Lonnie Deal Question

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  • Does Anyone know the yield formula Lonnie Scruggs uses to get 94% yield in his book Deals On Wheels? Page. 34

    Suppose we find two homes that we can buy for
    $2,500 each, and they don’t have to be moved. Let’s also
    suppose we don’t have to make any repairs or pay anything
    other than a little advertising, which for simplicity sake we
    won’t include in our figures. These homes are 12-14 feet wide,
    60-70 feet long, and 10-20 years old. Our total cost in each
    one is $2,500. Now, let’s sell these two homes and structure
    two different notes from two different buyers.
    We sell each home for $5,000 with a $500 down
    payment. Our buyers sign a $4,500 note, payable 12.75%
    interest, $175.96 per month for 30 months. Let’s see how we
    come out on these two little cheapo deals.

    How We Structure The Note:
    N 30 I 12.75 PMT 175.96 PV4,500

    Amount Invested And Yield:
    N 30 I $94.78 PMT$175.96 PV$2,000

    After receiving $500 down, we have $2,000 left in
    each home. Our total monthly payments on the two notes
    amount to $351.92 And we also have $1,000 cash from the
    down payments. As you can see from our chart, this works out
    to be a 94% yield.

    He plugged this into a financial calculator. This is what is called the time value of money. The factors that may come into play is number of payments (usually this is monthly payments), the interest rate, the present value, the payment amount (a negative number) and the future value (also a negative number). You can always calculate for one unknown. If you want a little crash course let me know I can tutor you.

    Thank You Don Wede. I started watching the Ultimate Mobile Home Boot Camp. He shows in his video how to do it.


    Knowing how to use a financial calculator is (still) one of the secrets in this business.

    I know several mortgage brokers who don’t know anymore than how to calculate a payment.
    And that’s using their company software. Most can’t/won’t learn how to use the calculator.

    Its an investment of your time that pays VERY well.


    Mike Weiss
    I went to Office Depot and purchased an HP 12C. This is a powerful little tool. I’m currently working Lonnie’s Scruggs Lessons. I feel like a sponge soaking all this great information in.


    Here’s a book I HIGHLY recommend. ‘Invest in Debt’ by Jimmy Napier is a great primer on the time value of money. Even though its a few years old, the concepts never get old. Get a copy.

    Amazon — https://www.amazon.com/Invest-Debt-Book-Buying-Paper/dp/9998258359
    Jimmy Napier — http://garyjohnston.com/registration-and-products/jimmy-napier/

    Happy Thanksgiving,

    Mike Weiss

    On the HP10bii app:

    Plug in what you know:

    30 N
    2000 PV
    175.98 +/- PMT

    Solve for what you don’t know:


    which results:

    94.78% Yield

    The $2,000 PV comes from the purchase price $2500 less the down payment $500 the buyer provides
    The $175.98 PMT amount comes from the note with the buyer.
    You basically get that income stream for the net cash outlay of $2,000.

    You probably already figured this all out if you watched Lonnie, but just in case, here it is.

    I will put that on my must-read book list.
    Thank you

    Bill Eisenhauer Thank you for breaking the yield question down for me.

    That book is probable 30 years old but it is a good one even today. Some things never change. Jimmy was one of my first great teachers. You can not go wrong with that book.

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