Banks are being more strict than ever with whom they lend money to, so if you are a home seller you really need to consider becoming the bank, and loaning our your own equity to a prospective buyer. How would that help, you ask?
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 are more taxes than the usual income tax and state taxes that can take your real estate profits, such as capital gains tax for one.
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.
By loaning on your own property, you have a very proactive opportunity in dealing with the home owners and can cut off any foreclosure by dealing directly with the borrower. If the buyer does get behind on payments, you simply go to them personally and express some empathy for them, then offer to take the property back through a deed in lieu of foreclosure. This keeps you from having to go through the expense of a foreclosure, and it keeps one off of the record of the homeowner as well. 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. After you take control of it again, your options are wide open.
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. - 23204
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 are more taxes than the usual income tax and state taxes that can take your real estate profits, such as capital gains tax for one.
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.
By loaning on your own property, you have a very proactive opportunity in dealing with the home owners and can cut off any foreclosure by dealing directly with the borrower. If the buyer does get behind on payments, you simply go to them personally and express some empathy for them, then offer to take the property back through a deed in lieu of foreclosure. This keeps you from having to go through the expense of a foreclosure, and it keeps one off of the record of the homeowner as well. 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. After you take control of it again, your options are wide open.
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. - 23204
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