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A Real Estate Formula
It was an easy real estate formula. The ads ran in our small-town newspaper for years before I realized exactly what was occurring. They were always exactly the same: A house for sale with 5% down and payments of 1% of the buy price. Maybe a three bedroom home for $90, 000, for example, with $4, 500 down and $900 per month payments.
When a colleague started doing a similar thing he explained the process to me. It was a strategy to get an excellent return on money, and it was the opposite of purchasing with no money down. There is no down payment at all when you buy, because you purchase for money.
The Quick Real Estate Strategy
You probably know that when you buy for fund, you can often get a much better price. With no funding contingencies in the offer, and the promise of a faster closing, sellers are willing to sell for fewer. You could offer $95, 000, as an example, on a house that would be worth $108, 000. If you can't get it for less than, say, $99, 000, you walk away - you'll find always other chances.
Once you buy the house, you placed few thousand into high-return repairs and improvements. These could include paint, carpet, and probably asphalt for a dirt driveway. For our example, we will say you spend $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 purchasers who are unable to get financing easily. You provide the financing. Because you are making it simple for the buyer, you can get more than the $116, 000 price for the home - and do it without having to pay a realtor's commission. Let's say you sell it for 123, 000. The buyer needs a down payment of just 5%, or $6, 150, and makes monthly payments of $1230 per month. You charge much higher interest than the going rates at the banks, of course.
This is a win-win condition. Your customer is capable to buy a home rather than renting and you get a capital attains of maybe $16, 000 after expenses, plus good interest. Your total rate of return will often be over 20%!
In our town, the first to do this regularly were a father and son team of lawyers. They saved cash by doing their own foreclosures when needed. Once they foreclosed, they increased the cost and sold the home all over again.
They made millions. Did you understand that if you can get an average return of 18% on your fund, you are going to turn $75, 000 into more than one million dollars in about 15 years? That's the power of a good real estate formula.
When a colleague started doing a similar thing he explained the process to me. It was a strategy to get an excellent return on money, and it was the opposite of purchasing with no money down. There is no down payment at all when you buy, because you purchase for money.
The Quick Real Estate Strategy
You probably know that when you buy for fund, you can often get a much better price. With no funding contingencies in the offer, and the promise of a faster closing, sellers are willing to sell for fewer. You could offer $95, 000, as an example, on a house that would be worth $108, 000. If you can't get it for less than, say, $99, 000, you walk away - you'll find always other chances.
Once you buy the house, you placed few thousand into high-return repairs and improvements. These could include paint, carpet, and probably asphalt for a dirt driveway. For our example, we will say you spend $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 purchasers who are unable to get financing easily. You provide the financing. Because you are making it simple for the buyer, you can get more than the $116, 000 price for the home - and do it without having to pay a realtor's commission. Let's say you sell it for 123, 000. The buyer needs a down payment of just 5%, or $6, 150, and makes monthly payments of $1230 per month. You charge much higher interest than the going rates at the banks, of course.
This is a win-win condition. Your customer is capable to buy a home rather than renting and you get a capital attains of maybe $16, 000 after expenses, plus good interest. Your total rate of return will often be over 20%!
In our town, the first to do this regularly were a father and son team of lawyers. They saved cash by doing their own foreclosures when needed. Once they foreclosed, they increased the cost and sold the home all over again.
They made millions. Did you understand that if you can get an average return of 18% on your fund, you are going to turn $75, 000 into more than one million dollars in about 15 years? That's the power of a good real estate formula.
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