Joan (not her real name), our Joint Venture Partner, purchases the property for $212,500, i.e. the title of the property is in Joan's name. The Harson Trust, i.e. Rob, Paul & Karen, find the property, on-sell it to a new purchaser, manage the new purchaser's loan (under the provisions of the Uniform Consumer Credit Code) and finally help them refinance into a traditional loan.
Joan purchases the property with a 80% interest only loan, at 6.5%. She injects $44,535 to complete the purchase, i.e. $42,500 as the remainder of the purchase price and $2,035 in other purchasing costs.
If the new purchaser refinanced into a traditional home loan at the end of year one, the expected returns for Joan would be:
Total Return- $28,145
Total Outlay- $44,535
Total % Return- 63%
If the new purchaser refinanced into a traditional home loan at the end of year two, the expected returns for Joan would be:
Total Return- $32,216
Total Outlay- $44,535
Total % Return- 72%
Annualised % Return - 31%
If the new purchaser refinanced into a traditional home loan at the end of year three, the expected returns for Joan would be:
Total Return - $36,188
Total Outlay - $44,535
Total % Return - 81%
Annualised % Return - 21%