Buy Sell Function In The Present Spike Market
As we are all aware, we are in the midst of a Spike Market, wherein the price of properties have zoomed way past any appearance of normality and indeed the price of single family homes has gone way out of the reach of the normal wage earner. This creates a large social probem as many can no longer aspire to ownership of their home. This creates Social Unrest and leads to disruptions in the total Social System. Remove the great American dream of home ownership and beware of what follows next.
This situation has occured several times in history and is not entirely new to our dear country the United States of America.
It will be cured by the introduction of an advanced housing revolution which is forming as we write. But ignoring that what can we the Real Estate Investors do to adjust to these prices? We cannot just sit on our hands and wait for changes. We must meet the challange of these prices and I propose some methods by which you can continue to buy and accumulate properties without paying the large requested prices.
A small house owned by an elderly man is offered for sale out here in the wilds of California. The price is $410,000. The true value of the house even on a run a way market as of today might reach $340,000 and that would probably be above the reach of 9/10th's of the inhabitants of the area.
You meet the price and make a normal offer with a ten thousand dollar down payment. This leaves a balance of $400,000. Your offer recites that the Owner shall take back a PMTD in the amount of $400,000 and that monthly payments shall be made on this obligation for a period of 30 years. No interest shall be charged and each payment made will be credited toward the then unpaid balance of the note.
The note is for $400,000 divided by 360 the monthly payment is: $1,111.11 a month. Can you make this payment? Can you rent out the house for more? Let us say $1,400 a month. That gives you the sum of $400 a month to pay any other expenses..
To examine the true price you have paid for this house let us add in an interest rate of 6.2% which seems to be the standard these days. 6.2% interest, Monthly payment $1,111.11 for 30 years
The true price of the house is: $181,414.90. Plus the downpayment of $10,000 a total of: $191,414.90. Not bad. You can of course offer even more but I leave that up to you top negotiators.
Of course the trick of this is to find a motivated Seller, enthused with greed and usualy egged on by a Real Estate Broker like myself, keen on making a buck. The high price of the Spike pushes him and interesting enough. If he should need money, why I will be happy to take him into a bank and make a collatteral loan. I will even cosign on the loan with the assignment of a
reversionary interest on any default.
Now tell me is not that fun? I do not want to clutter your minds up with two many of these little jabs at the economic situation. There are more. Give me your responses to this one and we shall proceed on with "The Great Game." Mygod Call me Kim, back to the days of the Great Raj.
Cheers Lucius 8-) 8-)
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