This is one of many many ways of doing money by lending money. This is a different twist that you should always remember which is acquiring a mortgage.
First rule, we’ll start on the value, 50% on the value is what we need to be, right. Our collateral today is a Manhattan New York Condo worth at least $5,000,000. Its spectacular, 3,000 square feet, great view, just a great property. That’s our collateral, how are we going to make money? We are going to buy a mortgage. We got $2,000,000 mortgages for sale, that’s the current balance, here are the current payments due monthly here is the interest rate, 9.85% interest rate. So you take that times 12, here is the yearly income you can make on the condo.
Now you say, why would a guy sell a $2,000,000 condo? Here is the purchase price, a million dollars. Why would you sell a two million dollar mortgage on a 5 million dollar value mortgage for a million dollars?
Here is the clincher, the owner is not making payments. So he’s not making payments so that’s what he owes a month, so that’s why he’s selling for a million fifty. Now you’re saying why would I buy a mortgage for a million bucks on a guy who’s not paying mortgage? So here’s why. I hope he doesn’t make another payment because if he doesn’t, I’m going to foreclose and I’m gonna own a five million dollar condo. This would be the best thing for me financially, if he does not make that payment I’ll have a five million dollar condo I’m going to foreclose on. I’m gonna take a million dollars and in a year with a 5 million dollar condo I’m gonna make four times more money at least, that’s why I would buy it .
Second of all, I’ve talked to the owner of the condo, I know why he hasn’t made the condo payments, and I know that he has the ability to, so I’ve cut the owner of the condo this deal. When I buy this mortgage for this amount of money, I’ve told him that if he makes this payment for a year, at the end of the year he can pay me off for this dollar amount. This is just the deal I cut with him. I’m just trying to get it in return I’m not trying to get somebody out their house, this way I get my return and he still gets his condo, so if he pays me this, plus this for the year, here is my profit, you can take that profit, divide in what I paid for I get a 32% return, great return right?
Now if he decides that he doesn’t want to do that, but he wants to keep making this payment, then he makes this for 16 more years, so I get $256,000 for 16 more years, if you analyze that out I get a 25% return on a condo of $5,000,000 in a 21% loan value ratio. It’s like all three of these deals I’m happy with.
He doesn’t make payments, it’s good. With this count I get 32% of return, if you mix the payments you get 25% of return for sixteen years.
Keep in mind, if any time a loan I give get pay back I gotta put it back to work. If I can leave it for sixteen years and get 25% of return that’s a grand slam.
If you ever have questions of how to make money on loans feel free to call, I’m happy to tell you about it. It’s a great deal.
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