I'm getting too old for this stuff. After 42 years I'd like to sell one of my properties. A friend of my accountant, who is a firefighter, has called me from time to time and asked if I would sell. Today he proposed a private sales contract, which would last 5 years and then he'd buy it. I have often been advised that sales contracts are dangerous. What do you think?

When i go to sell a single family house to a novice, or a smaller apartment building to a seasoned investor, you goals are as follows:

1) AVOID PAYING LONG TERM CAPITAL GAINS TAX (UP TO 20%)

2) AVOID PAYING CALIFORNIA STATE TAX (UP TO 13.3%)

3) AVOID PAYING SALES COMMISSIONS (AROUND 6%)

4) AVOID PAYING THE 2.9% MEDICAL TAX (IF i EARN OVER $250k)

5) REDUCE PAYING UP FRONT THE RECAPTURE ON DEPRECIATION (25%)

So I have several choices

A) Do an installment sale with a 29% or LESS down payment from the buyer.

B) Do a 1031 exchange

Around 6 years ago I had a large house worth $600,000. If I sold it with an agent, I'd have to pay a $36,000 commission and 2% in escrow and transfer tax, around $12,000.

That's $48,000 right off the bat.

Instead I installed automatic sprinklers and had SOD installed to I had an instant front lawn and curb appeal.

Then I painted the front of the house, so driving by you'd have to stop.

My competition with the same homes for sale used an agent, had showings and did not offer financing. So when they sold for $600,000, they net after taxes and commissions around $300,000 after paying their mortgage off. That's 1/2 of the sales price, ouch.

Instead I advertised, SELLER FINANCING, easy to qualify.

No loan Fee's. No sales load. No points or appraisal.

Asking $615,000 with only a $75,000 down payment.

I'd charge a 6% interest rate. 10 year pre-payment penalty.

I had around 100 phone calls the first day my ad hit the news papers.

When i go to sell a single family house to a novice, or a smaller apartment building to a seasoned investor, you goals are as follows:

1) AVOID PAYING LONG TERM CAPITAL GAINS TAX (UP TO 20%)

2) AVOID PAYING CALIFORNIA STATE TAX (UP TO 13.3%)

3) AVOID PAYING SALES COMMISSIONS (AROUND 6%)

4) AVOID PAYING THE 2.9% MEDICAL TAX (IF i EARN OVER $250k)

5) REDUCE PAYING UP FRONT THE RECAPTURE ON DEPRECIATION (25%)

So I have several choices

A) Do an installment sale with a 29% or LESS down payment from the buyer.

B) Do a 1031 exchange

Around 6 years ago I had a large house worth $600,000. If I sold it with an agent, I'd have to pay a $36,000 commission and 2% in escrow and transfer tax, around $12,000.

That's $48,000 right off the bat.

Instead I installed automatic sprinklers and had SOD installed to I had an instant front lawn and curb appeal.

Then I painted the front of the house, so driving by you'd have to stop.

My competition with the same homes for sale used an agent, had showings and did not offer financing. So when they sold for $600,000, they net after taxes and commissions around $300,000 after paying their mortgage off. That's 1/2 of the sales price, ouch.

Instead I advertised, SELLER FINANCING, easy to qualify.

No loan Fee's. No sales load. No points or appraisal.

Asking $615,000 with only a $75,000 down payment.

I'd charge a 6% interest rate. 10 year pre-payment penalty.

I had around 100 phone calls the first day my ad hit the news papers.

If I had listened to everything that I was told Not to do,

I wouldn't have two sticks to rub together.

DOWHATYAGOTTADO. (with your 42 years of REI experience)