The Rewards Of Holding A Note On Your Properties
In the typical real estate transaction, the bank loans you the money to buy the property, but many real estate owners miss the chance to make money from a source that they frequently do not even see. What would that do, you say?
Let us just say, for this example, you have sold a property that you have fifty thousands dollars in equity in. Selling the property and accepting that one lump sum may expose you to certain taxes and lower your profit potential from it. There is always the usual income tax and certain local taxes that may apply, but larger, more burdensome taxes may also apply.
There are many rules that govern taxes like capital gains tax, so consulting with an accountant or other tax professional is really important in order to save your money and profits. By loaning the buyer back your own profits you can offset or delay nearly all of these taxes, and continue to make interest on the loan. Whatever you do, make sure you are the primary lien on the property or else you will be assuming a higher degree of risk, and may be left out in the cold if the homeowner cannot pay for the home.
As a lien holder on any property you will always know the status of the loan, so you can work things out with the homeowner, something banks are not often willing to do. All you have to do is approach the homeowner directly, and you can offer to pay them to give you the deed bank, or maybe offset some of the payments until they get back on their feet. Most people do not want the shame and embarrassment of being foreclosed on, so they will iron things out with you, if for no other reason than to salvage their credit history. Even when you take it back, you can rent it to them or kick them out and rent to someone else, until you find another buyer for it. Selling the property in the same fashion is not a hard task as their are many people with bad credit who want to buy a home.
Being in this position may sound like a headache, and it can be at times, but you will make a residual interest check and you can help people get their feet back under them, which helps them too. The homeowner may even eventually refinance you out of your lien position altogether. - 23212
Let us just say, for this example, you have sold a property that you have fifty thousands dollars in equity in. Selling the property and accepting that one lump sum may expose you to certain taxes and lower your profit potential from it. There is always the usual income tax and certain local taxes that may apply, but larger, more burdensome taxes may also apply.
There are many rules that govern taxes like capital gains tax, so consulting with an accountant or other tax professional is really important in order to save your money and profits. By loaning the buyer back your own profits you can offset or delay nearly all of these taxes, and continue to make interest on the loan. Whatever you do, make sure you are the primary lien on the property or else you will be assuming a higher degree of risk, and may be left out in the cold if the homeowner cannot pay for the home.
As a lien holder on any property you will always know the status of the loan, so you can work things out with the homeowner, something banks are not often willing to do. All you have to do is approach the homeowner directly, and you can offer to pay them to give you the deed bank, or maybe offset some of the payments until they get back on their feet. Most people do not want the shame and embarrassment of being foreclosed on, so they will iron things out with you, if for no other reason than to salvage their credit history. Even when you take it back, you can rent it to them or kick them out and rent to someone else, until you find another buyer for it. Selling the property in the same fashion is not a hard task as their are many people with bad credit who want to buy a home.
Being in this position may sound like a headache, and it can be at times, but you will make a residual interest check and you can help people get their feet back under them, which helps them too. The homeowner may even eventually refinance you out of your lien position altogether. - 23212
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posted by X - Men @ 4:16 AM
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