INSTALLMENT SELLING W/WRAP AROUND
Besides earning pajama money, interest income, you can legally defer taxes on a sale. It’s always sound economics to postpone tax payments as long as you can.
When selling my properties that have existing mortgages already in place (obviously, without due-on-sale clauses) I always insist on a wrap-around mortgage when I carry back the financing. When you mortgage debt in excess of the basis (book value), this issue becomes even more serious! It’s called the loan over basis trap. Check it out!
Interest income on my carry back paper is the same as more profits to me! Carry back financing has made me a ton of money, so I’m not about to change my investment strategy. If you need a bit more convincing about seller financing and profits – you should take a peek at Chapter#6 of my best selling book, “Gold Mines Houses”, McGraw Hill Publishers. On a single transaction _ just one carry-back mortgage, my selling profits were $260,945, but my interest income for agreeing to take monthly payments over time was $939,077. I’ve watched the banks do business like this for many years. If it’s good enough for them it’s just fine with me!
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Ok Jay, here we go again. I continue finding myself going back and brushing away the dust from your books (that have been read more than any one time) because of the need to rethink a matter or just pay closer attention so as to attain a crisper fix, if you will, on new ways to earn more residual monies. It’s really unbelievable how you are able to teach with such clairty that even someone with the learning disabilities that I have can continue to read, understand & also apply this knowledge profitably time and time again. You are the MAN! regards Gerald