Hi Everyone
Can some one help me out with the figures on a vendor finance deal, i want to work out what the purchaser will have to pay weekly to me.
My loan – $261000
Repayments – $441wk
interest rate – 7.7%Selling – $340000
deposit – 5% ??when i work it out how i think it should go it comes out at around $800 per week, is this correct?
Any help would be great.
Thank
SeanYour figures don’t make sense to me.
How much are you selling the house for? How much financing are you carrying back? What percentage are you charging? How quickly does the loan need to be paid off?
If I can get these figures then I can help you
Ryan McLean
CashFlowInvestor.comRyan McLean | On Property
http://onproperty.com.au
Email MeMy loan on the property is – $272000
My Repayments to the bank – $441wk
interest rate – 7.7%pa
Loan term 30yearsI am selling to my current tenants for – $340000 less 10% deposit so $306,000 would be what i am loaning them.
Not sure what percentage to charge, i think 1.5 – 2% above what im paying?
The more time they have to pay back the loan the less there payments will be, so i guess 30years, i m not to sure?
I havent done anything yet, im just looking for options, and they are interested but want to know what it will cost.
Thanks
SeanSo if you use their 10% deposit to pay off your loan you will be left with
$238,000 debt
At 7.7% that is $18,326/yr in interestIf they assume a $306,000 loan at 8.7% that is $26,622/year
If you did interest only on both loans you could earn around $8,000/year
Looking at 30 yr loan
Your repayments – $441/week
Their repayments – $552/week
You could be making $111/week or more if you used the 10% to pay off your loan
Why not look at reducing your interest rate. I know you can get bank west interest rate loans in the early 6%. You would then be paying less on your interest, and charging them the same, thus making more money.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeThanks Ryan
Very helpful
my property is in NZ, its on a fixed term for another 12 – 18 months. so i guess at that stage we would get more icome.
one question, can you break down your calculation for working out the weekly payments to $552, i understand interest pa and dividing that by 52 gives your weekly payment, but when i try and work out the principal over 30years divided by 52 its to much, where am i going wrong?
Cheers
SeanThe calculation for working that out is extremely complicated. because every time you pay off the principle, your loan amount changes and therefore pay a different amount of principle off the next week.
I used a loan application on my iPhone, I am sure you can find one online easily enough.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just A Click AwayRyan McLean | On Property
http://onproperty.com.au
Email Methanks ryan
Hi guys
I've done a couple (of dozen) of these, and I work them out a little differently.
I start by working out what the property is costing me per week, and then come up with an amount per week above that I think is reasonable. I then work out all my figures around that in reverse.
eg, I have a property worth, say, $250K on the open market, with $225K debt on it. I'm paying 6.5% interest only – $281.47 per week.
Now, I generally want at least $100 per week cash flow, so I stuck $398 per week on this one, just to keep it under the $400 per week. This was before I had even decided for sure what the total price was, or what the deposit was going to be.
I then decided on a price of $280K, the buyer gave us $5000 deposit, and we worked out the interest rate with $275K as the loan balance.
Could I have gotten more cash flow by adding 2% per annum to my base rate and going from there? Maybe, but then who's going to pay $550 per week to live in a $250K house?? Probably someone, but not as many people who will pay $400.
Normally, there is no right (or wrong) answer for these things. However, if you've got someone who is interested, then the right answer is probably a negotiation with them. Just make sure you understand your figures a bit better than your originaly post before you get to that negotiation.
Have fun!
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