Owner financing land?

[jlp04c]

There are dozens of reasons why someone would want to owner finance and COULD not get a loan... Some of them are more legitimate than others.

Self Employed- Not enough time to show steady income (3 years i think?)
Overtime pay doesnt count toward Debt to income, only base pay (or something along those lines)
Paid in cash type jobs, i.e. i make 100k a year, but only have 30k in tax returns to prove it.
Previous financial troubles/debts....

As mentioned, if it's raw land, and everything else checks out, then it's probably a good deal for everyone involved.

[chief262]

Make sure the property taxes are addressed.

[Gary Roberson]

Finance no more than 80% and require that they furnish current financial statement and tax returns for at least two years or verification of employment. They should also have credit references and names of loan officers that they deal with.
It is a fairly common practice but make sure that you have your attorney review the note and deed of trust. The preparation of these documents should be at the buyer's expense.
Adios,
Gary

[TeamAmerica]

i would consider but demand a credit report, W2s, income tax returns (pretend you are the bank because you ARE the bank). depending on sales price, 10% down could easily get spent on lawyers if you need to foreclose. make them escrow property taxes with you.

what rate will you charge? i would take no less than 5% to tie up my money.

[Razrbk89]

I sold my place in ETexas and I offered owner financing. My realtor handled the credit check, helped me with the restrictions, (he cannot sell any timber, gravel, clay, etc. without my permission) Of course I had my lawyer draw up the deed restrictions and payment schedule. My reason was the interest he’s gonna pay if it carries the full 15 years and the fact that in reality, it’s still mine until he pays it off.

You can come out ahead as the seller (& buyer) on owner finance deals.

Definitely make sure that your offer and acceptance letter is EXACT about any changes to the property, keeping in mind that it’s still yours until that last payment is made (in most cases).

Had an episode where I was selling a place with plans to buy another farm adjacent to me. Terms were favorable, but after the first annual payment was due, things went south. They ended up cutting about 100 acres or hardwood off of me before I was tipped off. No bueno. Got the place back, but trying to recoup that value... let’s just say you can’t bleed a turnip.

Live and learn.

[deerwatcher51]

That sounds more like insurance fraud to me. Used carpet sinks and toilets are dont go for high dollars.

The clients insurance would not pay him anything since he did not own the property. He thinks they took it all to Arkansas, where they probably lived like kings with their stolen booty....

[Gilly]

I plan to buy some small acreage eventually and have been looking at prices and financing options just so i know what to save for and what to expect. Like some one mentioned above from what I've gathered most lenders expect a 20% down payment. Whereas, I've seen owner financing with a down payment as low as 5%. As a buyer, the owner financing option based on the down payment sounds more attracting and I also have excellent credit so I would have no issues providing a credit report, etc.

Forgot to mention, raw land or land with little improvements is what Ive been looking at based on my budget lol

[Johnny_Dodson]

The only risk you run is if they try to build their homestead on it. Then the loan becomes a mortgage and can get a bit more expensive when it is time to foreclose. But just have it in contract that they can put their personal homestead on it. They can build just not the house they call home. Just make it so if they want to do that they have to pay you off before they can start. Other than that it is a no brained if your not needing the cash. It’s the easiest 10% you can earn.
If they don’t pay call your attorney and begin foreclosure.



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[AntlerCollector]

When i looked at buying some land this year everyone i called on raw land loans required 20% down.... Maybe he doesnt have 20% for a loan through a lender but has 10%?

And i have great credit so that wasnt an issue

Yessir you are correct about the 20%.

[JLivi1224]

Yessir, there would be a lot more landowners at 10%. Self included. Ah, hell, I got 4 kids under 8, two of which are twin toddler girls. Perhaps not.

[kparker158]

You can always cash out/sell the note to someone else if you get to the point you’re needing a chunk of cash.

Investors buy land to owner finance it to people because it’s a lot easier to make money. That’s why there is so many buy here pay here car lots. You can sell a $8k car to someone owner financed for $16k because of notes. Same principle.

[Lone_Wolf]

So last year I got selected for Jury Duty. The case was about a couple who owner financed a piece of property from their Neighbor. The couple lived in a rent house property that gave them access to the property they were owner financing from their neighbor. They weren't completely honest with the neighbor, and told them that they owned the house, and not that they were renting it. Well the couple put down a large chunk as a down payment, and temporary fence was put up made out of cattle panels. They just guestimated were the property line would be based on the amount of acreage they were buying. Well the couple lost the lease on their home and the land that it was on, and basically lost the only easement they had to the property that they had owner financed from the guy. Now this owner financing was done basically by word of mouth, and a simple contract that was written down on a piece of paper and signed by both parties. When the couple lost there house and the only access they had to the land, they refused to make any more payments on the land, but already had a substantial sum invested in the property. Because they stopped payments, the original owner of the land locked the gate, and would not allow them access to the land. He did allow them one time access to come get all there stuff, but they fail to show up. They also had stacked literally tons of concrete median pieces, like the ones you see on a major interstate like I-35. It would require heavy equipment to have the concrete removed. The couple worked for a local silage company. The couple was suing for the the $$ they had already paid for the land, and they wanted they're fencing material back. The Jury ruled in favor of the land owner and the couple lost the money they had put into the land. It was a pretty big mess.

[Lone_Wolf]

I think this was a case, were it just wasn't done properly.

[Kossetx]

I knew a man that OFed the same piece of land 3 times. Lots of folks have big plans but when the bottom falls out don't have a backup plan. Some of them paid him for years before they stopped.

Question is, can you make 7% owner financing?

[meltingfeather]

It can be low risk and banks generally won't lend money on raw land without a SUBSTANTIAL down payment. 10% would never fly.
As mentioned, get a decent contract and your risk can be low. You have to protect value on the land (structures, timber, wildlife, etc.) that they might be able to extract or damage-- very doable, just be aware and keep the balance in your favor.