A $31,000 assignment fee on a 6 unit wholesale deal, and whether that's the buyer's problem
Take a small portfolio buyer new to purchasing through a wholesaler, looking at a six unit deal worth working through carefully. The deal: six units, two-bed each, one building, 1978, all occupied. Contract price to the seller is $449,000. Assignment in at $480,000, so the wholesaler's fee is $31,000. Current rents average $875 against a market closer to $1,150, and four of the six leases roll in the next eight months. At $480,000 that's $80,000 a door on units that should carry $1,150. Even with deferred maintenance visible in photos, the numbers can look better than anything on market in years, which is exactly when the diligence should tighten rather than loosen. Three things worth checking before signing anything like this. First, the seller. An estate with multiple siblings, one out of state and reportedly just wanting it done, raises a real question of whether all heirs have signed and whether the estate has authority to sell yet. That's usually a bigger risk than the fee itself. Second, the fee. $31,000 on a small multifamily deal is well above the $8,000 to $15,000 range typically quoted for single family assignments. Multifamily fees can run higher, or a wholesaler may simply have found motivated heirs and priced accordingly. Either way, the buyer is paying the assigned price or walking, full stop. Third, the tenants. Occupied and below market with no visibility into whether the leases exist in writing, or what they actually say, based only on a rent roll the wholesaler says came from the seller. The sound decision in this situation: no signed assignment and no earnest money without both the leases and the estate paperwork in hand, even under pressure of a short deadline. Walking from a deal that won't produce that paperwork is usually the correct outcome, not a missed opportunity.
