help me understand this success story.. - Posted by mikeW

Posted by John Smith, IV on September 17, 2003 at 12:12:35:

The back (late) payments disappeared when he bought the underlying mortgage and the property owner gave him the deed in lieu of forclosure.

help me understand this success story… - Posted by mikeW

Posted by mikeW on September 16, 2003 at 17:39:33:

Obligatory disclaimer: I am a newbie =]

So I read the ‘getting started’ guide in the Money Making section and the first thing it said to do was read the success stories. OK THEN.

This looks like a great story. Minimal effort on this guys part, he makes $18k and has a renter.

The part I dont understand is actually a fairly large part of the equation here. What has happened to all the money due from late payments? Also, he says he bought the note for $17.5k, and it is worth $23k. My math doesnt add up!

HELP :slight_smile:

Re: help me understand this success story… - Posted by Jim FL

Posted by Jim FL on September 17, 2003 at 01:16:23:

Mike,
I think it breaks down like this.
Bought the house, and then refied it for:
$37.8K

  • the cost of buying the note:
    $17.5K plus fees to close: $2k, total $19.5k

So, $37.8 - $19.5k = $18,300
So, maybe he used the $300 to advertise, or some other cost, who knows.
or he just rounded to $18k.

Makes sense to me.
Sure, his “profit” is barrowed money, but really, he spent $19.5, and got back a little over $18k right away.
Not a bad way to buy a property, that cash flows some, and still has equity.
Plus he has the $18k on hand to use elsewhere and make more.

Make sense now?

Take care,
Jim FL