Land Contract Question

General Real Estate Investing
1

Does anyone have an experience on completing a land contract successfully? My tenant wants to buy my rental property but unable to get financing due to recent BK. What are the costs in which it will involved, pros and cons, etc…? TIA

2

Great question. I too would like too know.

3

I have a Contract for Deed (land contract) that I did several years ago. I used to have it electronically, but the hard drive that it was on had to be reformatted and I did not get that file first (as well as several others). I am not sure what your questions are or if this one would be applicable since we may be different states. I am in Texas and if you are also, then you don’t want to do a contract for deed. Let me know what your questions are.

Wilson

4

First of all, I live here in Virginia Beach, Virginia. Here are questions and concerns:

  1. Do I have to notify my mortgage lender prior to signing of this Land Contract with my tenat.
  2. I know that I have to keep paying home insurance and property taxes for it, but this will be added to my tenants (buyers’) monthly mortgage payment every month.
  3. Who takes advantage of the mortage interest during tax season filing, me or buyer or both?
    Is there any source of online info I can check?
    TIA,
    Dan
5

dalcant,

Let me take your questions one at a time.

  1. Do I have to notify my mortgage lender prior to signing of this Land Contract with my tenat.

The title stays in your name until the contract is fulfilled and you will be making the payments so the mortgage company does not need to be notified of the contract. Also, less than 50 percent of land contracts get completed (from what I have read).

  1. I know that I have to keep paying home insurance and property taxes for it, but this will be added to my tenants (buyers’) monthly mortgage payment every month

This depends on how the contract is written. My contract stipulates that the t/b pays the taxes and insurance. I send him a copy of the tax statement, and he has to pay them. He has to pay for the insurance and has me listed as loss payee.

  1. Who takes advantage of the mortage interest during tax season filing, me or buyer or both?

You get to take credit for the interest that you pay to the mortgage company, and you send your t/b a statement for the interest that he paid to you so he gets to take credit for that interest. The net effect is that you have to pay income tax on the amount of interest you collect that is over what you pay to the mortgage company,

Is there any source of online info I can check?

I do not know of anything online, but I wouldn’t completely trust the information that would be available if there were. This is one place that you need to have a lawyer look over your contract to make sure you are not opening yourself up for trouble.

Hope this helps.

Wilson

6

Thanks for the info…