Who Wants an Assignment?

What is an assignment? I’m not talking about a school paper or a job your boss gave you. An assignment is a legal term that has a similar meaning in real estate as is does in the law of contracts. Assignments deal with the transfer of rights from one party (assignor) to another party (assignee). I just gave you some legal terms that you will probably never use and you’re probably asking why am I telling you this?

All of  my blog topics are to help real estate investors especially condo investors make money. The law of assignments in real estate makes it possible to sell ownership of your pre-construction property before the building is completed. Which brings us to another question? Why would I want to sell my pre-construction condo before it’s built?

Real Estate is usually considered a safe and wise investment. I have yet to hear someone say “I should have never bought that condo! I would have made more if I invested that money in RRSP’s.” Why, because property values usually increase. This is also true with pre-construction condos. When a developer starts selling condos preconstruction they sell them for a set price. As people start buying up the units a developer will probably raise the price. The developer continues to build and just before it’s completed raises the price again.  By the time the condo is complete your property value increased by 10%. Isn’t that amazing!

Assignments can be built into a contract as a clause when you are purchasing a pre-construction condo. Due to their nature buyers cannot advertise properties that they have assignments on since it would be in direct competition with the developer. If a potential buyer was interested in purchasing an assignment they would need to contact a real estate agent to find one.

How much can I make on an assignment? Let’s say that you did all your research and you found a pre-construction condo being developed by a reputable builder. For our sakes and easy math we will say that the units are selling for $400,000. After half the units were sold the price went up to $420, 000 and then finally $440,000. You being a novice real estate tycoon bought your unit for $400,000. The price goes up the first time you’re happy knowing that you made a good investment.   When the price goes up the second time you remember that you have the assignment clause in your contract and decide you want to exercise it.  To see a example for the breakdown of an assignment click on link provided below.

Assignment Breadown Link: http://wp.me/P2k0HD-7W

Before anyone purchases an assignment they should seek proper real estate and legal advice.

Do you see where you can make money selling assignments? You paid $80,000 and the assignee pays you your deposit plus the difference in Assignment Price from Original Price. You just made $40,000 that equals 50% return on your investment. If you can tell me other ways to make that type of return on your investment I’m all ears.

In summary, assignments are very, very good. They are complicated but if you’re selling one you’ll probably make a big return on your investment. If you are interested in buying or selling an assignment makes sure you SEEK PROPER REAL ESTATE AND LEGAL ADVICE.

I hope that you learned something about assignments today. If you have any questions please leave a comment, ask a question or go to my website www.mytorontocondos.ca for more information.

See you next week.