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real estate investment formula




real estate investment formula.  It was a simple formula of real estate. The ads ran in our small town newspaper for years before I realized exactly what was happening. They were always the same: A house for sale with 5% down and payments of 1% of the purchase price. Maybe a three bedroom home for $ 90,000, for example, with $ 4,500 down and $ 900 per month payments.


When a friend started doing the same thing he explained the process to me. It was a way to get a great return on capital, and it was the opposite of buying with no money. No down payment at all with the purchase, because you buy for cash.



The simple formula <B> Real Estate </ B>



You probably know that when you buy for cash, you can often get a much better price. No financing contingencies of the offer and the promise of a faster closing, sellers are willing to sell for less. You can offer $ 95,000, for example, in a house that could be worth $ 108,000. If you can get for under, say, $ 99,000, you walk away - there are always other opportunities.



Once you purchase the



house, put a few thousand on repairs and improvements of high performance. These may include paint, carpet, and maybe asphalt for a dirt road. For our example, let's say you spend $ 5,000. Suppose the house is worth $ 116,000 now. You are ready for the next step in this real estate formula.



You put it up for sale, targeting buyers who can not get financing easily. You provide the financing. Because you are making it easy for the buyer, you can get more than the $ 116,000 value for the home - and do it without paying a realtor commission. Let's say you sell it for 123,000. The buyer has a down payment of only 5%, or $ 6,150, and makes monthly payments of $ 1,230 per month. They charge higher interest rates that banks will, of course.



This is a win-win situation. Your buyer can purchase a home instead of renting, and you get a capital gain of perhaps $ 16,000 after expenses, plus good interest. Your total return will often be over 20%!



In our town, the first to make it consistent



tently were a father and son team of counsel. They saved money by doing their own foreclosures when necessary. Once awarded, they raised the price and sold the house again.



They made millions. Did you know that if you can get an average return of 18% on your money, you will become $ 75,000 to more than a million dollars in about fifteen years? That's the power of a good real estate formula.


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