Is it possible to set up an Amortization schedule for the sale of a property on land Contract?

cornerjd1

We have sold a house that we used to rent. How can we create that sale and amortization schedule tracking monthly payments, principal, and interest?

Tom Young

Set up a manual (offline) Asset Account.  Using the date the land contract was signed, enter the amount of the receivable into the Account, with the offsets to whatever Accounts and/or Categories are needed to properly account for the sale.  Then click on the Account's gearwheel icon and select "Convert to a lending loan."

jacobs

This post is in a Quicken Mac category. @Tom Young replied for Quicken Windows. If the question is actually about Quicken Mac, what I can add is that there is no capability for amortizing lender loans in Quicken Mac. 

What you'll want to do is use any free web site which allows you to generate an amortization table for your loan, and print it. In Quicken, set up the asset account as Tom describes. Now, create a Scheduled Transaction for each month (or whatever the payment period is) with the total monthly payment and a split for principal and interest. This will generate the monthly transactions you need, but you'll need to edit the transaction each month to adjust split amounts form the values on your printed amortization schedule. It's a little a toying... but only a little. Once you have it set up, it takes less than a minute each month to update the split values. 

Tom Young

You want to set up a "loan" as the lender and what I posted above does work for that.  I know that works because I've made two or three real loans to my children over the years.  What problem are you encountering?

jacobs

Just to add to what @Tom Young said, in Quicken Mac, you can set up the recurring monthly payment transaction with the split between income earned and the principal payment — but Quicken Mac won't automatically change the split amounts each month. If you have an amortization schedule printed out, editing that transaction each month for the correct split amounts takes only a few seconds; or you can wait months or all year, and then just update the transactions. While it's annoying that it's not automated in quicken Mac, it's certainly not a reason to choose one platform over the other, because you're talking about literally a few minutes of work per year if you do it in Quicken Mac. 

Tom Young

Set up a manual (offline) Asset Account.  Using the date the land contract was signed, enter the amount of the receivable into the Account, with the offsets to whatever Accounts and/or Categories are needed to properly account for the sale.  Then click on the Account's gearwheel icon and select "Convert to a lending loan."

jacobs

This post is in a Quicken Mac category. @Tom Young replied for Quicken Windows. If the question is actually about Quicken Mac, what I can add is that there is no capability for amortizing lender loans in Quicken Mac. 

What you'll want to do is use any free web site which allows you to generate an amortization table for your loan, and print it. In Quicken, set up the asset account as Tom describes. Now, create a Scheduled Transaction for each month (or whatever the payment period is) with the total monthly payment and a split for principal and interest. This will generate the monthly transactions you need, but you'll need to edit the transaction each month to adjust split amounts form the values on your printed amortization schedule. It's a little a toying... but only a little. Once you have it set up, it takes less than a minute each month to update the split values. 

cornerjd1

Thanks for the help! However, I have jumped to Quicken for Windows seeing that it has more features. But what I'm finding is the same imitation. So I was hoping you guys could now address my original question only this time from a Windows base.

Tom Young

You want to set up a "loan" as the lender and what I posted above does work for that.  I know that works because I've made two or three real loans to my children over the years.  What problem are you encountering?

cornerjd1

Thanks, Tom and Jacobs. I'm back to the Mac version. I have an account named "Test House" under Property. However, When you say "enter the amount of the receivable," is that the total of the sale or just the down payment or first payment? And, I don't see the gearwheel you speak of.

cornerjd1

I can go back to the Windows version if it is, in fact, more adept at setting up what I need.

jacobs

The "amount of the receivable" is the amount of money you lent. This is an asset of yours — money owed to you.

You can enter this amount either an an Opening Balance when you create the account, or with a transaction using the category=Adjustment. In Quicken Mac, the Adjustment category is ignored in income and expense reports, so it's a way of making money appear or disappear without Quicken thinking it's income or expense. 

But if the money you lent came out of an account you already track in Quicken (e.g. a checking account, savings account, money market account), then you want the loan to reflect what happened in the real world: you transferred money from checking, say, to the asset. So in this case, you'd create the asset account with a $0 opening balance, and then enter a transaction in the account the money came out of using Category="Transfer:[name of asset account]". (Or you can select the transfer account in the Transfer column, if you have that visible in your register.) This creates a "linked transfer," meaning the one transaction shows up in two places: money coming out of checking account, money going into asset account.

There is no gearwheel in Quicken Mac; that was something Tom mentioned about Quicken Windows. If you're continuing in Quicken Mac, you'd proceed to enter a new scheduled transaction for the amount of the monthly payment you will receive from the borrower; that transaction would have two spits: one to credit interest earned (per an amortization table), the other to transfer the principal portion to the asset account. (Post back if this isn't clear, and I can create examples of these transactions.)

Tom Young

What you appear to be trying to do in Quicken is to create a sale of the property, a sale financed by the buyer,with cash out of pocket, maybe, and taking out a "loan" (the land contract) from you.  As part of establishing this loan in your Quicken file you want a complete amortization schedule so that payments from the buy can be accounted for properly.  Quicken Windows can do that, it sounds like the Mac version can't handle the "loan" aspect in so far as creating an amortization schedule.

I'd stick with whatever version you're comfortable with.  As @jacobs has stated, you can create an asset Account for the initial balance of the loan and then employ an outside program or website to establish the amortization schedule.  As payments come in you deposit them in your checking Account, look to the amortization schedule to see how that payment is split between principal and interest, and enter that split - a transfer to the loan Account for the principal with the interest entered into an interest income Category.

The real advantage is that the Windows program will enter the payment into the checking Account and make the split for you.

jacobs

Just to add to what @Tom Young said, in Quicken Mac, you can set up the recurring monthly payment transaction with the split between income earned and the principal payment — but Quicken Mac won't automatically change the split amounts each month. If you have an amortization schedule printed out, editing that transaction each month for the correct split amounts takes only a few seconds; or you can wait months or all year, and then just update the transactions. While it's annoying that it's not automated in quicken Mac, it's certainly not a reason to choose one platform over the other, because you're talking about literally a few minutes of work per year if you do it in Quicken Mac. 

cornerjd1

Well, guys, I went back to Windows and was able to create an Asset account then converted it to a lending loan as Tom explained. And, it created an amortization Schedule as well. So you guys have gone above and beyond my expectations, and, I will be referring back to these comments as I get all my details together. Thanks