Investing in Pittsburgh real estate

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.

“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 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?

2 Responses to “Investing in Pittsburgh real estate”

  1. Mike says:

    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.

  2. James Trotta says:

    Thanks Mike – I guess I just don’t understand why someone would use the 12% company, the hard money lender.