Traditional Methods of Real Estate Investing
Through years and years of transactions,Real Estate Investing Financing Truths – Part 1 of 2 Articles the traditional method of buying and selling Real Estate investments has evolved into a market of its own and has grown into a Real Estate machine that circulates massive amounts of money through Real Estate Agents, Real Estate appraisals, Title & Escrow Companies, Banks, and Mortgage Companies.
These once-simple real estate investments have grown from a modest fee for a professional to keep the Buyers or Sellers best interest in mind during negotiations, to now, traditionally, 6% (or more) of the total sales price being paid to Real Estate Agents (via Brokers who often take the majority of the money), another 3 5% being paid to Title,
As if that weren’t enough, then a huge amount of money is absorbed by the Bank, through the form of interest payments usually over 15 30 years and totaling 2 3 times the original purchase price of the initial Real Estate investment!
Down Payments go to pay a variety of fees.
Now, dont get me wrong, it certainly is possible to make money through these methods, but the traditional real estate investment system is designed to simply break even for the home owner in purchasing a home (the first, and perhaps, only real estate investment they will ever make) in this manner. It is really not designed for the investor, who, of course, wants every real estate investment to make money.
Traditional funding only allows the Home Owner
to break even.
Example Home Owner Financing:
(the numbers represented here reflect the methods, not necessarily the price structures of any given real estate investment market.)
List price on property (with Real Estate Agent)