Smith Robinson Real Estate Two70
A Closer Look

The Hymas Building Offer
— in plain English.

Most offers boil down to a number. This one is different — and it's worth understanding what's actually on the table before deciding. Take 5 minutes and we'll walk you through it.

Summary of Offer

$1,500,000*
$300,000
$1,200,000
6.5% Fixed
25 Years
~$8,100
At 10 Years
Idaho Deed of Trust
Paid by Buyer
*Or current appraised value as determined by a mutually agreed-upon licensed commercial appraiser.
The Headline Number

You don't sell for $1.5M.
You sell for ~$2.2M — over 10 years.

$702K
In interest income alone — the buyer pays you

Here's the simple version.

Instead of cashing out at $1.5M today, you become the bank. The buyer pays you a fixed 6.5% on a $1.2M loan — every month, for 10 years — then writes a check for whatever's left. The math:

What You Receive Over 10 Years

Down payment Wired to you at closing $300,000
120 monthly payments $8,100/month for 10 years $972,198
Balloon payment Buyer refinances or sells in year 10 — remaining loan balance paid in full $930,083
Total cash to you over 10 years $2,202,281
Of that, pure interest income Money you never had before — paid by the buyer for using your capital $702,281
"What If We Just Wait?"

Could appreciation alone match this offer?

It's the right question to ask. Move the slider — see what the building would actually need to do to beat the seller carry. Remember: this comparison is before subtracting 10 years of property taxes, insurance, repairs, vacancy, and capital expenses on the building.

3.0%
10 yrs
Take the Offer

Sell now via seller carry

$2,202,281
Total cash to you (10 years)
$702,281 of that is pure interest income
Wait & Hope

Hold and sell later for cash

$2,015,873
Future sale price (gross, before carrying costs)
$515,873 in appreciation gain — before taxes, repairs, vacancy
The Breakeven

For waiting to beat this offer, the building must appreciate at ~3.9% every year.

Net of property taxes, insurance, ongoing maintenance, vacancy, and any capital improvements over the next 10 years. In a flat or softening commercial market, that's a hard bar to clear — and you're tying up $1.5M of equity in a single asset to find out.

Visualized

Cash in your hand — year by year.

Cumulative Cash Received Over 10 Years
Seller-carry pays you steadily every month. Holding pays nothing until the sale event.
Seller-carry: cumulative cash received
Hold & sell later: cash received only at sale
The Hidden Win

Taxes: this is the part most people miss.

When you sell a commercial property outright for cash, the IRS sends you a bill in April for the entire capital gain — all in one year. A seller-carry triggers an installment sale (IRS §453), which spreads that same tax bill over the years you actually receive the money.

Cash Sale

Sell for $1.5M cash today

~$238,000
Estimated tax bill — due in year 1
  • Entire capital gain recognized in the year of sale
  • Can push you into the highest tax brackets that year
  • Net Investment Income Tax (3.8%) applies on top
  • Possible depreciation recapture at 25%
  • One big check to the IRS — money permanently gone
Seller Carry

Same total tax — spread over 10 years

~$24,000/yr
Estimated tax — averaged over the carry period
  • Tax on each principal dollar only as it's received
  • Often keeps you in lower brackets year over year
  • Interest is taxed as ordinary income (normal — but it's income you wouldn't have had at all from a cash sale)
  • The deferred tax stays invested, working for you longer
  • Can be combined with other tax planning strategies

Numbers above are illustrative — assumes ~$500K cost basis, $1M long-term capital gain, 23.8% blended federal rate (20% LTCG + 3.8% NIIT). Idaho state tax and depreciation recapture not included. Your CPA will run the actual numbers based on your specific basis, depreciation history, and bracket. The point isn't the exact dollars — it's the shape: cash sale = one painful year, installment = smoothed over a decade.

The bottom line.

  • 1
    You receive about $700,000 more than you would in a cash sale That's pure interest income from the buyer — money that doesn't exist if you sell outright.
  • 2
    For waiting to win, the building has to appreciate at ~3.9% — every year, for 10 years, net of all carrying costs In a flat or softening commercial market, that's a coin flip at best — and your $1.5M is locked up while you find out.
  • 3
    The tax bill is dramatically softer Roughly $24K/year over 10 years instead of one $238K hit in April. Same total — much easier to plan around, and the deferred dollars keep working for you.