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Puzzlement solved...

Posted by Ward-CA- on January 26, 2004 at 8:46 PM

In Reply to: Ward, I'm puzzled... posted by Elsa-CA on January 25, 2004 at 1:00 PM

: In a post a few days ago you stated that you're content while "making $20k-$30k" a month until this market cools down. Does that mean you only pursue deals with at least $80k equity or more? Assuming a 50/50 split, you suggest it takes about $20k to invest in a typical deal. It would take $80k + to reach those target profits, no? Please explain. Thanks.

=======================

Elsa,

Sorry, almost forgot to get back to this one.

No, it wouldn’t take $80K cash out of pocket. As shown hereinbelow, it would take about $23K in cash and the rest postponed until the close of our re-sale. And the net equity in this deal turned out to be just $50K.

Hopefully this example will make things clearer to you:


$300,000 - Fair Market Value of Property

-8,000 for reinstate of back payments (cash now)

-10,000 in fix-up expenses (cash now)

-24,000 for re-sales commission (6%) and 2% for transactional expenses
(postpone and pay out of re-sale escrow)

-3,000 for delinquent property taxes (postpone ‘til close of re-sale escrow)

-205,000 balance 1st & 2nd after reinstatement (paid out of re-sale escrow)
-----------------
$50,000 Net equity (to be split 50/50)

-25,000 to Ward (paid out of re-sale escrow)

-5,000 initial payment to sellers (cash now)

-20,000 to Sellers (paid out of re-sale escrow)


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