Since the banks no longer did 100% financing, I knew that if I wanted to keep buying homes and making money that I had to modify my rent-to-own formula.I played around with the numbers, and finally I decided that I would get a 90% LTV putting 10% down.
The next home I bought cost $118,384 with my closing costs of 3% rolled into the loan. I bought and sold the home the same day, putting a 12 month price at $125,000.
Because I had to put 10% down, I had to come up with $11,838. How and the heck was I going to do that?
The renters gave me $5000 of it, plus the first month's rent of $1100. I got paid $3551 in commissions for buying the home. This gave me $9651 right up front. I was only short $2187. I took the money from the other deal and put my 10% down.
Basically, I put down $2187 of my own money, with the potential of $6615 in gain in 12 months, plus the first month's rent of $1100, which is pure profit. Plus $185 per month in positive cash flow times 11 months for a total of $2035. Plus equity build up from paying the loan down of $100 per month times 11 for a total of $1100.
I invested $2187 of my own money to make about $10,850 or a 496.11% return!!!!!
Anyone else getting excited?
I help them get into a home that they couldn't buy. They get to pick it. I basically give them better terms than a hard money lender would, and everyone is happy.
burkebennett@hotmail.com
http://www.seidahohomes.com/
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