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| Friday, April 07, 2006 |
| Tycoon in the making |
| CNN.com has the article: Tycoons in the making -- Ron and Yvette Godwin. Interesting story, but I wish they had more detail about other assets (retirement accounts, savings, etc.). The story focuses only on real estate. |
| posted by Boston Gal @ 11:40 AM *
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| 4 Comments: |
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I'm confused by the table that lists price paid, current value, then equity. Equity is determined by subtracting price from value. That's only true at the moment you have a mortgage of the price you paid. Unless they had 100% financing and never paid it down (or constatly refinced only to the amount of the original price), they have more equity than listed. Equity is usually determined by taken current value and subtracting current mortgage.
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I agree Annmarie that the table is a bit confusing. I can only assume price paid is the mortgage amount.
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CNN breaks down their Personal Finance stories into three categories: Tycoons in the Making (real estate), Millionaires in the Making (general net worth), and Extreme Savers (new and self-explanatory).
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Seems to me they are taking a bit of risk there with the HELOC to buy more property. It's making them pretty highly leveraged. I've thought about this plan myself, but I think I'm a little to risk averse to really give it a go.
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I'm confused by the table that lists price paid, current value, then equity. Equity is determined by subtracting price from value. That's only true at the moment you have a mortgage of the price you paid. Unless they had 100% financing and never paid it down (or constatly refinced only to the amount of the original price), they have more equity than listed. Equity is usually determined by taken current value and subtracting current mortgage.