12 Days Of Note Investing-Day #12 Tax Deed, Seller Carry & SD IRA

[Tracy Z. Rewey]

This deal wraps up our 12 Days of Note Investing where we review, dissect and analyze note buying strategies on real life transactions.  Thanks for reading and I wish everyone a Merry Christmas and Prosperous New Year.

The seller carry back can maximize profits when buying real estate wholesale and selling retail as utilized with this Tax Deed transaction in Arkansas.

Properties can be purchased at wholesale prices through a variety of methods including foreclosures, tax deed, probate, and other types of distressed sales (including NPNs in pre-foreclosure). Properties are improved as necessary and then resold at higher retail prices. The seller has an opportunity to further increase profits by offering the buyer payments on terms with seller financing.

This strategy was used on an Arkansas property by paying $710.00 to the county for unpaid real estate taxes on a single-family residence. The property was next advertised for sale as follows:

• House For Sale
• Easy Terms
• Owner Will Finance

The property was then resold “as-is” to a buyer for $14,000 with cash down payment of $2,000 at closing. The remaining $12,000 balance was owner-financed at the rate of 10% interest payable in 60 payments of $254.96 per month.

The initial investment was recouped out of the down payment along with more than enough for expenses. Additionally a monthly income of $254.96 for 60 months was generated (with the buyer paying all taxes, insurance, and property maintenance). What’s the return? Well common sense tells you it’s good enough and a financial calculator will reflect a return of over 430%!

To sweeten the deal further, the investment was made in a self-directed Individual Retirement Arrangement (IRA) as a member of a Limited Liability Company. This provides the added benefit of investing tax-deferred, or even tax-free with a ROTH IRA.