Below are some very good exit stratigies for you to consider when investing in Memphis real estate 

OWNER FINANCING YOUR MEMPHIS INVESTMENT PROPERTY TO MAKE 162% ROI

Want to make money with Memphis investment property, but don’t want to be a land lord?  You can sell your CASH ONLY investment property to a “retail” buyer and owner finance it for that buyer.  

Let’s use 800 Lydgate again as our example.  You can sell that property to a “retail” buyer for $60,000.  Only instead of them getting a loan from a bank, you provide the financing for them.  YOU ARE THE BANK, NOT THE LAND LORD (you don’t have to worry about doing repairs).  You can amortize the loan for 30 years at 9% interest (which will make their principle and interest payments to you come out to 482.78/mth).

$482.78/mth X 12 months = $5,793.36 annual which = a 17.03% ROI.

AND...

Most loans will be paid off in five years, because the owner (your buyer) either sells the property or refinances it.  So assuming that your loan is paid off in five years, this is what your profit will look like.

$5,793.36 annual rent income X 5 years = $28,966.80 total positive cash flow

$57,540 (sellers payoff amount to you) -$33,000(your original purchase price) = $24,540.00

$28,966.80(cash flow) + $24,540.00(back end profit) =

$53,506.80 total profit over 5 years which is a 162% ROI

Exit strategy #2

Medium Term Buy and Hold with 0 down

Here’s how to make a 36,000% return on your 0 down Memphis investment property using our 3712 Kildee cv deal as an example.

You purchase 3712 Kildee cv with 0 down and no closing cost for $68,000.00.  (rehab included in price)  using one of our hard money lenders, then you immediately refinance into a 75% LTV loan.  Assuming the value of Kildee cv is $105,000.00 you would refi at about $73,000.00 or less.  Which will leave you at least $32k in equity.

The property is rented for $975/mth.  So here is a realistic break down of the cash flow.

 $975/mth rent

 --667 monthly mortgage payment PITI @6.5%

--68 vacancy

--60  maintenance

--68 dollars for management

= $112/mth actual positive monthly cash flow

 So $112/mth X 12 months = $1,344.00 actual positive cash flow per year.  TAKE THIS POSITIVE CASH FLOW AND SAVE IT.  You do not live on this money; you save it for 5 years, and in 5 years time you will have saved a total of $6,720.00.

Besides the $6,720.00 you have saved, we will assume your property value went up 05% each year for the 5 years you own it, which is not too much to hope for as it very well should be more.  So your 0 down investment is now worth $127,628.00 ($22,628 more than when you bought it!!!)

When the 5 years has passed and the tenant moves out you take the $6,720.00 you have saved and reinvest it in the property, by touching up the paint and maybe some new carpet, so that it is ready to put on the retail market.  JDS Properties already did the rehab 5 years ago, so the saved money will now be used to touch up the property and to pay your note while it sits empty on the market. We estimate your house to sit on the MLS for 6 months, which should cost you $4,002 leaving you with $2,718 to touch up the house with what ever it needs (that is why you save the positive cash flow).

When you list it, you should list it below market value, at say .90 cents on the dollar for a quick sale.  (.90 cents on the dollar = about $114,500.00)

Now here is where you make your money!!!

$114,500.00 sales price

--69,000           loan balance

--6,870             commission paid to selling agent

--2,000             closing cost

=$36,630.00 profit. Which is a 36,000% return on your 0 down investment.  And this does not take into consideration the tax benefits over the 5 year period either.  Also because you waited 2 years before you sold it you don’t have to pay capital gains taxes on the profit either.

And the good part is you don’t have to get just one, you can pick up as many as you can and make tons of money!!

Do it 4 times this year and in 5 years you will get 4 free checks for $36k totaling $144,000.00

Call JDS Properties @ (901) 212-7246

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