Posted by Bud Branstetter on September 10, 2001 at 21:14:16:
Let us say you buy one of those el cheapos for 20K. If you owner financed it at 30K at 12% 30 year your payment would be 308/mo. This equates to better than an 18% return. Instead, ask for a 500/mo payment at 12% and shorten the time. It would normally pay off in about 92 months. But on your original 20K investment the return is a little over 25%.
This is a good way to invest cash for good returns. If they fix up the house and refi to a lower rate your return goes up even more. Many people in the trades will do these types because they can do the labor themselves. They can get surplus materials. You, in turn, pay retail labor rates plus contractor profits. As soon as the place is fixed up then you could get an appraisal and sell your note. I haven’t had you yet. I have a number setting in the IRA returning 35% on the original capital.