Hi all. I have a lot that I have been offering for a cash sale but I need to start offering financing. What is a reasonable down payment and monthly payments for a parcel with a market value of 15K. I want to get my money back as soon as possible but also want to stay competitive. Any advice is greatly appreciated. Thank you
You should check out the loan calculator on REtipster.
You can plug in any three variables and then calculate the missing one.
For example, if you know the loan amount is going to be $12,000 (say, if you require a 20% or $3,000 down payment), and if you want to get all your money back in 12 months, while charging 10% interest, it show you that the payment will be 1,054.99.
On the contrary, if you want to be sure the monthly payment is $500, but you don’t care how long it takes to pay it off, you can leave the # of months field blank, and when you calculate it, it’ll show you 27 months.
Make sense? Give it a try!
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I usually try to recapture the cost of the property in the down payment, or as close to that as I can get. Otherwise, you may start running into cash flow problems.
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That depends on what your exits are. We just talkeda bout this on our Real Estate Notes Show. If you are looking to hold the note or sell it matters a lot. We recommend creating 2 notes and selling the 1st.
Thank you Seth!
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Thank you Ted. It makes sense and I want to do that but in the market I’m in people are used to low down payments.
That sounds like a good strategy. Have you ever had pushback from buyers about signing two notes?
There can be some pushback. We actually have 14 points that make a note valuable, as we are primarily note buyers. All this is on our JKP Website
Hi Seth. I tried the calculator but doesn’t seem to be working. I tried entering loan amount, monthly payment, and #months. I also tried having the interest rate as the unknown variable. I doesn’t give me anything.
@cia are you clicking the blue button on the right of the empty field? It won’t calculate until you do that. I just tried it myself and it worked okay for me… but if you still don’t see it working, let me know (could be something strange with your or my browser).
The calculator is working for me too. Nice tool!
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