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Owner Financing Real Estate Explained! Case Study: How we Owner Financed an Out of State Property

8/8/2020

1 Comment

 
Today we are going to discuss how to maximize your profit on a property. If you are like a lot of real estate investors out there and don't have a lot of deal flow currently, you need to maximize what you can on each property.  

I am going to discuss how to maximize your profits using seller (owner) financing as opposed to just doing a regular old straight cash wholesale deal.  Let's review and break down a property in Texas that we purchased.  It is a double-wide property on 5 acres.

We purchased for $40,000 and could resell it (wholesale) for $55,000. A real estate investor is either going to keep it as a rental or do a Fix and Flip with the property.  After closing costs our net profit would be $12,500. 
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However we want to maximize our profits and on this property and what we decide to do is sell this with owner financing. Texas is a great state to sell houses with owner financing.  Texas is a great state to just be a landlord or a mortgage holder. 

We sold for $89,000.  We collected $9,000 down which creates a note for $81,000. We will hold this note for a couple of months (collect the monthly payments). It's $600 for principal and interest each month.  We collect an extra $1,200 in monthly payments. Then we are selling the note at 80% of the value, which is $64,800.
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You add $64,800, plus the $1,200, plus the down payment of $9,000, and the total is $65,000.  Now a realtor brought us a buyer so we have some commissions to pay plus closing costs.   That will decrease our total number to $70,000.   

That puts our net profit at $30,000.  Which is 2.4 times higher than it we wholesaled the property for a cash offer. 

Instead of making $12,500, we are making $30,000 net profit.   

If you don't have a big deal flow currently and you want to maximize profits, this is an out of the box way of maximizing profits. This is definitely a great method to utilize to increase your profits on each deal.  I'd much rather have $30,000 vs. $12,500.  Hopefully this is something you can utilize in your business.   

For more information on this visit https://youtu.be/FGoLwJDu2Zw
1 Comment
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12/16/2022 07:47:20 pm

Greaat post thankyou

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    Paul & Michael

    We buy and sell real estate virtually all over the United States! 

    We will cover virtual wholesaling, virtual rentals (out of state), renovation projects, owner financing, private lending, and more. 

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