A Little background information for you on the game:
You are about to bid on a single family home worth $75,000 in today’s market in Anytown, USA after $10,000 in rehab. The property is the perfect investment for the buy and hold investor but could also be sold to an end buyer. There are two ways to purchase the house…..
Behind door #1, you can purchase the house outright for $36,000 cash. You will never have to worry about making another payment on the property aside from the normal taxes, insurance, etc.
Behind door #2, you can purchase the house with seller financing for $50,000 at 6% interest rate paying $299.78 per month in principle and interest until paid in full. (as noted by Sam Perkins in a recent post)
Which door are you going to choose?
Fortunately, I am going to give you the answer – though, it will not be until next week. I want to hear from you! What door you would choose and why?
Before you post your response, I want to give you some additional information about the property. We can assume each month you have to escrow $200 for taxes and insurance and the property will gross $950 a month in rent. Finally, the property is in a growing neighborhood with new businesses moving in and a college expanding enrollment. Homeownership and the rental market are in demand.
Which door will you choose and why?
UPDATE: For our follow up post, please see Pick the Better Investment: Which Door Did you Choose??
Photo Courtesy of: E-Discovery