Real Estate Investment One Simple Formula

Real Estate Investment One Simple Formula



Real Estate Investment - One Simple Formula
I saw the​ ads in​ our small-town newspaper for​ years before I​ realized exactly what was going on .​
They were always the​ same: a​ house for​ sale with 5% down and​ payments of​ 1% of​ the​ purchase price .​
It might be a​ three bedroom home for​ $90,000, for​ example, with $4,500 down and​ $900 per month payments .​
A friend started doing the​ same thing and​ explained the​ process to​ me .​
It was a​ way to​ get a​ great return on capital .​
It was the​ opposite of​ buying with no money down .​
You bought for​ cash.
A Real Estate Investment Formula
It is​ simple, really .​
When you buy for​ cash, you often get a​ much better price .​
a​ house that needs a​ little work might be worth $75,000, for​ example .​
By offering $65,000 cash, you negotiate your way to​ a​ $68,000 purchase price .​
If not, you walk away - there are always others.
Then you put few thousand into high-return repairs and​ improvements .​
Paint, carpet, and​ maybe asphalt for​ the​ dirt driveway .​
For our example, we'll say you put $5,000 into it.
Now it's worth $85,000 perhaps, but you target those buyers who can't get financing easily, and​ you finance it​ yourself .​
By making it​ easy for​ the​ buyer, you can get $90,000 for​ the​ home - and​ do it​ without a​ realtor's commission .​
Whatever the​ sales price, you let the​ buyer put 5% down, and​ make monthly payments of​ 1% of​ the​ purchase price .​
Of course, you get higher than market interest too.
The buyer is​ thrilled that they can buy instead of​ renting, and​ you get a​ capital gain of​ perhaps $14,000 after expenses, plus good interest .​
Your total rate of​ return is​ somewhere over 25%!
The first to​ do this consistently in​ our town were a​ father and​ son .​
They were both lawyers, and​ saved money by doing their own foreclosures when necessary .​
After forclosing, they just raised the​ price and​ sold it​ all over again, of​ course .​
By the​ way, if​ you can get an​ average return of​ 18% on your money, you'll turn $75,000 into more than one million dollars in​ about fifteen years.




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