If I sell my house for $175,000 at 6% over 30 yrs...

[Lancer]

How much interest will I make? Also, I don't really want it prepaid as it provides a portion of my retirement income, can you tell me how pre-payment penalties work?

Is 6% a good rate?

Anything you think I should put in the contract? Any advise at all?

[notyoueither]

Get a lawyer!

[MichaeltheGreat]

There's all sorts of capital gains tax and other issues, especially if you move overseas to a cheaper place.

There's also the fact that if the buyer defaults and you're 8,000 miles away, you've got a pain in your ass to deal with. (in other words, sell it outright, let the bank finance the buyer, and then invest the money yourself)

Real estate transactions can be a pain in the ass to do yourself unless they're virtually cash and carry and you know what you're doing.

[MichaeltheGreat]

Originally posted by notyoueither
Get a lawyer!

A lawyer may cost you more than a realtor, unless you want the lawyer to handle a bunch of other stuff anyway. And beware of small town lawyers and small firms or (especially) solo practitioners.

[Lancer]

MtG, these people I trust. They're not going to let me down.

Also, capital gains...you can sell one house every two years and not pay.

[MichaeltheGreat]

Originally posted by Lancer
MtG, these people I trust. They're not going to let me down.

What happens if they get run over by a truck and are out of work, hospital bills, etc? You're putting your retirement at risk.

Also, capital gains...you can sell one house every two years and not pay.

If it's your main home and you own it for five years, live in it for two before sale, yeah. What about Oregon gains?

[notyoueither]

Originally posted by MichaeltheGreat
A lawyer may cost you more than a realtor, unless you want the lawyer to handle a bunch of other stuff anyway. And beware of small town lawyers and small firms or (especially) solo practitioners.

When someone proposes to become a bank, and bet the retirement on the other party paying, it is time to get a lawyer... As I think you illustrated with your 'what if they get hit by a truck' comment...

[notyoueither]

Originally posted by Lancer
MtG, these people I trust. They're not going to let me down.

I once trusted someone like that... hahahahahahahahahahahahahahahaha...

Boy was I foolish.

[Lancer]

I'm not foolish, these people are worthy of my trust.

MtG, if thre was a situation like that, we would figure something out. I'd come out of retirement to help them out, whatever. Whether they had a mortgage with me or not.

I'll find out about Oregon capital gains.

It is my main home, 5 years, etc...

[Lancer]

"How much interest will I make? Also, I don't really want it prepaid as it provides a portion of my retirement income, can you tell me how pre-payment penalties work?"

Damn good question guy! Too bad it seems nobody can answer it.

[Az]

MtG is right. Let the Bank finance them. **** can happen. Or they can always put your "trust" at jeopardy. The same thing happened to us, with our relatives. We vouched for them to get a mortgage at the bank, and they started failing their payments. We really dodged the bullet on that one.

[Japher]

go to This web site and ask them. They no this stuff pretty well.

MtG is right that in order to avoid the capital gains you have to have lived in it for 2 of the passed 5 years, and then perform some exchange, I forgot the number. Yet, it is only for equal or greater value.

Most ppl will tell you to sell your house out right, but if you are intent on keeping it and eating a good chunk of the capital gains taxes, there are other ways to do sell your house. Lease optioning is a good way to do so.

Also, if you have not already paid off your house the bank won't like you turning it into an investment property, thus you would need your buyers to take out a mortgage, and then arrange for you to hold the second to which the buyer will pay you.

In your contract I would make sure to have a "subject to" clause incase they try and sell in the next 30 years.

I think 6% sounds fine right now, but I think you could do better. Especially by selling your house and buying a true investment property which you could personally refi or depreciate incase markets take a hit or your friends reneg the contract or go into bankruptcy.

Hmmm, now that I think about it; sell your home out right. If you want investment property than buy investment property, don't play the bank. While these people may be friends there are too many ways that you can get screwed doing this without being any of their fault. Buisness and friends don't mix. Though, if you just want to help them out and take out your money on the place in a few years the lease option may be the way to go, and then you can decide on a contractual time fram whether you really want to continue collecting from them or if you want to take all your money out... All along they are building their down payment for the property... It's a win/win IMO.

[rah]

Yep. Sell the house, buy an anuity. Less worries.

Pre-payment penalties are not as popular anymore. Putting one in the contract could weird many possible deals.

[Tingkai]

Originally posted by Lancer
"How much interest will I make? Also, I don't really want it prepaid as it provides a portion of my retirement income, can you tell me how pre-payment penalties work?"

Damn good question guy! Too bad it seems nobody can answer it.

Well if you're intent on doing this, and ignoring all the capital tax and other stuff, it depends on what the inflation rate is like in the next 30 years. If inflation shoots up to 10% then you're losing money.

Also, what could you sell the house for now. If it is only worth $100,000 then maybe it would be worth it.

Then again, I'm drunk and I should go to bed.

[Lancer]

This is all good advise. I would be selling the place, which is free and clear, for $105,000 more than I bought it for maybe 15 years ago.

The bit where I have to step into a replacement property is the pits. I thought I could sell a house with no capital gains every two years. Are you sure about this?

I don't want to own an investment property in this country because I'll be living in the Philippines. Kinda hard to manage it.

I guess I'll lose the prepayment penalty idea Rah, thanks.