Best Strategies for Buying from Retiring Investors

[Chris Jackson]

Hello! I have two different people in my local area that are retiring investors. They both have one property FSBO that is residential and they both have one property that they are willing to sell me but it is not currently FSBO or marketed at all.

They both have expressed concern over the Capital Tax Gains if they sell everything all at once.

They both have expressed possible interest in at least partial owner financing.

Can anybody explain to me (or refer me to a friend) what strategy(ies) I could employ that would help me get into their properties (I do not have money to put down) and help them avoid cap. gains tax as much/as long as possible? I'm trying to come up with a win-win scenario for these retiring investors and myself to get into these properties.

Thanks!

[Tim Davis]

@Chris Jackson...I have bought a lot of property from retiring investors.  I have had many of the owners that I work for in my property management business end up selling to me and owner financing 80% to 100% of the deal.  The first thing that a retiring owner wants to know before they will consider financing it for you is do you have the capacity to manage the property and make the payments.

If a property is fully depreciated and there is potential capital gains both the capital gains and depreciation recapture are only taxable when they are recieved.  So basically as you make the payments every year they will have to pay the tax that is due on those payments as opposed to paying it all at one time if you were to pay cash.

It is a great way for retiring landlords to truly cash out of their property with no more tenant and toilets but continue to recieve some cash flow.  It is also a great way for you to begin to build your portfolio.  Hope this helps.