A Real Estate Formula

By: Steve Gillman 
                          It was a simple 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 at 5% down and payments of 1% of the purchase price. Maybe a three bedroom house for $ 90,000, for example, with $ 4,500 and $ 900 payments per month.

When a friend started doing the same thing, he explained the process for me. It was a way to get an excellent return on capital, and it was the opposite of buying with no down payment. There are no funds at all when you buy, because you are buying money.

The formula Estate Real Simple

You probably know that when you buy silver, you can often get a much better price. In the absence of risk financing for the bid and the promise of a faster closing, sellers are willing to sell for less. You can offer $ 95,000, for example, a house that could be worth $ 108,000. If you can not get it for less than, say, $ 99,000, you walk away - there are always other possibilities.

Once you buy the house, you put few thousand into high performance repair and improvements. This may include painting, carpeting, and maybe asphalt for a driveway of land. For our example, we'll tell you spend $ 5,000. Suppose the house is worth $ 116,000 now. You're ready for the next important step in this real estate formula.

You put up for sale, for buyers who can not easily obtain financing. You provide the financing. Because you're making it easy for the buyer, you can get more value for the $ 116,000 house - and do so without paying a commission to a realtor. Say you sell it for 123,000. The buyer needs a down payment of only 5%, or $ 6,150, and makes monthly payments of $ 1,230 per month. You charge higher interest rates that go into the banks, of course.

This is a win-win situation. Your buyer is able to buy a house instead of renting, and you get a capital gain of $ 16 000 perhaps after expenses, plus interest well. Your total rate of return will often be over 20%!

In our city, the first to do always been a father and son lawyers. They saved money by doing their own entries when necessary. Once captured, they raised the price and sold the house all over again.

They made millions. Did you know that if you can get an average yield of 18% on your money, you turn $ 75,000 into more than one million dollars in fifteen years? It is the power of a formula property.