Updated almost 2 years ago on . Most recent reply
Benefits of seller financing
Owner financing is like a secret weapon for folks looking to sell their properties after hanging onto them for ages. Instead of selling your place outright and getting hit with a massive tax bill all at once, you play the bank and provide a loan to the buyer. This way, you get to spread out those capital gains taxes over time, making your tax bill way more manageable. Plus, you get a steady flow of cash from the buyer's payments, which can be super handy, especially if you're retired and looking for a consistent income stream. It's a smart move for both keeping more money in your pocket and making your property more appealing to a wider pool of buyers. What is your strategy when doing owner financing? Do you have the buyers assign the rent to you etc... Tell me about your experiences!
- Jorge Vazquez
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#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
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#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
When I tapped out in March, April and June of '22 I sold all my larger mf on i/o contracts.
I conveyed with a hybrid contract for deed which put title in the buyer's names, but I remain the legal owner. Like a car loan. After a default of 90 days, I take the property back with a piece of paper.
They are serviced with a note/contract servicer which holds the original docs, receives and dispurses pmts, does the tax reporting and enforces the terms like late fees, early payoff penalties, interest-only end dates, etc. It costs $18/mo per contract and $145 annually but is worth it at this level. I have other smalls I handle myself.
I agree with all your reasons to offer SF as a seller, just research what methods of conveyance your state has available which offers more seller protections.
If I just had a regular note and DofT I don't know if I'd do it. My buyers were sophisticated entities that would lawyer up to stall a foreclosure, but not sophisticated enough to challenge the conveyance method ironically. Conveyance methods of seller financing are not discussed nearly enough.