As an article I wrote a couple weeks ago about a potential seller financing opportunity in which I have gotten a tremendous amount of negative comments from, today I have actually gotten an offer close to what I have been looking for. As a result, I would like to further elaborate the math on this deal:
Just a quick recap in case no one read the earlier article, I had purchased a 2 bedroom 2 bed condo in Las Vegas cash for about $65,000 net costs. I am looking to flip the property in a seller financed deal selling for a premium price. In this case, I am looking for a neighborhood of $90,000 with the buyer paying 50% down and I’d carry a 8% loan 30 year amortization with a 3-5 year call. Seems like a lot of people are saying in my previous article that I was crazy to expect a price like that or people would be crazy to buy. But hey, what do you know, I’ve gotten an offer today.
The Offer on my Condo…
A buyer today offered to put down $28,000 instead but is willing to repay the principal of the loan in installments of 5 years at 8%. Meaning at the end of every year he would pay me back a fifth of $62,000 (or $12,400) for each of the 5 years. Would this be a good sale for me? Or should I keep renting the condo until real estate prices go back up to a crazy level again?
It was really a gut decision until I put the numbers together.
So let’s crunch some numbers again.
First, let’s run my returns if I keep the condo rented:
Assuming I don’t sell the property, it runs me at about 7.5% return so far.
But what if I sell it to …read more