What Kind Of Earning Potential Is Possible In Sub2?
Hello - I'm fairly new to this type of investing, but seriously thinking of taking the plunge.
Just curious - what type of eanring potential is there for those that make this their full time "job"?
What are your experiences about doing Sub2 full time so far?
Any feedback is greatly appreciated.
Spend a few hours reading the forums, the answers are there, and it's more honest info than you'll get from a TV "guru.". Same answer goes for your nearly identical post in L/O forum.
it all depends on the individual. how agressive, motivated, are you a 24/7 kinda person, how well you nego., your ability to find motivated sellers the list goes on and on. sub2 to like many types of rei has the potential to make as much as you are willing to put into it..........km
I would say on average you would make anywhere from 25k-40k per completed deal. You have three profit centers: frontend, monthly pack, and backend. For example, if I purchased a house sub2 for 1k and the numbers look like this:
Mortgage Balance: 80k
FMV: 95k
PITI: $625
Appreciation Rate 5%
Sell Bond for Deed:
6k DP
PITI $850
2 year Balloon at Sale Price of $104500
Profit Centers:
FrontEnd $4500
(6k DP - ( 1k DP + $500 mrktng expense)
Pack $5400
($225 x 24 mos.)
BackEnd $18500
(CFD Pyff $98200 - Original sellers bal $79700)
TotalProfit= $28400
This is just an example of a deal I did, and its easy to see that every deal will be different. So as far as your profit potential goes, the question is how many deals can you do per week, month, quarter, year, next five years, over your lifetime? Even if you did 1 deal a month you would make a lot of money. Its all under your control.
neutral
new orleans
I like taking a property Sub To for rehab and then putting my buyer right into it. NO seasoning issues
Randall
[addsig]
I have a question about the sales price in your last formula. Do people really pay that much of a higher sales price on a contract sale? Secondly, is a 5 or a 10% down payment more common. I am doing a deal tomorrow. Here it is:
Mortgages: $99,000 payoff
Costs: $3k back payments & $2k moving
FMV: $115k - $120k
2 Year Balloon at Price of $125k??
Profit Centers:
5% DP of $6250
Contract mtg payment of $1005
$6250 - $5000(costs)
$1250 up front profit.
Pack
Around $250/month
$6000
Backend:
$118,750 - $99,000
$19,750 backend.
Sound about right? My only two concerns are ability of people to pay the DP and the inflated sales price. Do you all commonly inflate the sales price with appreciation similar to a Lease Option?
Quote:
On 2004-09-03 23:00, Ruman wrote:
Sound about right? My only two concerns are ability of people to pay the DP and the inflated sales price. Do you all commonly inflate the sales price with appreciation similar to a Lease Option?
You're taking into account that the home will appreciate within the 2 years you will be providing financing for your buyer/s. This justifies your 10-12% increase in purchase price.
If you're dealing with CFD most of the time your focus is serving clients who have sub-par credit or don't want to jump through the conventional lending hoops. All they really care about is how much they have to come up with as a down and how much the monthly payments will be. The total purchase price is something they really don't worry about.