And it only took 9 years, haha.
The first house that my wife & I bought after we got married we paid $126,000. When we bought it it was a $0 down deal, at the time you could get a first mortgage for 80% and a HELOC for 20% to avoid paying any PMI. During the 3 years we lived there I rapidly paid off and closed the $25,000 HELOC.
When we decided to move to a much nicer house, I sold the old one with owner financing to a handyman and his wife for $140,000 with $8,000 down at 8.5% interest. They had decent income but poor credit related to some medical bills. He was supposed to refi in 5 years but I dont think he tried very hard and he was a reliable payer so I just left him be. I netted around $4,700/yr between his contract payment and my underlying mortgage payment. My mortgage was paid down to $80,000 during this period and he still owed me $122,000, which netted me the $42,000.
The return on this deal was 31% if you figure my investment was the $25,000 HELOC minus his $8,000 down payment. The IRR would have been closer to 40% had he paid it off in the 5 years.
I've done much more lucrative real estate deals in the last 9 years, but this wasn't too bad for my first. I could have sold it with a Realtor and probably would have gotten beat up on price, paid commission & closing costs, and probably netted $0 at the end.
The first house that my wife & I bought after we got married we paid $126,000. When we bought it it was a $0 down deal, at the time you could get a first mortgage for 80% and a HELOC for 20% to avoid paying any PMI. During the 3 years we lived there I rapidly paid off and closed the $25,000 HELOC.
When we decided to move to a much nicer house, I sold the old one with owner financing to a handyman and his wife for $140,000 with $8,000 down at 8.5% interest. They had decent income but poor credit related to some medical bills. He was supposed to refi in 5 years but I dont think he tried very hard and he was a reliable payer so I just left him be. I netted around $4,700/yr between his contract payment and my underlying mortgage payment. My mortgage was paid down to $80,000 during this period and he still owed me $122,000, which netted me the $42,000.
The return on this deal was 31% if you figure my investment was the $25,000 HELOC minus his $8,000 down payment. The IRR would have been closer to 40% had he paid it off in the 5 years.
I've done much more lucrative real estate deals in the last 9 years, but this wasn't too bad for my first. I could have sold it with a Realtor and probably would have gotten beat up on price, paid commission & closing costs, and probably netted $0 at the end.
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