Seller financing is one of the options in which you will explore with financial implications for your future. If you want fewer taxes to be paid and more investment done, then you need to be aware of these solutions. The three principal techniques that you can use to seller financing are discussed in-depth by David and Tom Moore who are the co-founders of Equity Advantage.
Option 1: Purchase the Note and Trust Deed
The first option is to procure the note and trust deed from our company directly. It is permissible for you to use any spare cash you want to purchase the $400,000 note and trust deed since the amount will be invested well. Through this method, you will be able to put more cash into the Exchange, and we will make an assignment of that note and trust deed to you.
As the holder of the note, you’ll start receiving payments, and the only taxable issue will be the interest income. This arrangement is beneficial in two ways: first, it prevents a substantial tax outflow from your pocket; second, you are given a smooth flow of cash.
Option 2: Selling the Note and Trust Deed to a Third Party
You can also choose the alternative to a note and trust deed to be sold to a third party. To cite a good example, we have experienced many transactions in the past where our clients prospected to sell to an outside buyer. Selling notes to investors helps you to obtain cash for re-investment immediately. The selling of notes to your captive investor would be the same as the first option, but instead of keeping the note, you monetize it by the sale to the investor.
Although it may sometimes create more complications, this option is also the key to liquidity that could potentially be in line with the way you have planned your finances.
Option 3: Explore Other Financing Alternatives
While the first two options are straightforward, investigating other means of funding could also be beneficial. Seller financing arrangements, mixed in with construction loans, could be among the possible options to consider. You may even consider partnerships that could allow you more resources and the necessary support. Flexibility is the main aspect; flexible processing for both market changes and personal finance will ensure the best output.
Conclusion
To maximize your investment and avoid tax liabilities correct way it is critical to understand the seller financing options. Buying the note and trust deed, selling it to a third party, or using other forms of financing are some of the possibilities you can choose from. Each of these offers its own specific advantages and drawbacks.
As always, it’s wise to consult with a financial advisor or tax professional so that the decisions you make are indeed the best for your own individual circumstances. With the right strategy in place, you can effectively navigate the complexities of seller financing and set yourself up for long-term success.
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The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site, we are here to help Investors get where they want to be. Call them today! 503-635-1031.
