New to Real Estate · Petaluma, CA · Member since 2022 · 3 posts · 0 votes
Hi there my name is Danny, im new at real estate and im on here searching for some help and advice. A little background story, I own a barbershop that I have been running for 1 year and my lease has come to an end, and we’re getting ready to draw up a new lease for another 5 year’s. My current landlord owns the property out right and has it in a trust fund for his kids, I have brought up the idea of me purchasing the property from him being as tho he is already retired. In the past he has stated he was ready to sell but ended up backing out after finding out he would have to pay capital gains on the property. My thoughts are to figure out a way to structure a deal with him that can be both be beneficial for him and me by using seller financing, making sure his and my needs are met. If anyone has done a similar deal or has any suggestions using creative financing on how I can structure this deal, i would love to here some ideas. All feedback would be greatly appreciated. Thank you for talking the time to read.
@Danny Pacheco The easiest way to "spread out his capital gains", rather than paying them all in one year would be to sell on a "contract for deed" (language may be slightly different in your state, but same principals apply).
Instead of you giving him the 100% purchase price in the same near, he basically becomes the bank. You pay him, some % up front, then you pay him in monthly payments (with interest) for X amount of years. When the X years is over, then you would pay him the remaining amount you owe him. Terms of this are fully up for you and the current owner to negotiate, purchase price, % down, monthly payments, interest rate, amortization years, etc. Often is a win win for both parties.
Hi there my name is Danny, im new at real estate and im on here searching for some help and advice. A little background story, I own a barbershop that I have been running for 1 year and my lease has come to an end, and we’re getting ready to draw up a new lease for another 5 year’s. My current landlord owns the property out right and has it in a trust fund for his kids, I have brought up the idea of me purchasing the property from him being as tho he is already retired. In the past he has stated he was ready to sell but ended up backing out after finding out he would have to pay capital gains on the property. My thoughts are to figure out a way to structure a deal with him that can be both be beneficial for him and me by using seller financing, making sure his and my needs are met. If anyone has done a similar deal or has any suggestions using creative financing on how I can structure this deal, i would love to here some ideas. All feedback would be greatly appreciated. Thank you for talking the time to read.
If owns a property free and clear, he can seller finance 100% of the property, he wouldn't have to pay capital gains (still check with real estate CPA. I can give you my CPA's number if you want)
Advantages to the seller:
1. Probably some taxes based on what he receives every months from you but not huge capital gains
2. If you tell him to amortize it for 30 years, and let's say his property worth 200K now and you pay him 5% a year then in 30 years he'll be collecting $386K
3. He doesn't have to worry about being a landlord. He is just acting as a bank
Option #2
If he still owns a mortgage on a property, sub 2 deal + seller carry back could be a good option to avoid capital gains.