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.
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.
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.
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