Just got the signed contract/downpayment in the mail for my first terms deal. This is breakdown:
Total all in cost on property (1.15 acre, great Colorado views/area): 1450.00
Sold for 9,995.00, 1,500.00 down
Financed balance of 8495.00 at 12%, or 127 per month for 9 years and 2 months
If he takes full term to pay off loan, I will have received 1500.00 down, plus 127 * 110 months (13,970) for a total of 15,470.00
This is about 116% compounded annual interest (used Excel PMT function to calculate).
Buyer gets bonuses each year, so he will probably pay off early. This would lower total amount of money received, but will bring my rate of return up.
Another way to look at it: I have recovered all upfront cost with downpayment, so basically this property is giving me free and clear around 1525.00 a year for up to 9 years!
Keep at it everyone – this stuff can really happen if you take time to buy right.
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