How to Access Cash From Your Mortgage Note in Florida

Florida has no state income tax. You already knew that. But here's what most Florida note holders don't put together: combine that with hypothecation (which is a loan, not a sale, so there's no federal capital gains event either), and you're looking at 100% tax-free liquidity. Zero state tax. Zero federal tax. That's a combination only a handful of states can offer.

Florida is also one of the most active seller-financing markets in the country. High property values, a large retiree population, and a steady flow of out-of-state buyers who don't qualify for traditional financing mean there are thousands of private mortgage notes across the state. We know this market. We're based here.

One thing to know: Florida is a judicial foreclosure state, meaning foreclosure goes through the courts. This can take longer than in states like Texas or Arizona where the process bypasses the courts entirely. For hypothecation, this doesn't change your experience as the note holder. Our enforcement mechanism is UCC Article 9 (we take the note, not the house), which is efficient in all four of our focus states. But it is a factor in our underwriting, and it's one reason we pay close attention to borrower payment history and property equity in Florida deals.

Patricia is 67, lives in Naples, and sold her vacation rental in 2020 with owner financing. Her note has a $190,000 balance at 5%, paying her $1,110 a month. She needs $90,000 to help her son start a restaurant.

Here's what happened:

Step 1: Patricia told us about her note. We reviewed the terms, the borrower's 4-year payment history, and the property's current value.

Step 2: Within 72 hours, we sent Patricia a proposal with her specific numbers: $90,000 loan at 12% interest-only for 24 months. Monthly payment: $900.

Step 3: Patricia reviewed the proposal with her own attorney in Naples. She asked a few questions, we answered them, and she signed.

Step 4: We funded. Patricia's son got his restaurant capital.

During the loan, Patricia's borrower keeps sending $1,110 a month to the servicer. Patricia pays us $900. She keeps $210 every month. She's cash-flow positive the entire time, and she still owns her note.

When she repays the loan in 24 months, the note comes back to her free and clear. Total cost: about $24,470 in interest and fees. Taxes owed: zero. Not one dollar, because Florida has no state income tax and hypothecation isn't a federal taxable event.

For the complete math behind a deal like this, see our deal math walkthrough.

Not every note qualifies. Here's what we look for:

• Property located in Florida
• First-position note (we don't lend against second liens)
• At least 12 months of on-time payment history
• Adequate property insurance and current property taxes
• Unpaid balance between $50,000 and $1,000,000

Professional servicing is strongly preferred. If you're collecting payments directly, we'll need additional documentation to verify the payment history.

If you're not sure whether your note qualifies, tell us about it. We'll give you a straight answer.

We work with notes across the entire state, from the Panhandle to the Keys. Our strongest markets include:

• Southwest Florida: Fort Myers, Naples, Cape Coral, Bonita Springs, Estero
• Tampa Bay: Tampa, St. Petersburg, Clearwater, Sarasota, Bradenton
• Orlando: Metro Orlando, Kissimmee, Daytona Beach, Ocala
• Jacksonville: Jacksonville metro, St. Augustine, Fernandina Beach
• South Florida: Miami, Fort Lauderdale, West Palm Beach, Boca Raton

If your property is in a smaller market or rural area, we can still take a look. The note's payment history and property equity matter more to us than the zip code.

If you've already decided to sell, our guide on selling your mortgage note in Florida covers what to expect and what it costs.

Tell us about your note. We'll have a proposal for you within 72 hours of receiving your documentation, with your exact numbers: what you'd receive, what it costs, and what your monthly cash flow looks like during the loan.

No obligation, no follow-up calls unless you want them. Just the math.

For a complete explanation of how hypothecation works, see our guide to note hypothecation. For the tax side of things, see taxes when selling a mortgage note.