US Real Estate Investment Program
Buy distressed properties at 40% below appraised value.
Fix up the properties by doing the necessary cosmetic renovations.
Rent the property for a monthly positive cash flow for approximately 2 - 5 years.
Sell the property at a substantial profit of 60% or more of the original appraised value.
Click on each tab below to see the financial details of each step - please note all numbers in the example are approximate and for demonstration purposes only:
- Step 1: Buy
- Step 2: Fix
- Step 3: Rent
- Step 4: Sell
Step 1: Buy
NOTE: All numbers in this example are approximate.
Property is appraised at $100,000
Buy property at distressed market price of $60,000 (40% below appraisal)
Pay $20,000 down on financing of $60,000
Mortgage loan = $40,000
Total Monthly payment = $400.00 PITI (Principal, Interest, Taxes & Insurance)
Step 2: Fix
Invest 20% of purchase price for renovations:
.20 x $60,000 = $12,000 cost of renovations
The new property value is: $120,000.00
Step 3: Rent
Rental market returns 9%:
.09 x $120,000.00 = $1,080.00 per month rent income
Rental Income & Expense Breakdown:
| $1,080.00 | Monthly Rent Income | |
| — $400.00 | Mortgage Payment | |
| 680.00 | Gross Rental Income | |
| — $204.00 | 30% TMHI Management Fee: .30 x $680=$204 | |
| $476.00 | Monthly Positive Cash Flow | |
| x 12 | Multiplied by 12 months | |
| $5,712.00 | Gross Annual Rental Income For Each Year | |
Step 4: Sell
The sell example below is based on a 3 year hold.
Property in 3 years will have 65% appreciation:
.65 x $120,000 = $78,000 appreciation
Selling Income & Expense Breakdown:
| $120,000.00 | Original property value | |
| +78,000.00 | 3 Year Appreciation | |
| $198,000.00 | New Market Value | |
| $198,000.00 | Selling Price | |
| — 72,000.00 | Original Investment (Financing, Renovation) | |
| $126,000.00 | Gross Capital Gain | |
| — 31,500.00 | 25% TMHI Fee (.25 x $126,000 = $31,500) | |
| $94,500.00 | Net Profit To Investor(s) | |
