What is a Structured Sale? – PART 2

by | BiggerPockets.com

This is part 2 in the series on Structured sales. Once again, this series was written by Trevor Mauch, as a guest piece on the blog. We hope you have found it to be interesting and useful.

Note: We cannot speak for against this type of strategy, and we advise anyone to do their homework before conducting any type of real estate strategy. BiggerPockets does not necessarily advocate or agree with the beliefs, expressions or opinions of our writers.

The Advantages & Disadvantages of a Structured Sale

Some of the benefits and advantages:

  • Large Fortune 100 life insurance company guarantees your payments rather than relying on your buyer
  • Avoid depending on buyers ability to manage the property or business (even if the buyer runs the business or property into the ground the seller is protected and is guaranteed to receive each and every payment on time.)
  • Defer capital gains to the year you receive payments – reducing your tax liability
  • Provides guaranteed rate of return on the principal (which is compounded because you earn a return on the money that would have been Uncle Sam’s if you were to sell with an all cash sale).
  • Provides payments for any term you desire ( from 3 years to your lifetime)
  • Costs the buyer, seller, agent, etc. nothing at all. No additional fees or expenses above your normal sales expenses. A 1031 exchange often costs the seller a fee/commission from a 1031 facilitator.
  • Avoid the requirement to purchase additional real estate immediately (however, can leverage the annuity to get financing for future projects)
  • Buyer is able to get full title at closing
  • Supplies a steady and safe stream of income for the time period you choose
  • Can be leveraged to acquire financing to pursue other projects
  • Lets you concentrate on living your life, rather than chasing payments
  • No time restrictions like with a 1031 exchange

Some Disadvantages:

  • Buyer must have all cash or financing to complete the transaction. (however, seller can carry back private note for part of the purchase price if they choose)
  • Like most alternatives; If the seller has an emergency and needs to liquidate their equity in the annuity, they will need to sell it at a discounted rate to an annuity buyer. (Seller must sell at a discount in a traditional installment sale as well). Usually around 60-85% depending on the situation.
  • Not all lenders will take an annuity as collateral for new project financing, but many will. (only effects those who want to use the annuity as collateral for new financing).

The Structured Sale isn’t a one size fits all sales method. However, it is perfect for sellers who:

  • Want to retire and receive monthly/yearly payments to help fund their retirement
  • Want to purchase a new property, but can’t find one in time to meet the 1031 exchange restrictions
  • Want to sell their business and collect monthly/yearly payments for their equity
  • Want to sell their investment property and use it as leverage to obtain commercial financing for a new project (that is maximum leverage!)
  • Want to defer capital gains taxes but don’t want to be responsible for chasing after the payments from the buyer.
  • Want to earn a return on their equity PRE-TAX much like a retirement plan that is taxed when money is taken out…not put in.
  • Or many other situations.

Those who it isn’t perfect for:

  • Sellers who need all of their equity in cash at closing
  • Sellers who absolutely can’t find a cash or financed buyer (however, the seller can choose to carry back a note and place the rest in the annuity.)
  • Sellers who want to 1031 exchange and have found a property in time to meet the deadline
    As you can see, the Ensured Installment Sale (Structured Sale) is an excellent product with many uses. It will be very useful for babyboomers who want to exit the business, real estate, or stock markets and receive a safe-guaranteed stream of income for the time period they choose.

Settlement Professionals Inc. (SPI), a national company, was founded in 1987 and is based in West Linn, Oregon (a suburb of Portland). SPI’s founder, Jack Meligan, has been a top annuity specialist for over 19 years and is seen as one of the nations preeminent experts in the structured annuity field with many published articles in high profile publications. SPI’s main business is structured settlement planning for plaintiffs in injury cases around the U.S.; however, has began to focus on the Ensured Installment Sale (Structured Sale) since its development by Allstate Insurance in 2005.
SPI has teamed up with many of the nations top tax, financial, and real estate professionals to give sellers of appreciated assets a better solution for deferring capital gains taxes with less risk and greater benefits.
To contact SPI please call 1-888-666-5584, email: [email protected], visit: http://www.structuredsalespro.com or http://www.settlepro.com

About Author

Joshua Dorkin

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.


  1. I just noticed that the phone number for Settlement Professionals Inc. is incorrect as a fault of my own. The actual toll free number is:

    Thank you,

    Trevor Mauch
    Settlement Professionals Inc.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here