Sell Smart. Keep More. Create Predictable Income.

A Tax-Efficient Exit Strategy for Investment Property Owners

As a rental property owner, you’ve done the hard part — you acquired the property, rode the market cycle, and built meaningful equity.

But when the time comes to sell, most investors face three problems:

• A large capital gains tax bill
  
  
• Depreciation recapture in the year of sale
  
  
• The loss of their monthly income stream

You’ve spent years building value.
There is a way to exit the property, while still protecting your gains and preserving your income.

It’s called Owner Financing — also known as a Seller-Carry Installment Sale.

The Problem With Selling the Traditional Way

A standard sale triggers:

• Immediate capital gains tax
  
  
• Immediate depreciation recapture
  
  
• The end of your monthly income
  
  
• A lump sum that often gets parked in:
  
  • A 3–5% CD
  • Treasury notes
  • A market portfolio with volatility risk

You take on tax exposure without necessarily gaining better yield.

The Alternative: Exit the Asset, Keep the Income

With Owner Financing, you:

✅ Sell the property at market value (or slight premium)
✅ Avoid the one-time capital gains tax event by spreading gains over time
✅ Convert your built-up equity into reliable monthly income
✅ Eliminate property management responsibilities
✅ Maintain security through a first-position deed of trust

You are not loaning money.
You are structuring your exit like a bank.

How It Works (Simple Explanation)

You sell the property — but instead of the buyer paying a bank,
the buyer pays you.

You receive:

• A down payment (10–25% is typical)
• Monthly payments based on:
  
  • Interest rate you set
  • Amortization period you choose
  • Balloon timeline you control

You are no longer a landlord.
You are the lender.

No tenants.
No repairs.
No maintenance calls.
No vacancy risk.

Just steady, secured, predictable income.

Scenario Overview

Asset: 4-Plex
Market Value: $1,000,000
Down Payment (from Buyer): 10% = $100,000 paid to seller at closing
Amount Seller Finances: $900,000
Loan Terms (Seller Financing):

• Interest Rate: 5%
• Amortization: 30 years
• Balloon Payment: Due in year 10

Current Rent Roll: $6,000/mo
Net cash flow after property taxes, repairs, vacancy, management, etc., is typically much lower — for many owners $1,200–$2,200/mo.

Monthly Income as the Lender (Instead of the Landlord)
We calculated the payment:
Financed Balance: $900,000
Monthly Payment at 5% / 30-Year Amortization:
✅ $4,831/month paid to the seller
No repairs, no turnover, no management. Just income.

Balloon Amount Remaining at Year 10

Remaining principal after 10 years ≈ $732,079 (paid to seller when buyer refinances or sells)

⭐ Comparison: Rent vs. Be the Bank

🎯 The Real Wealth Advantage: Avoid Paying Taxes Up Front

If the seller sells traditionally and pays ~30% tax:

That is $300,000 removed from your wealth immediately.

But if the seller carries the note, capital gains tax is paid slowly, over 10+ years, not all at once.

That means the seller effectively keeps control of the $300,000 and earns interest on it.

📈 How Their Equity Grows FOR Them Instead of Going to Taxes

Interest earned just from the loan payments in the first 10 years:

And then at Year 10:

Seller receives the balloon payoff:

• $732,079 principal
  
  

💡 The Key Insight Sellers Should Understand

If you sell traditionally, you hand $300,000 to the IRS up front.
If you sell with owner financing:

• You keep that $300,000 working
• The buyer pays you interest on it for 10 years
• And it’s secured by real property, just like a bank loan

Interest earned because the seller DID NOT pay taxes upfront:

≈ $411,799 of added wealth — just from being the lender.

This is why experienced investors say:
“Renting pays small. Lending pays forever.”

Why Tax-Smart Investors Choose This Strategy

This is a wealth-preserving exit, not a liquidation.

Who This Strategy Is Ideal For

This approach works best if you are:

• A long-term property owner with significant equity
  
  
• Looking for retirement-style predictable income
  
  
• Interested in minimizing tax impact
  
  
• Tired of dealing with tenants, repairs, or turnover
  
  
• Not in urgent need of 100% cash upfront

If this is you, owner financing is often the highest-yield, lowest-effort exit strategy available.

We Handle the Entire Structure for You

As The Schwaegerle Team, we:

1. Analyze your property and tax positioning
   
   
2. Model your monthly income scenarios (5–12 years)
   
   
3. Draft recommended deal terms
   
   
4. Screen and pre-approve qualified buyers
   
   
5. Coordinate legal, escrow + servicing setup
   
   
6. Ensure payments are processed through a neutral, licensed loan servicer

Your role is simply:
Receive monthly deposits.

Request Your Personalized Seller Income Projection

We’ll calculate:

• Your estimated monthly income
  
  
• The interest return your equity would generate
  
  
• Tax deferral benefits under the IRS installment sale method

No pressure. No obligation. No sales pitch.

Just clear numbers so you can make a smart decision.

About Us

The Schwaegerle Team — Keller Williams Realty, San Luis Obispo

We specialize in:

• Investment property strategy
  
  
• Wealth-preserving exit planning
  
  
• Owner-financing structures
  
  
• 1031 exchange guidance
  
  
• Portfolio expansion & disposition

We help clients build, protect, and transition real estate wealth.

Want to See How This Strategy Would Work on Your Property?

Most property owners are surprised by how much income they could generate
—and how much tax they could defer—by selling as the lender rather than
selling the traditional way.

We’ll run a private, personalized Seller Income Projection for your property,
including monthly income estimates, interest earned over time, and projected
balloon payoff.

No pressure. No sales pitch. Just clear numbers based on your property.

👉 Fill out the contact form below to request your custom analysis.