The Advantages Of Holding A Note On Your Real Estate

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. Why should I do that, you say?

Let us just say, for this example, you have sold a property that you have fifty thousands dollars in equity in. Deciding to just sell it and pocket the big chunk of money may end up hurting you by increasing your tax liability. It is not only a matter of income taxes or municipal taxes that may affect your bottom line, and there are additional taxes that tax you at a higher rate. 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 leaving your equity in the property by carrying a note on it, you can avoid these taxes, or at least defer them until you can generate some income from the loan. Being the primary lien holder on the property is the ultimate goal, but if a bank is involved for the remainder you can bet they will not accept anything but primary lien position for themselves.

With a solid lien position, you have a certain amount of control over your destiny, in regard to the property you are loaning on. 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. Processing a foreclosure completely is expensive and ruins the homeowners credit, but signing the house back to you avoids one and allows to you iron out the problem. Finding a renter is easy so renting to the homeowner or not, is not a problem, but make sure you can sell it when you find another buyer for it. Buying a home is on the forefront of many minds, so loaning out your money on it again is not too difficult.

By being willing to put your money to work for you and allowing a buyer who may otherwise not be qualified to buy a home, you help someone establish credit, while you get paid interest. Ultimately you will be financed out at some point, but you will generate a nice amount of income meanwhile.

The author enjoys writing articles about boise home search & short sales in boise idaho. Click on the above links to learn more about these topics! Get a totally unique version of this article from our article submission service