A retired owner in Allston sells her eight-bedroom two-family to the six people already renting it, holds the note herself, and collects $5,551 a month instead of a single check she would have to hand a third of to the IRS. Here is how the math works on both sides of that trade.
35-37 Haskell Street in Allston is a recently sold eight-bedroom, three-bathroom two-family that traded at $1,149,000. The owner, who we'll call Margaret, lived in one side of it for decades and rented the other. She is in her seventies, the mortgage was paid off years ago, and effectively everything she has is sitting in the walls of that building.
The six people renting from her want to buy it, and the reason the structure fits is that it lets both sides move gradually rather than all at once. Margaret does not have to hand over the keys and leave the same afternoon, because she can stay in her unit while the building changes hands, keep collecting income from it the way she always has, and step out of being a landlord without stepping away from the property. The six renting from her get to move into ownership of a building they already live in, at a rate and a down payment that a mortgage was not going to give them.
She can sell the building and finance it at the same time, which is not something a lender is set up to do for anybody.
| Purchase price | $1,149,000 |
| Down payment (10%) | $114,900 |
| Seller-financed note | $1,034,100 |
| Interest rate, fixed | 5.0% |
| Amortization | 30 years |
| Balloon / group refinance | Year 10 |
| Title | Tenancy in common, 6 equal shares |
| Margaret's occupancy | Leases her unit, first 5 years |
There is no bank in this transaction. There is no appraisal contingency, no rate lock expiring, and no underwriter deciding whether the group fits a template. There is a purchase and sale agreement, a promissory note, and a mortgage recorded against the property in Margaret's favor.
| Down payment share | $19,150 |
| Closing share (3%)Includes a 2% Restored Living coordination fee plus standard closing costs. | $5,745 |
| Total cash in | $24,895 |
| Down payment received | $114,900 |
| Note receivable created | $1,034,100 |
| Cash at closing | $114,900 |
Margaret leaves the closing table with $114,900 in hand and a $1,034,100 note secured by the building she just sold. Over the first twelve months that note pays her $66,615, of which $51,359 is interest and $15,257 is principal coming back to her.
That split between interest and principal matters because the two are taxed in completely different ways. Principal is what triggers the capital gain, and under the installment method in IRC §453 she only recognizes that gain as the principal actually arrives, so decades of appreciation get spread across the life of the note rather than landing in one year that pushes her into the top bracket and past the net investment income threshold. The interest is treated separately and taxed as ordinary income on Schedule B in whatever year she receives it, so the monthly payment is not tax-free money, it is income that shows up on a predictable schedule and can be planned around.
Here is what the building costs to run every month and where each piece of it goes.
| Line | Monthly |
|---|---|
| Principal and interest to Margaret $1,034,100 at 5.0%, 30-year amortization | $5,551 |
| Property taxes Boston FY2026 residential rate, $12.40 per $1,000 | $1,187 |
| Insurance | $200 |
| Shared utilities | $400 |
| Reserve fund Pooled account for maintenance, repairs, and capital work | $850 |
| Total building cost | $8,189 |
| Less rent from Margaret's unit | ($1,250) |
| Net cost to the six owners | $6,939 |
| Per owner, one of six | $1,156 |
Comparable rooms in Allston go for roughly $1,250 a month, so each of the six is paying $1,156 for a room in a building they own, which is $94 a month below what the same room would cost them as renters, and every one of those payments is buying down a balance instead of disappearing into someone else's account.
| Line | Monthly |
|---|---|
| Note payment received | $5,551 |
| Rent paid for her unit | ($1,250) |
| Net to Margaret | $4,301 |
She is drawing $51,615 a year net of her own housing, in the building she has lived in for thirty years, on a block she knows, without being responsible for maintenance or upkeep on any of it. After five years she moves out, stops paying rent, and the payment continues at $5,551 for the remainder of the term.
| Scenario | Full building | Per buyer |
|---|---|---|
| Margaret's note at 5.0% | $5,551 | $925 |
| Bank loan at 6.76% Freddie Mac PMMS, 30-year fixed, September 10, 2026 | $6,714 | $1,119 |
| Monthly difference | $1,163 | $194 |
| Over 10 years | $139,531 | $23,255 |
The gap between 5.0% and 6.76% is 176 basis points, which reads as a rounding error on a rate sheet until you carry it out ten years and it comes to $23,255 a person, which for most of this group is more than they put in at closing.
At year ten the group refinances into a conventional loan and pays Margaret off. By then the balance has amortized down to $841,158, the group has ten years of payment history and ten years of shared ownership to put in front of an underwriter, and the building carries whatever appreciation the market has delivered.
| Source | Amount |
|---|---|
| Down payment at closing | $114,900 |
| Principal and interest, 120 payments | $666,153 |
| Balloon payoff at the refinance | $841,158 |
| Total received | $1,622,211 |
| Same building sold for cash on day one | $1,149,000 |
| Difference | $473,211 |
That $473,211 is interest. In a conventional sale it goes to a bank, because the bank is the one lending the buyers the money. Here the money being lent is the equity already sitting in Margaret's building, so she collects what a lender would have collected, on capital she never had to move, secured by an asset she has owned for thirty years.
The honest comparison is not $1,622,211 against $1,149,000, because dollars arriving over ten years are not the same as dollars in hand today, and $1,149,000 invested on day one would have earned something of its own. The comparison that actually matters at that stage of life is between a lump sum she has to manage, allocate and worry about, and a fixed payment that arrives on the first of the month regardless of what the market is doing.
| Line | Group | Per buyer |
|---|---|---|
| Property value at 4% annual appreciation | $1,700,801 | $283,467 |
| Balance owed to Margaret | $841,158 | $140,193 |
| Equity in the building | $859,642 | $143,274 |
| Cash invested at closing | $149,370 | $24,895 |
| Interest saved vs. 6.76% | $139,531 | $23,255 |
Each buyer turned $24,895 into $143,274 of equity while paying $94 a month less than the room would have cost them to rent, and that equity is the down payment on whatever comes next, which for most people in a group like this is a house of their own.
The standard advice to a longtime owner-occupant is to move somewhere smaller, rent both units, and live off the income. It sounds like the conservative option and it quietly costs her money.
None of this means the seller should skip the work a lender would do. Margaret still needs to look at credit, at income, at savings and at what each of the six does for a living, because she is taking on the credit risk a bank would otherwise carry and she should price and document that risk seriously.
What she can do that an institutional lender largely cannot is look at the group as a group. Fannie Mae's Desktop Underwriter handles a maximum of four borrowers and Freddie Mac's Loan Product Advisor tops out at five, so a six-person purchase needs a lender willing to manually underwrite, which exists but narrows the field considerably. The constraint is procedural rather than credit-based, since six incomes covering one obligation is a lower risk than one income covering it, not a higher one.
Margaret has also been collecting rent from these six people, which tells her more about how they pay than a credit score does. Put that alongside a co-ownership agreement that sets out reserve requirements, a cure period and a buyout mechanism for an owner who cannot keep up, and she can reach a decision an underwriting box would never get to, in an afternoon rather than in forty-five days.
Margaret sells the building to the six people already living in it, takes $114,900 at closing, and collects $5,551 a month for the next ten years, which adds up to $1,622,211 against the $1,149,000 she would have received in a cash sale. She stays in her unit for as long as she wants it, she stops being responsible for the building, and she spreads the tax over the life of the note rather than paying most of it in a single year.
The six buyers get in for $24,895 each, pay $1,156 a month for a room that would cost $1,250 to rent, and hold $143,274 of equity apiece by year ten. What each side is really getting is the thing the conventional version of this sale could not deliver, because she gets predictable income without managing anything and they get ownership at a rate and a down payment no bank was going to write for six people at once.
Hypothetical scenario for illustrative purposes. Property details reference 35-37 Haskell St, Allston, MA at a $1,149,000 price. Note terms assume 10% down, a 5.0% fixed rate, 30-year amortization with a balloon at month 120. Market rate comparison uses the Freddie Mac Primary Mortgage Market Survey 30-year fixed average of 6.76% as of September 10, 2026. Property taxes calculated at the City of Boston FY2026 residential rate of $12.40 per $1,000 applied to purchase price; actual assessed value will differ. Insurance, utilities, reserve contributions, and the $1,250 Allston room rent comparable are estimates. Appreciation modeled at 4% annually. All figures rounded to the nearest dollar. Borrower limits reference Fannie Mae Desktop Underwriter and Freddie Mac Loan Product Advisor documentation; manually underwritten loans have no stated borrower limit. Seller financing rules reference the CFPB Loan Originator Rule at 12 CFR §1026.36. Tax treatment references IRC §453, §121, §483 and §1250. Closing costs include a 2% Restored Living coordination fee. Reserve fund balances are excluded from equity calculations. Not financial, tax, or legal advice.