Posted by J. CA on July 13, 2001 at 22:26:16:
“When no other rule applies, make one up.”
Your entire first paragraph implies there are some sort of rules and established procedures. There are not. It all depends on the numbers.
No matter how much equity a seller has, get that equity either by way of 0% payments, or cash discount.
Example: Seller has $100,000 house with $50,000 equity. Follow Ray Como’s rule: Equity / 100 = $500/month.
Or if buying the equity for cash, a nice simple rule is: For every dollar bought, get a dollar discounted, i.e. buy that $50,000 equity for $25,000 cash.
Charge as much rent and mark up the price as much as the T/B market will pay, if that’s less than what you need to make a profit, then you’re in the wrong deal!
What if rents won’t cover the costs? Read “You can’t do this where I live!” in the money-making section of this site, for the answer to that.