Land Investors Show 700 (LI 700)

Transcript:

Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Happy Show 700.

Steven Butala:                   Welcome to the Land Investors Show, Show 700. Entertaining land investment talk. I'm Steven Jack Butala.

Jill DeWit:                            And I am Jill DeWit, Show #700, broadcasting from sunny Southern California. I can't believe it's 700.

Steven Butala:                   Today Jill and I talk about this Land Investor Show, Episode #700. Jill and I had a little misty moment right before we turned the microphones on. I truly can't believe.

Jill DeWit:                            Remember the times that I wanted to quit on Show #48, #148, #62, #91, #312 ... Just Kidding.

Steven Butala:                   #999. #698.

Jill DeWit:                            Yeah, that's right. Laugh, Jill. And today I'm here for this show.

Steven Butala:                   It's horrible.

Jill DeWit:                            I can't wait to say how this all started, how I became-

Steven Butala:                   The whole thing was-

Jill DeWit:                            Part of it.

Steven Butala:                   My idea, and we'll get to it in a minute.

Jill DeWit:                            Yes.

Steven Butala:                   But let's take a question first, posted by one of our members on the LandInvestors.com online community. It's free.

Jill DeWit:                            All right. I haven't seen a question from this person in a while, and it's really nice to see. So, hello Michelle. Michelle asks, "After two months on Ebay-

Steven Butala:                   Two rounds.

Jill DeWit:                            "Two rounds," excuse me, "On Ebay, I finally got my first terms deal. It's a .26 acre lot in Cocoa, Florida, seven miles away from Cocoa Beach. I bought it on a tax [inaudible 00:01:24] auction for $3,390.00. I sold it on terms for $10,000.00 with 5% interest. Down payment, $1,052.00-"

Steven Butala:                   I love all these numbers. It's awesome.

Jill DeWit:                            Thank you so much, Michelle.

Steven Butala:                   It's real.

Jill DeWit:                            "Monthly payments of $168.86-"

Steven Butala:                   Nice.

Jill DeWit:                            "For 60 months. If I get tile insurance before they pay it off, which costs $2,000.00, I'll still be at $4,000.00 profit. The buyer asked this question: "Can we go by a standard amortization chart? That way, if I pay a chunk over the amount owed, it will be easy to calculate exactly where we are in regards to the payoff amount, as well as the amount of interest owed." I'm looking for some feedback on amortization."

Steven Butala:                   Here's the answer. When you take out a mortgage, what he's referring to is a standard amortization schedule. Every payment has principle and interest in it. A standard amortization schedule looks like an X. One of the lines of X's is principle, one of the lines is interest. If you take your arms and make an X, your left arm is the interest, and your right arm is the ... I'm sorry, the other way.

                                                Your right arm is the interest, and your left arm is the principle. So, the more payments that you make, like in this case, payment #50, let's say, has a tremendous amount of principle in it and very little interest. But the first payments that you're making ... This is just like a house or a car.

                                                The first payments you're making are almost all interest. It's a sneaky, terrible, awful way that finance companies and banks schedule stuff. That's why new cars, you're always under water with your car. If it was straight line amortization where a $500.00 was right from the get-go $250.00 a month in principle,