Expert opinion?-Starr/JohnBoy/Trandle/Jim - - Posted by Green
Posted by Green on March 03, 2002 at 18:27:41:
Newbie still reading case studies.
Here is the case- Say I am not a very ppl person(shy kind). I am not good at marketing, negotiating. Say adding to that I a have a great job which keeps me busy not just the weekdays, weekends too. So pretty much I cannot do any of the brilliant ideas the experts suggests for being successful in RE investing.
Here is my problem, I am very interested in RE Investing, and am working my way up for financial freedom. I find myself reading creonline every few minutes I get during my job.
I have good credit.
So here is what I do based on a case study I read from some of the Rich dad books and some RE investing books and some posts on this site.
Appraised value of home: $135000
I buy at same price. ( No 25% less than the appraised value)
Cash Down $10000
Mortgage amount $125000
Closing cost $2500(approx)(Dont know how I came up with this)
Finance(30 yrs) $791.25 per month( based on interest rates these days)
Put an advertisment for Owner financing with no cash down(must have good credit). With “No cash down move in” I assume I hope I would get atleast one buyer.
So Sell it at same price I bought. $135000 @ 11%
Their monthly mortgage- $1286.55
How much i make- 1286.55-791.25= $495.30
Total investment from me 10000+2500(closing)…12500
ROI= (495.3 X 12)/12500= 47%
Well If I get that kind of return, I don’t mind being busy with my job and also do RE . BUT ALL THIS SOUNDS TO BE TOO GOOD TO BE TRUE.
I am sure so many things would be wrong here…like
2) Would I get loan financing for same interest rate that I would get owner ocuppied home loans. I heard loans for investing and non owner occupied property are higher??
3)If I sell the home with owner financing…you guys think 11% in common.
4)taxes. This 495 per month is 5943.6$ a yr. How is this taxed. Same as my income?
5) I am doing aginst the REI priniple preached by experts-“U make profit when u buy”.
a) With no time to invest- How can I get deals 25%(approx) below apprasied price???
b)When people say “we buy houses” and “will pay cash”. Do they actually write a cheque for the seller and later finance it?? or they line up the finance and then pay just some amount from their pocket and rest the chequ from bank???
Any input…?? pardon my ignorance if i am grossly wrong on my theories as I never talked to any experts. All this is based on the reading I have been doing so far.