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THE SCENARIO
Recently, a customer (call him Ron) asked me for some help determining his yield on a deal he'd recently done. I've changed the numbers here, but the basic structure of the deal is the same.
Ron flips houses. That is, he buys them at a discount, fixes them up a bit, then re-sells them for a profit. The unusual thing about Ron's method is that he sells them
on terms, that is he takes payment for the house over time, rather than getting all of the money in one lump sum.
The question: If Ron buys a house for $50,000 and sells it for $80,000 with 10% down, and carries the balance at 8.5% for 15 years, what return does Ron get on his mone...
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