Ways Real Estate Owners are Profiting from the Real Estate Slump

Within every dark cloud there is a silver lining. The real estate slump is no different. Owners of investment real estate property quickly started placing ads in the newspapers whcih read as follows:

Owner Will Carry, $89.5K
3bd/2bath, built 2005
All Credit Types Accepted

The above ad can be found by clicking on the title of this post and scrolling to the bottom of the page for a video of this property. (The site is full rent to own and owner financing properties, in every major city)

What real estate investors understand, and most people don't, is:

When you get ready to sell a piece of property that is NOT your primary home, and the property has been listed on a Schedule E of your tax return as a rental property, then the IRS will take CAPPITAL GAINS TAXES, once you sell the property.

There are two ways to avoid or lower capital gains taxes when selling rental property.

1) 1031 Exchange
2) Sell the property on a month to month contract and only pay capital gains on the amount which you collect each year.

Smart Rental Property Owners are doing just that. And the silver lining is, many people are able to purchase property that they never would have been able to qualify for, with the banks.

The risk is low. The gains are great.

Rental property owners over insure the property in case the buyer defaults and leaves the property in a mess, or stops making their payments.

If this should happen, the owner who is financing the loan, fixes the property up and sells the property all over - keeping ALL the money from the previous buyer who defaulted.

Sweet. Information is power, and can turn bad events into good, even the down turn of the hoursing market. Because when you finance the property for the buyer, you will receive twice the amount of the selling price, because of the interest the buyer pays you!