Real Estate Broker · Chattanooga, TN · Member since 2016 · 25 posts · 4 votes
Hi all, Big Ben here in Chattanooga.
I'm in talks with the long time owner of a 17 unit apartment building, 1bdrms and studios. He owns it outright and has taken all of his depreciation. Grossing around $7k a month, 2 vacancies. I like the area it's in. Seller is really pushing to carry the note, for various reasons including avoiding the big cap gains tax hit from a sale.
I've never done a Seller Financed deal and wanted to ask for your advice.
Do you have an example of how you structured terms when buying in a situation like this?
Let me know if I left out anything you'd like to know.
If you can get him to do close to market rate, oh hell yes! You can save a TON of money from bank fees etc.
Spend the money to have your lawyer review (or offer to write up) the note and mortgage. What your seller does not understand is that, if he does his taxes legally, he will still have the cap gain hit, but that seems to be his problem, not yours.
If you can get him to do close to market rate, oh hell yes! You can save a TON of money from bank fees etc.
Spend the money to have your lawyer review (or offer to write up) the note and mortgage. What your seller does not understand is that, if he does his taxes legally, he will still have the cap gain hit, but that seems to be his problem, not yours.
@Ben Garrison Shoot me a PM, Im involved in some owner finance stuff and hold properties today that have been owner financed. A lot of the times its a "your price my terms" style deal. Ive paid premiums for properties and made it back on financing, and made sure the cash flow is tight. Whats the purchase price of this prop?
What your seller does not understand is that, if he does his taxes legally, he will still have the cap gain hit, but that seems to be his problem, not yours.
Yep, but at least it would be spread over the term of the carry.
Yep, but at least it would be spread over the term of the carry.
... Thanks, I worked for a fortune 500 company in the finance Dept and they always told me, when I was planning a deal to never do an installment sale, because postponing the tax payment was against the rules. however after a quick search of the IRS web site I see clearly you only pay taxes on the profits you receive in the year that you receive them. Is that different for a C corp?
Seth Williams my last offer was for $600k. Market is hot here. Seller is 70 years old and seems reluctant due to tax considerations. He mentioned that Trump is going to do away with capital gains...?