Thursday, May 21, 2015

Chris' land deal - How do you figure out your yield when you buy low and sell at a profit on a note?

I show how to calculate the rate of return from buying low and selling high on a note in a land deal that was suggested by Chris.  In this example, Chris pays $2,500 for a piece of land and sells it for $5,000.  The buyer has a $1,000 down payment and will pay the balance over 36 months (3 years) with 8% interest.  What is Chris' rate of return on this investment? Hint: It's similar to a Lonnie Deal.

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