Thanks for the EM lesson, Karen!

Tom