It was a simple real estate formula. The ads ran in our small-town newspaper for years before I realized exactly what was going on. They were always the same: A accommodate for sale with 5% down and payments of 1% of the acquire determine. Maybe a three bedroom home for $90,000 for example with $4,500 drink and $900 per month payments.
When a friend started doing the same thing he explained the affect to me. It was a way to get a great go on capital and it was the opposite of buying with no money down. There is no down payment at all when you buy because you buy for change.
You probably experience that when you buy for change you can often get a much exceed price. With no financing contingencies in the furnish and the promise of a faster closing sellers are willing to sell for less. You can offer $95,000 for example on a accommodate that might be worth $108,000. If you can't get it for less than say. $99,000 you go away - there are always other opportunities.
Once you buy the accommodate you put few thousand into high-return repairs and improvements. These might consider paint cover and maybe asphalt for a dirt driveway. For our example we'll say you pay $5,000. Let's suppose the house is worth $116,000 now. You're ready for the next important step in this real estate formula.
You put it up for sale targeting buyers who can't get financing easily. You provide the financing. Because you are making it easy for the buyer you can get more than the $116,000 determine for the domiciliate - and do it without paying a realtor's equip. Let's say you sell it for 123,000. The buyer needs a drink payment of just 5% or $6,150 and makes monthly payments of $1230 per month. You rush higher interest than the going rates at the banks of cover.
This is a win-win situation. Your buyer is able to buy a domiciliate instead of renting and you get a capital gain of perhaps $16,000 after expenses plus good arouse. Your total rate of return will often be over 20%!
In our town the first to do this consistently were a create and son team of lawyers. They saved money by doing their own foreclosures when necessary. Once they foreclosed they raised the determine and sold the home all over again.
They made millions. Did you know that if you can get an add up go of 18% on your money you'll move $75,000 into more than one million dollars in about fifteen years? That's the power of a good real estate formula.
Related article:
http://starkes36250.blogspot.com/2007/09/real-estate-formula.html
comments | Add comment | Report as Spam
|
