Case Study (real case)
This example is with my old property I had for 15 years and sold it recently. The property with 4 units is located in Bakersfield, CA. I sold this property for $260,000.
Buyer purchased the property with 20% down and paid 2% in closing cost, so buyer invested $57,200. Buyer got a great loan for 5.5% rate for 30 years, the monthly payment is $1,180.
Let’s look at the figures, assuming no vacancies:
| Rents $650×4 | $2,600 |
| Property Taxes | $350 |
| Landlord policy insurance | $150 |
| Property Management company 10% of rents | $260 |
| Water bill | $150 |
| Trash | $75 |
| Gardener and cleaning | $125 |
| Mortgage payment | $1,180 |
| Repairs | $200 |
| Total Monthly Profit | $110 |
What could happen if the buyer purchased a note for the same investment, $57,200?
| Note | $57,200 |
| Interest Rate | 7% |
| Note Term | 360 months |
| Monthly payment | $380.55 |
Let’s compare both investments
| Income Property in Bakersfield | Proposed Note | |
| Yearly Return on Investment (ROI) | 2.31% | 7.98% |
| Dealing with tenants | Yes | No |
| Possible Evictions | Yes | No |
| Repairs | Yes | No |
| Inspections | Yes | No |
| Unplug toilets at 11:00 pm | Yes | NEVER!!!! |
What can you do?
If you are ready to invest in a note please contact us to get you a better investment than an income property. If you already own an investment property we offer a variety of solutions to convert it to your investment a better investment, ask us for our Seller Financing program.
Please call us at 1-877-668-3790
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