Interest income on my carry back paper is the same as more profits to me! Carry back financing has made me a ton of money, so I’m not about to change my investment strategy. If you need a bit more convincing about seller financing and profits you should take a peek at Chapter# 2 of my best selling book. THE REAL ESTATE FISHERMAN,” KJAY publishers. On a single transaction just one carry-back mortgage, my selling profits were $260,945 but my interest income for agreeing to take monthly payments over time was $939,077. I’ve watched the banks do business like this for many years. If it’s good enough for them it’s just fine with me!
When selling my properties that have existing mortgages already in place I always insist on a wrap-around mortgage when I carry back the financing. When you mortgage debt in excess of the basis (book value), this issue becomes even more serious! It’s called the loan over basis trap. Check it out! Besides earning pajama money, interest income, you can legally defer taxes on a sale. It’s always sound economics to postpone tax payments as long as you can.