Real Es­tate 101: Trucks and trail­ers

Calhoun Times - - BUSINESS NEWS -

They owned their prop­erty free and clear. What if, in­stead of sell­ing out­right for cash, they had been will­ing sell it with owner fi­nanc­ing? What if they found some­one who had $ 5,000 to put down on the prop­erty and could pay $550 a month for the next 30 years?

With a sales price of $ 85,000, when you put those num­bers into the fi­nan­cial cal­cu­la­tor, mort­gage rate comes out to 7.33 per­cent. ( Note: re­mem­ber to take the down pay­ment away for the pur­chase price be­fore you en­ter it into the PV but­ton on your cal­cu­la­tor.)

In­stead of pay­ing an out- of- pocket $ 550 a month for this new truck they needed, they would have a per­form­ing as­set that would have bought the truck for them. In ad­di­tion, that as­set would pay them $ 550 a month for an­other 25 years after the truck was paid off. That’s an ad­di­tional $ 165,000 of in­come. Or they could’ve used the $ 5,000 to rent a truck un­til their other ve­hi­cle was fixed and pock­eted $550 a month for the next 30 years. That’s $ 198,000. Not too shabby.

Now, this is some­thing that’s cool. Since they had lived in the house two out of the last five years, they could’ve taken ad­van­tage of Sec­tion 121 of the IRS tax code, which says that any gain on the sale of a per­sonal prop­erty is tax- free up to $ 250,000 for a sin­gle per­son or $ 500,000 for a mar­ried cou­ple.

That means all of that $ 165,000, plus the five years for the truck, would have been tax free!

And that’s a strat­egy you should re­ally con­sider when sell­ing your per­sonal house.

Now, you may find your­self ask­ing, “Can you re­ally sale a trailer on land for that?” The an­swer is “yes.” Prop­erty val­ues are up right now and a dou­blewide on a per­ma­nent foun­da­tion can be sold with an FHA mort­gage for a sim­i­lar value.

But if your house isn’t on a foun­da­tion, you’re go­ing to have to ei­ther take a much lower price for cash or owner fi­nance it so your buyer can get a mort­gage. Here’s what you do: Of­fer the house as a rent- to- own home and sell your ten­ants an op­tion to pur­chase the house for the same price as one with a foun­da­tion. They will pay you about $ 5,000 in non- re­fund­able op­tion con­sid­er­a­tion. Rent the house to them for a year. And if they make all their rental pay­ments on time, sell them the house with owner fi­nanc­ing.

If you were able to do all that, this lit­tle deal would have a re­turn on in­vest­ment of 24.43 per­cent. And that doesn’t ac­count for the in­come you would re­ceive for the first year that it’s a rental. ( Which brings the re­turn closer to 32 per­cent)

I’ve said it be­fore and I’ll say it again, dol­lar for dol­lar, mo­bile homes are one of the best in­vest­ments in real es­tate to­day.

Joe and Ash­ley English buy houses and mo­bile homes in North­west Ge­or­gia. For more in­for­ma­tion or to ask a ques­tion, go to www. cash­flowwith­joe. com or call Joe at 678986- 6813.

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