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The Advantages Of Holding A Note On Your Real Estate

Todays Date: November 17, 2018

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. There are more taxes than the usual income tax and state taxes that can take your real estate profits, such as capital gains tax for one.

Taxes, overall limit the amount of motivation many potential business people have, so it makes you wonder why the government institutes such burdensome policies and regulations. Banks make money by loaning money, and you can do that same thing by taking back a note on the property you are selling, increasing potential buyers by doing that. Whatever you do, make sure you are the primary lien on the property or else you will be assuming a higher degree of risk, and may be left out in the cold if the homeowner cannot pay for the home.

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.

Loaning your money out again will do a lot of positive things, including helping your next buyer improve their credit history, and bring you a nice chunk of change as you go along. Being financed out of the equation will inevitably happen, but all the while you will make a nice amount of interest.

The author enjoys writing articles about boise home search & reos in boise idaho. Click on the above links to learn more about these topics!

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