If the residual cap is subsequently sold, the money received is income or capital gain.While you could certainly do the multi-step journal entry you described, it’s easier to just create a separate expense account for the rate cap payment received.

More than you would think, clients ask for something and they don't see the expansion in what they have, for more residual and larger ROI as a whole.

Just getting started.I do have partners, it's just that rentals seem to be the way to go, as opposed to "flips" for the long term residual income...and we do not want to tie up so much of our cash on DP's.I would like to multiply the props...have someone manage them...and so on...We do not need the income, so we can continually re-invest.We are looking to build something, not cash out.Thanks, again for your feedback

My initial interpretation is West Ward may be higher risk/higher reward for potential appreciation, but I'll be doing some more late night drives to get a better feel for some specific blocks.I do think all of Easton (& residually Phillipsburg for that matter) is headed in the right direction as long as this outbreak hasn't steered too many away from the urban "vibes" the area provides.

I know in Central Florida it has been increasingly hard to find decent profit potential fix and flips which is what I specialize in, I will eventually start to invest in buy and holds but after I flip enough houses where I can do both because I just love doing what I am doing and will always want to flip houses but I do see the importance of having residual income and a ever increasing equity so one day when I put up my work boots I can live comfortably in my old age ..

I am interested in buying and holding to get residual income.

Purchase Price is $260K, APR is 8% 30 years term $52K down. 20K Renovation, $2.6 residual rental; forced equity of 50K to $310K.

@Lance Lvovsky, so if the seller dies before the transaction is complete, do their children still have to pay the capital gains as though the seller had not died, or does their residual interest get a stepped up basis?

The contract also needs to address the possibilities of prepayment, refinance and non performance.Before a realtor snubs this idea I would say look at the power of residual income stream that can be built up using this strategy on some of your deals. 

And said spraying can get the EPA ultimately involved, due to the EPA want residue, carried off by water, to go into shallow pits, so contaminates don't end up in U.S. water-ways.