Benefits of Owner Financing
In this blog we will talk about the benefits of selling your multifamily property using owner financing:
- Terms: With higher interest rates offered by the bank, seller financing get more popular. There are deals out there that do not make sense going the bank route for debt but can make sense if both parties can agree on terms. Owner/seller financing in the simplest definition is: the previous owner becomes the bank. Just like a bank would do, make sure that the new operators have plans to pay you on time, and run the operation effectively to secure your investment.
- Income Stream: Owner financing can provide you with a steady income stream as the buyer makes monthly payments. This can be especially beneficial for the owners that are at the end of their investing career. They get the monthly cash flow without needing to manage operations, tenants, and pay the bills.
- Tax Benefits: Owner financing can provide you with tax benefits. You are able to defer capital gains taxes over time which can lower your overall tax liability. If you don’t plan on rolling the money in to other investments, a cash sale would get taxed pretty hard.
- Trust: You can set up a trust to ensure that your heirs receive the payments if you pass away before the note matures. If you know your loved ones did not want to manage your properties this will give them the chance to continue to receive dividends without needing to operate.