Thank you so much for making this course free and so available! Got a question on buying a mobile home with a credit card. 36:00 is where you talk about it. Excatly how do I use a credit card for this type of purchase? Cash advance on my card only allows a small percentage of the total credit limit. Where do I swipe? : ) Thanks

Cash Deal:
PP: $2400
Repairs: $6000
All In: $8400

Assuming Lot rent is $450
Avg. Rent Pmt = ($1100 + $800) / 2 = $950
Note Amount 5 yrs @ 6% = $49,139.28
Cash Flow = $950 - $450 = $500
Down Payment = $4000
COC = ($500 *12) / ($8400 - $4000) = 136%

Fully Financed:
PP: $2400
Repairs: $6000
All In: $8400

Seller Financing
2 Yrs @ 7% of $2400 = $107.45

Assuming Lot rent is $450
Avg. Rent Pmt = ($1100 + $800) / 2 = $950
Note Amount 5 yrs @ 6% = $49,139.28
Down Payment = $4000

2 Yrs CF = $950 - $107.45 - $450 = $392.55
2 Yrs COC = ($392.55 * 12) / ($6000 - $4000) = 235.5%

3 Yrs CF = $950 - $450 = $500
3 Yrs CF = ($500 * 12) / ($6000 - $4000) = 300%

I think this makes sense. The less cash you have in the deal, the higher the COC.

I love seeing this post man - you just a smile on my face from ear to ear.

Appreciate it man! I hope to give back just like you are doing with us one day. Need to get to where you at first.

Cash Offer

PP: $2400
Repairs: $6000
Out of pocket costs: $8400

Average of Houses @ $1100 | Apt @ $800 = $950
Probable rent: $575
Lot fee: $ $375
$575 x 12 = $6900 Annual Profit

Sales Price: $27,062
DP: $2,706 (10% of purchase price)
Term: 60 months
Rate: 10%
PMT: $575

$8400 - $2706 = $5694 (Net Out of Pocket Costs)
$6900/$5694 = 121% CoC

Close, but on a 60 month term, with 24,356 being financed, the monthly payment would be 517.49 at 10%.

Other than that - I am very excited to see others applying the wealth formula

Daniel you were saying to come up with the ARV with the given data in the homework. I dont understand what formula you are using to come up with the ARV.

here is a good video - https://www.youtube.com/watch?v=p0V7qXlB11c

Which video explains the AVR?

Hey Daniel you said your minimum on COC return is 100%. Do you have a specific timeline for that? In other words within 6 months, one year, 5 years or more?

Thats calculated for the first 12 months - I want all my cash back within that time.

ok got it Daniel thank you!!
Also what do you mean by .25 of ARV?
Does that mean your total repairs cannot exceed .25 of ARV?
Not sure why you're comparing the 70% rule with the .25% rule?
I understand when calculating an offer for a SF home using the 70% rule, for EX:
ARV $50,000
REPAIRS $5,000
USING 70% RULE
($50,000 X .7) -$5,000 gives you your MAX offer of $30,000
But.....when you said on your 1st problem in this video:
" I'm all in for $5200, that's less then $6000, so I'm good, not sure why?
Sorry if I'm all over the place, just trying to translate the meaning of ARV x .25?
Thank you

Thank you for your example Keritan!

Question in part 1 of your example:

Average local rents $950

Lot rent $450

Can your buyer afford to pay $950 + $450 = $1400 monthly, if the average local rents are $950?

Should your End Buyers price be based on a $500 monthly payment, as apposed to the full $950 monthly payment?

In that case we're looking at a PV of $25,862.78

Am I missing something?

Thanks

Your total monthly payment for all buyer expenses should be similar to very slightly more than local rents. So if local is 950 you would subtract lot rent for a total monthly payment to you of roughly 500