I am trying to sell a rehab, but haven’t had much luck with it. My realtor told me there are several prospects that would be willing to buy it if they could do a land contract.
Here are a few of my questions:
Can I structure it where they can get a loan for $20,000 and I would carry back the rest of the loan (I need the $20k to cover my expenses).
Are land contracts something I should even be looking at doing? What’s your experience or thoughts on land contracts?
These “buyers” are willing to do a land contract because their credit is shot. In this environment, your credit has to be VERY bad to be excluded from a traditional loan. Since credit is a measure of trust, the people that you would be accepting would not be very trustworthy when it comes to money. Very few of these people with terrible credit will be able to get an unsecured $20K loan. Since their credit is already shot, they usually don’t have any money and their ability to borrow is poor.
Land contracts can be risky. Most 'buyers" don’t actually buy the property. Many will have to be evicted or foreclosed (much worse than eviction) and will trash your property. Furthermore, if you must foreclose, that can mean months and months of free living (at your expense) for the “buyer”. For these reasons, I never do land contracts.
i usually agree with mike but in this instance he may or may not ( sorry mike) be right.
I have held a land contract for people in the past and i also am paying currently on three different land contracts that i am buying.
quite franky i didn’t want to pay top intrest that i would have to pay for commercial, the owner was having a hard time selling in this market and he really wanted to retire so he agreed to hold two of our contracts at 6% for commercial. The other guy that holds our other contract was the first guys friend who also wanted to retire so he holds our other commercial conract at 6%.
Our credit is poor we just wanted a better deal than the bank could give us.
so do a credit check and give it a whirl…but 8 times out of 10 people do want a contract becuase their credit is crappy.