This article about investing in Pittsburgh real estate shows a situation that seems too good to be true:
One example of how this works is a single-family, three-bedroom, one-bath house in North Braddock that sold for $12,000. The buyer put $7,000 into it and had a $1,000 down payment. The mortgage was $18,000 at 12 percent interest, Wagner said.The mortgage at 12% interest seems strange to me - you could find a credit card with a better rate than that. Otherwise these numbers make sense to me but can they be real? Posted by James Trotta at March 17, 2007 12:46 PM"There is a positive cash flow of $300 monthly, based on a $180 monthly mortgage payment, plus insurance and taxes, and a rent of $600 monthly under the federal Section 8 rental subsidy program," Wagner said.
The mortgage was a 1 year loan, probably financed through the company mentioned in the article EQT Investments Inc. They are a hard money lender, therefore they charge more.
Posted by: Mike at April 24, 2007 3:22 AMThanks Mike - I guess I just don't understand why someone would use the 12% company, the hard money lender.
Posted by: James Trotta at April 24, 2007 5:39 AM