Credit Partner

[Wai Fung]

So I'm working with a broker and it is a 50/50 split. The broker finds a buyer who can't qualify with their credit with enough cash for a down payment and I come in with my credit. The buyer pays a premium of 20% over the current market price for the property.

Here are the numbers:

Buyer found a home for sale that we can buy for $120,000.
I put down 10% (Home path)

In this case buyer puts down 15% down payment instead of a 20% down payment for these Home path homes.

In this case the buyer has a 10% down payment but has agreed to pay the additional 5% down over 24 months.

So the numbers work like this:
We buy for $120,000; our required down payment = $12,000

Buyer buyers from us for $144,000 ($120,000 + 20%)

Buyer down payment = $14,400.

Buyer will pay additional $7,200 over 24 months to accumulate the 15% down payment (and bolster the security of our position)

Our principal and interest payment based on 4% interest rate: $516

Buyer's principal and interest payment on $122,400 @ 7.99% = $897

Buyer's second mtg payment to pay additional 5% down payment for first 24 months: $325

So our net cash-flow for first 24 months = $706

After 24 months = $381 per month

Gross profit based on 5 year hold = $24,000 from mark up and $23,000 from cash-flow = $47,000 profit

What do you guys think?