Seller Carry Note Yield Calculator

Carrying the note back boosts seller yield but concentrates risk — compute the delta.

Sale price

Down payment %

Carry rate %

Amortization years

Balloon years

Alternative yield %

Total carry yield advantage

$126,113

Monthly payment

$4,406

Balloon amount

$470,479

How the math works

Carry yield = sum of payments + balloon. Compare to alternative compounding at T-bill rate.

$525k note at 9% 25yr = $4,405/mo × 84 + $447k balloon = $817k. Alt 4.5% = $716k. Advantage $101k.

How to Use

Enter sale price.
Enter down payment %.
Enter carryback rate %.
Enter carryback term years.
Enter balloon years.
Enter alternative yield (T-bill, CD) %.
Read carry advantage.

Frequently Asked Questions

Why would a seller carry?

(1) Gets higher yield than CD/T-bill on cash proceeds. (2) Installment sale method spreads gain tax over years (IRC 453), reducing tax bracket impact. (3) Helps buyer qualify who can't get conventional financing. (4) Enables premium sale price (buyer pays 5-10% more for seller financing). (5) Retirement income stream for seller. Most common in rural markets, niche properties, and small commercial.

Risks to seller?

(1) Borrower default + property value decline = loss. (2) Concentrated risk vs diversified cash portfolio. (3) Slower access to cash (locked in note). (4) Tax on note sale (if you later sell to a note buyer). (5) Junior position if buyer takes senior mortgage + seller carries junior. Foreclosure + resale cost 15-25% of sale price on average. Seller financing only makes sense with strong buyer credit or substantial down payment (30%+).

Typical carry terms?

Rate: market + 100-300 bps (8-12% typical in 2024). Term: 15-30 year amortization. Balloon: 3-7 years (forces buyer to refinance). Down payment: 20-30% standard, 10-15% for strong buyers. Interest-only first 1-2 years: increasingly common. Recourse vs non-recourse: recourse preferred by seller. Full due-diligence on buyer: essential.

Installment sale tax?

IRC 453 installment method: report gain proportionally as principal payments received. Example: sale $1M, basis $600k, gain $400k (40%). $300k down + $700k note at 8%. Down payment gain: $120k (40% of $300k). Note payment gain ratio: 40% of each principal payment. Spreads tax bracket. Catches: depreciation recapture (still taxed in year of sale regardless of installment), no installment method for dealer property.