Magnify your returns with owner financing

It’s no secret that big banks make money hand over fist. One of their most lucrative revenue streams is the mortgage market. If you’re looking to sell a property, why not become the bank? You can and you should!

Let’s run through a scenario.

You have a house you want to sell. You think the house is worth $100k. You contact an investor who says he can only pay $90k because the house needs repairs and he needs to make a profit. The investor offers you an owner financing deal of $10k down with an interest-only loan of 5% interest over 5 years with a balloon payment at the end. Huh?

This may sound complicated but in reality, you have a chance to become the bank & make serious returns. Here’s what this means for you.

$90k purchase price

$10k down (cash in your pocket at closing).

So you are holding a note for $80k ($90k-$10k down).

5% interest-only means 5% of $80k per year = $4,000 per year in interest you are collecting.

So, over 5 years, you’ll collect $20,000 in interest payments and guess what? The investor now pays you the full amount due on the note ($80k).

Your total return:

$10k down payment received

$20k interest payments received

$80k loan payoff received

= $110k!

 

As you can see, by becoming the bank, even for a short period of time like 5 years, you can earn significantly more than just selling your house for cash today.

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