A Real Estate Formula

It was a simple real estate formula. The ads ran in our small-town newspaper for years before I realized exactly what was going on. They were always the same: A house for sale with 5% down and payments of 1% of the purchase price. Maybe a three bedroom home for $90,000, for example, with $4,500 down and $900 per month payments.

When a friend started doing the same thing he explained the process to me. It was a way to get a great return on capital, and it was the opposite of buying with no money down. There is no down payment at all when you buy, because you buy for cash.

The Simple Real Estate Formula

You probably know that when you buy for cash, you can often get a much better price. With no financing contingencies in the offer, and the promise of a faster closing, sellers are willing to sell for less. You can offer $95,000, for example, on a house that might be worth $108,000. If you can't get it for less than, say, $99,000, you walk away - there are always other opportunities.

Once you buy the house, you put few thousand into high-return repairs and improvements. These might include paint, carpet, and maybe asphalt for a dirt driveway. For our example, we'll say you spend $5,000. Let's suppose the house is worth $116,000 now. You're ready for the next important step in this real estate formula.

You put it up for sale, targeting buyers who can't get financing easily. You provide the financing. Because you are making it easy for the buyer, you can get more than the $116,000 value for the home - and do it without paying a realtor's commission. Let's say you sell it for 123,000. The buyer needs a down payment of just 5%, or $6,150, and makes monthly payments of $1230 per month. You charge higher interest than the going rates at the banks, of course.

This is a win-win situation. Your buyer is able to buy a home instead of renting, and you get a capital gain of perhaps $16,000 after expenses, plus good interest. Your total rate of return will often be over 20%!

In our town, the first to do this consistently were a father and son team of lawyers. They saved money by doing their own foreclosures when necessary. Once they foreclosed, they raised the price and sold the home all over again.

They made millions. Did you know that if you can get an average return of 18% on your money, you'll turn $75,000 into more than one million dollars in about fifteen years? That's the power of a good real estate formula.

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Ktguzwfx@bellsouth

FA Cup Third Round - Oppose Premiership Teams Away

The so-called "gulf" between teams from Premiership and those striving to join the elite from the Championship is often noted, especially when teams from their respective divisions clash in Cup competitions.

However, this "gulf" may be nothing more than a fallacy. When the third round of the FA Cup comes around, Championship teams rewarded with a home tie against Premiership opposition often make a mockery of their respective league positions.

Clashes of this nature have not occurred very often during the third round in recent years, although last season, eight matches fell into this category, with the "superior" Premiership teams winning just twice.

Preston @ 2.47 vs West Brom @ 2.56. Result: 0-2
Sunderland @ 2.20 vs Crystal Palace @ 2.86. Result: 2-1
Watford @ 3.11 vs Fulham @ 2.08. Result: 1-1
West Ham @ 2.32 vs Norwich @ 2.72. Result: 1-0
Sheff Utd @ 3.07 vs Aston Villa @ 2.12 Result: 3-1
Cardiff @ 3.45 vs Blackburn @ 1.95. Result: 1-1
Ipswich @ 2.48 vs Bolton @ 2.56. Result: 1-3
Burnley @ 5.69 vs Liverpool @ 1.53. Result: 1-0

If you had backed the home teams at level stakes of 10 you would have made a profit of 52.80. If you had used a betting exchange and laid the Premiership sides with a liability of 10 on each bet, you would have made a profit of 68.76 before commission costs as the draw results would have also resulted in winning bets.

The 2003/04 season produced only two eligible matches in the third round, both of which saw the Premiership sides fail to beat their lower division opposition at the first time of asking.

Watford @ 7.02 vs Chelsea @ 1.40. Result: 2-2
Gillingham @ 3.69 vs Charlton @ 1.86. Result: 3-2

If you had backed the home teams at level stakes of 10 you would have made a profit of 16.90. However, if you had laid the Premiership sides with a liability of 10 on each bet you would have made a profit of 36.63 before commission.

There was only one eligible match in the 2002/03 season which pitted a Championship side at home to Premiership opposition. Wolves beat even money shots Newcastle 3-2 at odds of 3.44.

Unusually, there are no all-Premiership ties in this seasons third round of the FA Cup, but eight Championship sides are hosting Premiership opposition:

Leicester @ 5.50 vs Tottenham @ 1.57
Hull @ 3.60 vs Aston Villa @ 1.90
Ipswich @ 3.20 vs Portsmouth @ 2.10
Luton @ 7.00 vs Liverpool @ 1.40
Millwall @ 4.00 vs Everton @ 1.80
Norwich @ 2.75 vs West Ham @ 2.30
Sheffield Wednesday @ 4.00 vs Charlton @ 1.80
Watford @ 3.40 vs Bolton @ 2.00

All bar one of the Championship sides are available at odds greater than 2/1, although it may prove a better option to lay the Premiership teams in case of drawn matches.

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