Any feedback would be appreciated. I’m in Georgia.
Sell on a Land Contract
Sale Price: $164,900
Down Payment: $15,000
Amount to finance: $149,900
Interest rate: 7.9%
Principle and Interest Total: $1,423.87 ( 15 year note)
Taxes: $2104 yearly ($175 monthly)
Insurance: $339.24 yearly ($28.27 monthly)
Monthly Payment: $ 1,627.14 PITI
Current Financing In Place.
Payment: $1,355.98 (15 year note)
Taxes: $478.00 yearly (have not increased since I purchased the property last year)
Insurance: $339.24 yearly
Monthly Payments: $1,492.18
My thoughts are a 5 year balloon.
Am I missing anything?
You say the current taxes are $478/yr but you show $2,104/yr on the pro-forma sale terms, why the difference?
The $478 a year is the current taxes. They have not changed since I purchased the property in the fall. When the taxes do change, it will change to the higher amount. The previous owner had homestead exemption and lived there for over 30 years.
How much did you put down when you bought the property?
Asked another way, what did you pay for the property when you bought it?
This is a house I purchased for $115,000. I put about $5,000 into rehab.
The market slowed considerably around November and has not improved. I refinanced the place to pull my money out.
The existing financing is mine. I have more rentals than I need.
So you are offering to finance what you owe on the property. The taxes will adjust so your cash flow will only come from the interest rate spread.
You can improve that income a little bit by taking only 5% down, resulting in a slightly larger monthly payment for the buyer. You can also improve the income by charging a little more interest. Taking less down payment, offering no bank qualifying, and saving the buyer from the loan fees he might pay an institutional lender, you should be a little better compensated. Consider charging 8.5% because you are taking on a greater lending risk than the institutional lender.