I believe I can do this but then again I thought I would ask. I have a gentleman who is very interested in purchasing a property I have that is currently under an Installment Note that I am paying on. I would make between 40k to 60k if I choose to do this…the question is, am I able to?
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Yes, this is called a “wraparound” or “wrap” for short. You sell at a higher price and higher interest rate and collect some money down and make money on the monthly spread. The logistics are complex, so I recommend you hire a local attorney to help you with the details.
I know it’s late, but I’ll still share. Selling a property that has an existing installment note can be complex, but it’s definitely possible with proper planning. One key issue is the due-on-sale clause, which might require you to pay off the entire loan balance when the title transfers. In some cases, seller financing or an installment sale can offer benefits, like reduced upfront taxes and making the deal more appealing to buyers who can’t qualify for traditional loans.
To move forward, it’s important to structure the sale carefully. A wraparound mortgage is one option, allowing you to continue paying your original loan while receiving payments from the new buyer. However, it’s crucial to check whether your current lender permits this arrangement. Also, installment sales come with specific IRS guidelines you’ll need to follow. If you’re considering this route, talking to a real estate attorney or tax professional can help you avoid legal or financial issues down the line.