Owner financing land?

[meltingfeather]

It was a pretty big mess.

Folks generally have to lie in the beds they make...

[Burnadell]

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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Say, WHAT??? It’s not a mortgage without a homestead on it?

Please explain the 2nd bolded sentence. I am confused. You are contradicting yourself.

[RingSteel]

It's just raw land, timber has already been harvested, and the only improvement is the road has been rocked in and a good creek crossing is built.

[HOOKNBULLET2]

I’ve done it several times. Still do whenever the opportunity arises.

I suggest getting a loan servicing company to collect the money and file the IRS paperwork. Makes it hassle free. The fees from the servicing company should be added to the monthly payment. Don’t forget to get an origination fee of a couple points to cover all the attorneys fees and others associated costs with getting it all set up.

Finally, I do all mine on a 30 year amortization with a 5 year ballon.

[Bear Charge]

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

This. I bought my land using a lender because I felt like that was more secure. I had to pay 20% down but didn't want to give the previous owner the ability to change terms or back out. I could have "purchased" more land putting 10% down but the risk was too high.

[M16]

I’m in the process of doing an owner financed ranch repo. Hope to sell it again to someone that can’t afford it.

[AntlerCollector]

I’m in the process of doing an owner financed ranch repo. Hope to sell it again to someone that can’t afford it.

Wow.

[Ride_Klein]

We sell a lot of land owner financed. Some go like the James McMurtry song and we take em back to do it all over again. Most go well. We get a lott of wealthy and/or self employed that dont want a conventional loan sitting on their account. Dont be afraid of it but do paper it up well.

[M16]

U

Wow.

Wow what? Is it my fault when a high roller crashes?

[bowhntrmatt]

On raw land, I see very little risk. If you don’t need the cash up front, offer 8-12% interest depending on their credit score. Best case is they make the minimum payment for a long time and you sell for 2-3x the price. Worst case, you foreclose.

[bowhntrmatt]

U

Wow what? Is it my fault when a high roller crashes?

Nothing wrong with cashing checks a few years and then taking back the land, after appreciation!

[texansfan]

This makes sense to me, but I wasn't sure that foreclosure was an easy process.
If they can give 20% down, I'd feel a lot better about it.

The land isn't listed for sale. It's 20 acres +/- in Jasper, recently cut.

33.3% down
The rest payable in 120 monthly payments
15% interest rate

If they don't bite, then they can go to a bank for more favorable terms

Its a bear taking someone through the foreclosure process. Id advise against it
But I wouldnt advise against owner financing.
Just make sure it HIGHLY lucrative and favorable to you.

Also, be careful beacuse Dodd-Frank has a lot of laws about financing real estate you may not know about or be ready for.

[texansfan]

33.3% down
The rest payable in 120 monthly payments
15% interest rate

If they don't bite, then they can go to a bank for more favorable terms

Its a bear taking someone through the foreclosure process. Id advise against it
But I wouldnt advise against owner financing.
Just make sure it HIGHLY lucrative and favorable to you.

Also, be careful beacuse Dodd-Frank has a lot of laws about financing real estate you may not know about or be ready for.

Oh and use a 3rd party company for loan payments
Because when it comes time to forclose you'll need immaculate NON-payment records.

[RingSteel]

Thanks for the suggestions of the 3rd party loan servicing company.

One suggestion that I received was to should have a clause that if the buyer wants to pay off the loan early, all interest is to be paid. That is, all interest that would have been paid over the long term. Keeps you from losing a load of cash on an early pay off. The buyer may want to sell the property and make a profit and this way, you would still get the total amount including all interest.
Any thoughts of this idea?

[LoneStarTx]

From a buyers perspective, I won't sign a loan I can't pay off early without penalty.