Owner Financing for land purchase question

General Real Estate Investing
1

OK, I need some help here with a deal I am working with builder on a SFH property I am selling.

The simple idea I have is to have buyer/builder put 10% down, with monthly payments, followed by full payoff when home built and sold.

  1. What is ‘typical’ interest rate to charge on monthly payments? I am thinking 15 -18% giving builder incentive to complete quickly and also maying it worth my while.

  2. Is there any ‘Other’ things/charges I should be aware of in possibly doing this? Attorneys will be involved for legal aspects.

Thanks in Advance,
David

2

What is your objective? Do you need/want monthly payments? Then it sounds like a fair deal, better terms than he would get with a hardmoney lender.

Regards,
Patti Porter

3

Patti,
What would the deal look like from a Hard Money lender…?

What is the typical interest rate?

The land is fully payed off, so I can live with payments of in Full.

Thanks

4

Most hard money lenders only lend 50% - 65% of the appraised value of the land. They typically charge 2 - 7 points and rates are 10% and higher.