Profit Center #1: Equity Profit

This section will reveal the 7 profit centers that is presented in RENG and Fast Track to Real Estate, an educational course introduced by July Ono and Darren Weeks. Each profit center will be presented in a monthly newsletter, and in this issue I’m going to talk about the first profit center found when negotiating a deal on a property: Equity Profit.

In mortgage terms, equity is the value of a property minus the debt charged against it. If a property is worth $100,000, for example, and the mortgage owed is 75% then the equity is simply $25,000.

When purchasing a property, the price is often negotiated and the price that is agreed between the buyer and seller (fair market value) can be lower than the price that is determined by the market (appraised market value). This difference is known as equity profit and it is value that is added to the buyer’s net worth statement.