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Learn some tips on buying smart
Check out the following scenario
Say you find a house between 150K and 200K that needs
some cosmetic work - nothing serious. If you have good credit, it is pretty easy
to get a loan for 90% of the property value. To do so, you would have to put up
approximately 15K-20K.
I could show you many examples of properties where the purchase price was in this range
and with some paint, a little landscaping and some nice presentation, the property sold for
10-20% higher within 1 year. Actually a number have sold for more than that, but I am trying
to keep this real and conservative.
If you put down 15K, then put 2K into it - you actually have control of a 150K investment
for only 17K. Say you hold it for 1 year, hire a realtor and sell the property for 185K.
Let's take a look at the figures.
Don't let me leave out closing costs. They normally run around 3-4% depending on the amount mortgaged.
You can often have them added to the purchase price and borrow a little extra - which reduces
your out of pocket expenses. Or, if you're really good - you might get the seller to
pay those costs - or possibly help you with some of them.
| Property Cost + closing cost | $155,000.00 |
| Down Payment | $15,500.00 |
| Improvements | $2,000.00 |
| Total out of pocket | $17,500.00 |
| Re-Sale price | $189,000.00 |
| Closing costs | $4,000.00 |
| Commission to agent | $10,000.00 |
| Your mortgage payoff (155,000*90%) | $139,500.00 |
| Cash to you at closing | $35,500.00 |
| Profit on 17K investment | $18,500.00 |
| Percent profit on 17K | 109% |
I hope these figures make sense. I can show you many succesful examples of this scenario in action!
In the above, you would have to rent the property for a year to cover the mortgage. But there
is nothing to say you have to hold it for a year.
And, there are different mortgage options that have incredibly low payments. You have probably
heard of some of them. They have various names, but what they have in common is low payments in the
early stages of the loan. If you plan to sell in less than 3 years, such an investment strategy may
be perfect for you.
All of our advice is not focused on quick turnarounds. Whether you plan to sell fast or are in it
for the long haul, the following article will definitely be of benefit.
Please tell us a little about yourself. I will immediately send you the article entitled
Be A Smart Educated HomeBuyer!
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