正文
I have posted several articles b4 for this questions, please do a search to find out details.
here is a brief summary:
whether or not to buy this investment property, should be decided based on （at least to me）
1） profitablity
2） liquidity
3） solvency
4） stress testing results
for example, I bought a property at $50k, I borrowed a 10 year term loan on this property for 100k at the rate of 5.5%, so my monthly mortgage payment is 1085.26, tax+hoa+insurance monthly is 120, so total out-going money on balance sheet is $ 1,205.26
then I sold this property at owner refinance for 100k. My loan to the buyer is 30 years term loan at the rate of 7.9%, the buyer（tenant） has to pay me monthly payment for 726.81 plus the escrow tax+hoa+insurance monthly: 120. so total in-going money on my balance sheet is $ 946.81
so my cashflow on my monthly balance sheet is
-1085.26 - 120 + 726.81 + 120 = - 358.46
See, my cashflow is negative every month! - $358.46, I have to pay from my pocket 358.46 every month.
Is this a good investment? Sure it is according to my expectation, but maybe not for you.
I know some people cannot see just a little bit further than the so called cash flow, because they don\'t have a solid overall liquidity, solvency, credibility and safety. Since this is a negative cashflow, some people cannot handle it.
But for me, it\'s a big profitablity （$50k upfront profit, plus after 10 years, $ 726.81 profit every month for 20 years!
for liquidity, it cashed out $100k at the beginning, what else i need to expect more?
for solvency, I have huge cash in the bank for long term fixed expenses, my overall assets far exceed the liabilities. Besides, my equity accumulated is much faster (3 times faster) than the tenant(buyer)\'s equity on the same property.
Well, this is just my experience, different people have different styles. You\'d better develope your own.
I still remember Miat42\'s strategy is all about cashflow. If you use his stratedy, (according to his repeated requirement:) you have to put more downpayment to make your cash flow positive. This might work for you, but definitely not my style of investment. Because in his cases, the profitablity, liquidity and solvency are not good at all, and also if the market has any flucuations, the stress testing for his investment could fail. I am still wondering his investments he made during 2004-2007.
If using my method, all the risks are transfered to the buyer, and mitigated by difference in the interest rates... in one word, it\'s a quite safe and hedged investment.
here is a brief summary:
whether or not to buy this investment property, should be decided based on （at least to me）
1） profitablity
2） liquidity
3） solvency
4） stress testing results
for example, I bought a property at $50k, I borrowed a 10 year term loan on this property for 100k at the rate of 5.5%, so my monthly mortgage payment is 1085.26, tax+hoa+insurance monthly is 120, so total out-going money on balance sheet is $ 1,205.26
then I sold this property at owner refinance for 100k. My loan to the buyer is 30 years term loan at the rate of 7.9%, the buyer（tenant） has to pay me monthly payment for 726.81 plus the escrow tax+hoa+insurance monthly: 120. so total in-going money on my balance sheet is $ 946.81
so my cashflow on my monthly balance sheet is
-1085.26 - 120 + 726.81 + 120 = - 358.46
See, my cashflow is negative every month! - $358.46, I have to pay from my pocket 358.46 every month.
Is this a good investment? Sure it is according to my expectation, but maybe not for you.
I know some people cannot see just a little bit further than the so called cash flow, because they don\'t have a solid overall liquidity, solvency, credibility and safety. Since this is a negative cashflow, some people cannot handle it.
But for me, it\'s a big profitablity （$50k upfront profit, plus after 10 years, $ 726.81 profit every month for 20 years!
for liquidity, it cashed out $100k at the beginning, what else i need to expect more?
for solvency, I have huge cash in the bank for long term fixed expenses, my overall assets far exceed the liabilities. Besides, my equity accumulated is much faster (3 times faster) than the tenant(buyer)\'s equity on the same property.
Well, this is just my experience, different people have different styles. You\'d better develope your own.
I still remember Miat42\'s strategy is all about cashflow. If you use his stratedy, (according to his repeated requirement:) you have to put more downpayment to make your cash flow positive. This might work for you, but definitely not my style of investment. Because in his cases, the profitablity, liquidity and solvency are not good at all, and also if the market has any flucuations, the stress testing for his investment could fail. I am still wondering his investments he made during 2004-2007.
If using my method, all the risks are transfered to the buyer, and mitigated by difference in the interest rates... in one word, it\'s a quite safe and hedged investment.
如果你還有100K的loan，你還能做owner refinancing麽？
我是新手，正在學習中
多謝
1) how can you make sure that ternant will stay at this property for 30 years?
2) is this procedure legal as it seems to me that you are acting as " a middle man" to lend money to the ternant.
3) Can you elaborate a little bit on how the land contract can be processed?
Thanks in advance.