Have You Ever Wondered How You Can Maximize Your Profits from the Properties You Sell for All Cash?

Happy Prosperous New Year 2016 to You All!

I continually talk to my students about maximizing their profits on every deal they do so this month I am going to explain to you how you can do just that, get more money from the deals you do. This is a simple strategy every investor can easily accomplish once they have an understanding how to make it happen.

I’m Not Talking About Doing Any Extra Work to the Properties You Sell

I’m Talking About a Way to Get More Price for the Houses You Are Selling.

High consumer debt with high interest rates can greatly affect how big of a loan buyers can qualify for to buy a home for their family. A buyer who is trying to buy your properties can be greatly handicapped simply because they have high consumer debts they are paying every month which greatly limits how much of a loan they can qualify for.

What if you could help your buyer eliminate a portion of their consumer debt to change their debt-to-income ratio considerably? You could instruct your buyers to pay off one of their high interest consumer debts such as, (a credit card) that has a current balance of $3,000 as an example that has a monthly payment of $60.00. How would that help them qualify for a bigger loan you ask? First comes the question, how can they pay off that debt all at once with their limited income?  What if you bought something from your Buyers? If you were to buy something from your buyers (an old car, a boat, a barbeque grill) for $3,000, it would give them money to pay off that one high interest $3,000.00 debt. Now let me show you how you can get more price for your property and maximize your profits by buying something from your potential buyer. 

After the high interest debt has been paid off your buyer no longer has to pay out $60.00 every month. That money is then available to pay for other things such as your house without costing them one more penny than they were currently paying out each month. Here is an example of how to get a higher price for your house….. You find out your buyer can only qualify for a 4% institutional loan based on their current income and debts for $100,000.00 over 30 years. Because the buyer no longer has to pay out the $60.00 each month will greatly change what they can pay for your house provided an appraisal shows getting a higher price is possible.

If your buyer can qualify for a $100,000.00 loan for 30 years at 4% interest their monthly payment will be $477.42, principle and interest. At $477.42, for every $1,000.00 in increased price it will cost them an additional $4.77 each and every month for the term of the loan. Let’s turn those numbers around to show you how to increase what the buyer can pay for your house simply because they no longer have to pay out the $60.00 every month for another debt.

The extra $60.00 they now have if divided by $4.77 (which is the payment of $1,000.00 over 30 years at 4% interest) would look like this, ($60.00 divided by $4.77 = 12.6 more $1,000 increments or an additional $12,600 the buyer can qualify for). That would be over a 12 1/2% increase in price your buyers can pay. At the increased price of $112,600 their monthly payment of 4% for 30 years would increase to $537.57. This would be an increase of $60.15 per month almost exactly what they were paying for the high interest rate credit card they no longer are paying.

Let’s recap, you paid the Buyer $3,000.00 for something they had you supposedly wanted and by doing so you were able to increase the price you can ask for your property $12,600 for that buyer. Here is what those numbers tell you, ($12,600 increase in price for the cost of $3,000 to buy something from your buyers leaves $9,600 net increased profit for you). That looks to me like over a 300% return on your investment of $3,000.00. Even if you bought something from your buyer you didn’t really want. I will gladly pay $3,000.00 every day to get back $9,600 in profit. This is that little secret some seasoned investors use to maximize their profits from the houses they sell.

This strategy isn’t really complicated and if you can get your mind around the concept of helping your buyer find money to pay off consumer debts thereby reducing their monthly expenses, it will allow them to qualify for a larger loan can mean more money for you.

Until next month, Happy New Year and Happy Investing.

Larry