Posted by Craig on April 26, 1999 at 12:12:08:
I think you might also take into account the price of the homes. A half million dollar home will take some time to market no matter if it’s seller financed or not. I do these deals with median priced homes in my area and it takes an average of about 60 days to have it resold and closed. It would probably take 6 months for a home worth $500,000. Plus your talking about a $50,000 down payment. That’s a heck of alot of cash to come up with. Even people with good enough incomes to pay for the loan can’t come up with that kind of cash to put down. In reality unless you can buy any home for no more than 82% of Appraised Value the deal will not work, and even with that number you will have to negotiate with the seller and buyer to handle some closing costs or your up front profit will be eaten away by them. To summarize, the guy that pitched this idea to you did not explain the smaller details of these deals and it would be in your interest to find out if he’s done any deals himself with the numbers he has given you and ask him for documented proof before landing yourself in a contract to buy a $500,000 home with no escape except non performance on your end.