I am going to show you guys a transaction we are working on right now. This is the 2nd purchase of ours this month, and we should buy around 8-10 this month.
The seller calls and is facing a foreclosure sale date of a week from the day she calls. My main acquisition guy, Tony, goes to the house and verifies that the condition is good. We buy it “subject to” 225k. This means that the loan remains in place and we take title with this lien remaining. We do not assume the loan and our seller is completely aware of the situation.
We market to sell it for 300k with owner financing.
We have a buyer with 40k down….that money goes to us…not bad, and much better than a typical wholesale fee. Never mind that, because a wholesaler couldn’t have done this deal anyway.
At closing we get a note for $260k wrapped around $225k.
Because of the interest rate differences, we get cash flow!
The 260k note 30 year @ 6.5% throws a payment of $1,643.38/mo
My 225k underlying is at 4% fixed….that PI payment is $1,074.19
That means I net 569/month until I get cashed out of my note.
So how many $569 payments per month do you need to live the life you want? 10? 20? If you just did 4/year…you can see how it accumulates.
I look at it as retirement money. Questions? Comment below or Brad@bradsmotherman.com