FLIP using PRIVATE MONEY & OWNER FINANCING

[Mitch Stephen]

@James Hiddle
I think we're not on the same page Hiddle.
I don't think buying a house for $50,000 and then selling it for $100,000 is a crappy deal.
Here's an example of a typical deal for me...and I've done this many, many times... over a 1,000 times...using private money and owner financing:

$50,000 acquistion price
I borrow $53,00 from a Private lender @ 8% interest only,5 yrs, none -recourse loan.

My Monthly payment = $353~

$3,000 just went into my LEFT POCKET

I DO NOT FIX UP HOUSES

I owner finace the house for $100,000
5% down.

$5,000 just went into MY RIGHT POCKET

By the way, you don't need an appraisal to owner finance, nor an ispection, nor a credit score. The Seller and the Buyer decide if there is a sale or not.

I finance the $95,000 @10.5% for 30 years

Their payment to me is $869 P&I

The difference between what I owe and what I'm owed = $516/mo.

SUMMERY:
I got paid $8,000 to create a $516/mo positive cash flow.

The new owner begins to repair the house (I took a small down payment because the house needed work...you really couldn't hurt the house much...except to leave it vacant).

When the onwer finished the repairs the house becomes worth more like $120,000

I sell the note for %93,000 cash because the disparity from between the note balance and the owner financed sale price is so great you don't need to take much of a discount. If I sell for $93,000 and I owe $53,000 I will clear $40,000.

I think $40,000 is a long way from crappy.

So...call it a crappy deal..but may I suggest that if you can do this 20 times and you make $160,000 up front and create a cash flow of over %10,000 per month...while you go to work on collecting 20 x $40,000 = $800,000

$10,000/mo gives you cash flow as if you had $1,000,000 in the bank at 12% annual interest. And what active RE investor worth his salt can't earn 12%?

In short...it makes you a millionaire on paper. In fact, your $160,000 collected in down payments + 1 year of collecting payments ($120,000 annual income) added to what you can sell your notes for ($800,000) make you worth right around $1,000,000

I like it!

NOTE TO SELF: How much of my money do I have to have to do these deals? ...ZERO!
So the rate of return is as good as it gets.

Now, not every deal you do has $50,000 srpead. I only used this example $50K$100K because you thought it was "Crappy Deal." I did very well when my deals only averaged $20,000 to $35,000
Spreads.

--Mitch Stephen--

--Mitch Stephen--

[J Scott]

As I mentioned in your other thread with the same topic, in my state this would be absolutely illegal unless I did very few deals and I titled them all in my name. SAFE ACT legislation restricts seller financing from a business entities and doing more than a couple deals per year.

I'm under the impression it's illegal in many states these days. So, anyone considering this should contact their local department of banking and finance (or whomever is the governing body in their state).