Got a small sale today!
1 acre lot in Colorado – all in 3550. Selling for 6,000.
Buyer put 3000 down, and financing rest for 24 months at 6%. 132.96, plus extra for tax/credit card fee.
This means I have 550 of my own money tied up, which I will get back in about 4 months. I will get roughly 3,191.00 back over 2 years in principal/interest on the 550 I have committed, which is about 90% rate of return (based on monthly compounding).
I got lucky because my buyer had a big downpayment. If I had sold the way I thought I was going to have to sell, I would have ‘only’ made about 25% annual rate of return on my money. This is great compared to other investments, but because we can get bigger returns, we have to be careful not to tie our money up and miss the really good deals! Think this is called Lost Opportunity Cost in economics – not sure, didn’t like that class!
Moral of the story – learn your county and stick to your price model!
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