Money Machine? - Posted by DuaneWV

Posted by Brent_IL on February 12, 2002 at 11:19:03:

An extremely high percentage of the class of all sellers only knows one way to sell. The buyer gets a mortgage, puts 10% or 20% cash down, and pays the seller for equity over the existing mortgage.

The reason the property would sell at $60K is because of the $3,000 down, and no bank qualifying. Buyers that will not, or can not go to a bank have only two major concerns; ?How much do I need to move in?? and ?What are the monthly payments?? The bump-up in selling price is not an issue.

Folks that must sell will listen to any kind of offer that solves their immediate problem.

At an appreciation rate of about 4% annually, the reality is that people who buy at retail with bank financing through a RE agent will take five to ten YEARS to recover the initial costs of buying their house. Those who say they do better are either experiencing a period of rapid appreciation (not indefinitely sustainable), or the have not accounted for all the costs.

Thanks to Jim Pasquini, over at NARS, I can show any seller that, in my marketplace, they will only net 72.9% of FMV if they pursue the traditional route.

Once the incentive for an all cash sale is eliminated, many people will consider some form of seller-financing. The naysayers who state unequivocally that sellers are better off with all cash don’t consider the ultimate destination of the cash. Based on the results of the average equities investor, would the seller be at an advantage with a foray into the stock market? Or, would they be in a better position with an income-producing note, automatically wrapped by the IRS, that they could use for dollar-cost averaging, if they so desired?

When the cash offer is negated, it?s only a matter of terms.

Money Machine? - Posted by DuaneWV

Posted by DuaneWV on February 10, 2002 at 19:36:57:

I would like some advice or opinions on the Money Machine concept used by Wade Cook and John Burley.Their methods are to buy on contract and sell on contract,although Mr. Burley does so by buying VA properties,the basics are the same.Im in an area where owner financed deals are common.I want to be aware of any pitfalls and legal problems that I could expect.Im looking for cashflow .Example,I buy a 50,000 house for 3,000 down,355.00 per month for 20 years.Then I sell for 55 -60k,5,000 down,450.00 - 500.00 per month.I would keep the spread from DP and monthly payment,my buyers would pay the taxes and insurance.Assuming I get the title checked and it`s O.K. what else should I look for?And what if they do owe on the home,can I still do the deal?Do I have to tell the sellers what I intend to do?Any help is greatly appreciated.

Re: Money Machine? - Posted by Randy, OH

Posted by Randy, OH on February 11, 2002 at 17:35:23:

What I do not understand about these creative RE deals the gurus talk about is this: if you can sell the house for $60,000 and $5,000 down, why would the first guy sell it to you for $50,000 and $3,000 down? Why wouldn’t he just go ahead and sell it $60,000 and $5,000 down? Anyone I have ever known that put a house up for sale wanted to get as much as possible for it.