How to deal with cash money?

Fly in the ointment is you are carrying the note for $350k. What did your credit check reveal?

In my estimation this is a far bigger issue than the cash. If they are doing illegal business or not paying taxes that note may be least of their concerns.
 
When I had my business I had large cash deposits. You take them to the bank. Sign a form and move on.
 
The property is for sale for $450k. The offered down payment is $100k, leaving a $350 note that we would carry. We are carrying five contracts right now, just had a ten year on a little trailer park pay off and started a new three year balloon contract on a little lot on the coast. That is to say, we are familiar with carrying paper as long as we're in first position.
For us carrying property contracts is comfortable - we can see the asset and if someone doesn't pay we get a place back that we know and have received payments on. If property values have appreciated we might make out better by repossessing. Of course if property values collapse a buyer may opt to do a "strategic default". With enough down payment I don't care too much what a credit report says.
 
I assume that the buyer will also pay his monthly payment in cash as well? If so, you are going to be dealing with cash deposits regularly until the note is paid off. If it were me, I would not want to deal with that, but if I did I would price the hassle in the interst rate on the note, maybe 0.25% more?

At some point, the bank might file suspicious activity reports which might freeze your account. Even if you can eventually clear the issue with the bank or law enforcement, a frozen account might be an even bigger issue if you don't have other accounts with which to do business in the meantime.
 
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calmloki said:
The property is for sale for $450k. The offered down payment is $100k, leaving a $350 note that we would carry. We are carrying five contracts right now, just had a ten year on a little trailer park pay off and started a new three year balloon contract on a little lot on the coast. That is to say, we are familiar with carrying paper as long as we're in first position.

For us carrying property contracts is comfortable - we can see the asset and if someone doesn't pay we get a place back that we know and have received payments on. If property values have appreciated we might make out better by repossessing. Of course if property values collapse a buyer may opt to do a "strategic default". With enough down payment I don't care too much what a credit report says.
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Understood. So that's another way of saying you don't check credit.

It seems that would yield valuable info in any case that would inform other terms of the agreement.

But obviously it is not my concern, just my curiosity.

Then again I remember terrible RE markets and seeing strategic defaults. Not fun.
 
calmloki said:
... For us carrying property contracts is comfortable - we can see the asset and if someone doesn't pay we get a place back that we know and have received payments on. If property values have appreciated we might make out better by repossessing. Of course if property values collapse a buyer may opt to do a "strategic default". With enough down payment I don't care too much what a credit report says.
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Well, you've got that important piece handled anyway. I would still have a lien and jundgment search done, just to understand what I am dealing with.

It will be interesting if you can squeeze the buyer into making a deal with the title company. Also interesting if he can't and he comes back to you with an alternative proposal. His first proposal is a classic scenario for laundering cash, of course.
 
Interesting scenario and sounds kind of sketchy. Following.

Bring the $100k in small non sequential, unmarked bills in a Samsonite briefcase. Come alone, wear your Blues Brother glasses to the midnight meeting. :D
 
I used to play poker and $100K (in $100 bills) is not that big of a deal. I would stipulate that it needs to be counted and validated at a bank. Since you are the seller you can put this into a counter-offer. If there is an escrow company involved you can see if they will take custody of it. If there are any counterfeits or problems then the buyer needs to make it right. I would suspect it is all legitimate currency as I've sat in poker games where many 10K stacks were common. It would be about 3-1/2" tall if they are dense packed. Kinda cool if everything is legitimate.

You have nothing to hide so don't let the amount intimidate you. Just be careful with the chain of custody.
 
Sounds like a money laundering scheme to me, which you don't want to be caught aiding and betting.
 
Selling property with documented records for cash does not create any cloud of suspicion over the seller. The seller doesn't have to explain the source of the cash, he has documents to prove where it came from. The bank files a CTR as required which is no more than a record of a cash deposit over $10K. Banks file these every day. It's not something that sets off an alarm at the government.

The person who has a single CTR filed, with a documented reason, doesn't even create a blip on anyone's radar. People deposit cash from vehicle sales, inherited from the late Aunt Mary when they opened her safe, you name it.

Don't act like you're up to something shady, that's what creates suspicion. You sold property, got paid in cash, you need to deposit it and you disclose the source of the cash which is documented. Done and done.
 
calmloki said:
I expect most replies will be of the "their problem, not yours" variety, but hope to learn by some responses:

So we are selling a F&C rental property for $450k, owner carry. An offer has come with a $100k cash - like dollar bills - down payment. We have no need for that much paper cash. The buyer claims to be a tattoo artist, which does generate a lot of cash sales I'd imagine, or maybe he has a weed dispensary (my guess). I remember something about dispensaries not being able to use banks and wonder if our escrow company would reject dollar bills and insist on a cashier's check. Which led to my wondering how dispensaries DO deal with their income. There has been no suggestion of us taking the cash and claiming to sell for $350k, we will be paying our taxes right and proper.

How have different people dealt with this kind of problem? Do I have to re-watch Ozark?
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this proposal loudly screams SCAM. if the buyers don't want to deposit their dollar bills into a bank it's likely to avoid govt scrutiny. and the suggestion that you use their cash to commit fraud is really all you need to know about their character or lack thereof. if you want to sell to these people then insist on a legal and proper sale and closing otherwise walk away. on second thought...just walk away.
 
Why can they not take their cash to a bank and exchange for cashiers check?
That's what I would insist on if I were in your shoes.
Red Flag if they don't want to do something as seemingly as simple as that.
No "cash" needs to come into your hands.
 
It's not a matter of whether or not the bank will accept cash deposited by the seller. The issue is if the escrow company will accept the cash from the buyer to be included in escrow.
If the down payment is cash, one can expect that the scheduled payments on the loan/note will also be cash. Low income housing landlords frequently get paid in cash as the tenants are "unbanked".
 
calmloki said:
Yes, we would carry the $350 @ 6%.
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I doubt you can get a 30 year mortgage for 6%, I'd try to get more.
Heck, I charged my kids 4% the first year jumping to 6% the second year, when mortgage rates were 3.5%. This was a fixed upper home, the 6% was to kick them in the a$$ to get it fixed and refinanced. It worked, they get it rehabbed and refinanced in 9 months. :dance:
 
Just apropos of nothing, but musing on "This note is legal tender for all debts, public and private". We're moving/have moved from gold to gold backed notes to paper notes to electronic ones and zeros. From the solid to the ethereal, and strangely the more solid the representation of value the more we distrust it. If I'd been offered 3.153 pounds of gold as a down payment I'd view with suspicion and reject the offer even more hastily.
 
calmloki said:
Just apropos of nothing, but musing on "This note is legal tender for all debts, public and private". We're moving/have moved from gold to gold backed notes to paper notes to electronic ones and zeros. From the solid to the ethereal, and strangely the more solid the representation of value the more we distrust it. If I'd been offered 3.153 pounds of gold as a down payment I'd view with suspicion and reject the offer even more hastily.
Click to expand...


I'd take it in coin form and subject to composition verification...:D
 
Not really. Have received 1 counterfeit $100 bill that I know of in a group of 3 cash rent payments, which I'd combined in my pocket. A hundred K would get passed and deposited in a bank, with scrutiny.
 
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