# Owner financed land.



## GeorgiaLady

Hi all...I am wondering if any of you have and experience (good or bad) with buying land from these "owner financed" real estate company's. There are several online that have land from Alaska to Florida....I am primarily looking at Colorado. Thanks in advance for any advice or experience that you can share.


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## AverageJo

I haven't dealt with an "owner financed real estate company". I've dealt with the owners directly, not through a RE company. I've sold property by myself and purchased it without a realtor. DH bought a house from the owners direct. Single sheet of paper, but then he knew them personally. It all depends on where your comfort level is. You can always have an attorney in that state look over the paperwork before you sign it. Get one in that area as they'll be more familiar with the laws in that state. Good luck!


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## Stiffchick

We bought owner financed land from a guy who owned a small realestate company in the town we were buying in. We have a family friend who is an estate lawyer who did alot of land transactions of his own do all the legal stuff, just to be sure it was on the up and up and we got all mineral and water? rights. IT was great, 6 years and it was all paid for and ours. we had to pay the taxes while we were making payments, and we could not log it untill it was paid in full, but those were the only stipulations. Good luck!


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## GeorgiaLady

Thanks for the replys! I'm mainly looking for something I can make payments on that doesnt have a early pay of penalty. I have some good credit, but not enough as a single mother to qualify for a mortgage.


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## sandc

Where in Colorado are you starting to look?


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## RobinD69

Do they have any of these places in North Carolina.


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## Stiffchick

There was no early payoff penalty in my contract, there was interest I think it was 6% but that was in 2003. but if we paid it off early, the guy didnt care. I dont know how it would be dealing with a corporation over an individual.


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## SashayXP

please be very very careful to inquire about water rights in colorado. Water is a big big deal there and you can't just drill a well anywhere you want. If you are locked into being able to get water from only one source, the cost is likely to be steep. HTH


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## GeorgiaLady

Sashay...I didnt even think about water rights, than you for reminding me. Sand...I'm not quite sure yet...any suggestions? Stiffchick....a 6% interest rate wouldnt be a problem as long as I could pay it off early. You mentioned you couldnt LOG until it was paid off, does that mean you couldnt cut a few trees for firewood or a few more for maybe a cordwood house? TIA.


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## edcopp

Georgia Lady. Good to see that you have an interest in "owner financed" land. This has been a large part of my income stream for the past 40 years or so.

What happens is a person usually acquires a large tract of land, and then cuts it up to sell in smaller tracts. Something like buying a pie and cutting it up to sell by the piece. Now the seller may agree to take time payments on the smaller piece. The IRS calls this an installment sale, but that is usually not a concern to the buyer.

Often this is called a "land contract" sale and in some states it may be called a "contract for deed" sale. The basics are the same. Buy from the seller, make payments, and get the deed when the property is paid off.

The seller may be a person, like me. Also you may see property offered by a company, or a corporation. It is a good idea to find out who you are really dealing with. There are many reasons that a person may want to do business as a corporation, or a company.

In a recent situation my IRA account was the "land contract" seller. In this case the IRA is a trust, and I get the benefits from that trust. My IRA trustee was the actual seller in that situation (but I get the money).

Individuals and companies exist just about everywhere to do this kind of (owner financed) business.

From your position, I would suggest figuring out a few things about your future plans. Where do you want to live? Do you have down payment money now? What about your income prospects for the future, and now? How is your credit? Some items will be more important than others as a buyer.

Most of the companies doing business with tracts of land, will have "good title" to the land. This is not always the case, and in some cases this can be a deal stopper. Think about research here. If the seller owes money on the land, can he deliver deed to you? The answer is Maybe. Other situations can come up as well as the title is concerned. Others claiming some ownership is common, and IRS or some other government agency often appear as well claiming an interest in the property.

The reason that most people seek to buy property on a "Land Contract" is no, or little money. If you had cash you could negotiate a lot better deal. The next most common reason is lousy credit.

The question for the seller becomes, do I want to turn my property over to a person who has no money, and bad credit? 

Negotiation is key here. It will help a lot if you can cause the seller to understand and trust you. This often takes a bit of time. After all he is risking his security.

The most common request that I get from a possible Land Contract buyer is : They need something to move into today, they have no cash , and so on. A little checking usually reveals that they are being or have been evicted usually for not paying what they owe. There is no requirement for me to check them out, but a little checking usually reveals a lot.

So. Prepare some information about yourself, and your needs and desires. Keep it simple, and provide the information to the prospective sellers that you may meet. Be patient, do not be afraid to negotiate. A "Land Contract" is an agreement between buyer and seller. Anything that needs to be in it can be included, like early payoff (you mentioned). Why not ask for a Discount for early payoff?

Hope this gives you some food for thought.


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## oregon woodsmok

It is common for the companies that sell a lot of land and provide their own financing to be selling undesirable land for a higher price than you would pay from a private party.

I suggest that you decide on an area and contact a good real estate agent and ask them to look for useable land with water and available utilities that can be owner financed.

Also put some ads on Craigslist asking for useable, owner financed land. Be sure to put in the ad that you have a good credit rating, because a lot of people who seek owner financing have trashed credit. Good credit will give you an advantage.

Have either a lawyer or a good real estate agent deal with the paperwork so that you are protected. Don't just sign whatever the seller gives you to sign.

It will help if you have some down payment money. I'd be surprised if you can get owner financing for as cheap as 6%. That is low for owner-carry.


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## Stiffchick

GeorgiaLady said:


> Sashay...I didnt even think about water rights, than you for reminding me. Sand...I'm not quite sure yet...any suggestions? Stiffchick....a 6% interest rate wouldnt be a problem as long as I could pay it off early. You mentioned you couldnt LOG until it was paid off, does that mean you couldnt cut a few trees for firewood or a few more for maybe a cordwood house? TIA.




No, cutting a few trees for personal use was ok,and even to clear a building site if we wanted. but we were not allowed to let a company come in and cut down lots of trees at once for a profit. just because if we had defaulted while we were still paying for it, and we had already logged it, we would have decreased the value. 

Side note though, we did call a logging company in after it was paid for to have them check it out. Our land was reclaimed farm land (old farm where trees took over), not forest so the company was not interested. I guess there are smaller outfits out there that would be interested in our trees, but I havent been able to find them, yet lol.


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## GoldenCityMuse

What edcopp said is good.

Seriously reconsider CO. Northern AZ or even NM would likely be better, and there is not the water issues that CO has.


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## thequeensblessing

We bought our property this way. We actually bought the original land and paid it off quickly to build our home on it. We eventually bought 2 more tracts around us as they came up for sale through the same company. We've had no problems at all. They've been great to work with!

One note though...I would NEVER buy land sight unseen. That's asking for problems!


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## GeorgiaLady

Thanks for all the wonderful replies. I am reconsidering Colorado. From my research I have learned what an issue water is in that part of the country. I want to be in the mountains and Colorado seemed ideal, but not so much anymore. I want some snow!!! It rarely snows here in Georgia and I just cant take the oppressive heat for 4-5 months out of the year.


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## BoldViolet

GeorgiaLady said:


> It rarely snows here in Georgia and* I just cant take the oppressive heat for 4-5 months out of the year*.


You an' me both, sugar.


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## sandc

The most affordable land in Colorado is going to be in the San Luis Valley. I find the country beautiful down there, but not for everyone. Water is scarce, wells are very deep and the land itself is dry as is the job market. The people will leave you alone unless you need help for the most part, there are no building codes so you can go at your own speed and do what you want. 35-40 acres will run you 250-400 a month owner financed. For the most part you will need to plan to be off grid.

I know we looked in the snowflake area of AZ and liked it, but I am stuck on heading back to Arkansas or Missouri so I can have real fish to waste bait on and not have to run halfway across the state to hunt. Plus I want a longer growing season outdoors


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## Dusky Beauty

Northern AZ is pretty and mountainy, but make sure it's possibile to drill a well before you buy. 
I lived out in Williams once-- a small town near the south rim of the grand canyon and the ground water is locked away under a thick layer of rock. Everyone has to have cisterns and fills them up at the town pump. in a water tank on a trailer or truck bed--- least. sustainable. system. Ever.


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## ChristieAcres

You rec'd good advice on this thread with multiple options. I would add that it is important to get a Title Report and have the transaction handled through Escrow, and RECORDED. That is in caps for a reason. If you secure Seller financing, this protects your interest in the property. The Seller cannot get a loan against the property. I also agree with either going through an Agent or RE Attorney.


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## Cygnet

Dusky Beauty said:


> Northern AZ is pretty and mountainy, but make sure it's possibile to drill a well before you buy.
> I lived out in Williams once-- a small town near the south rim of the grand canyon and the ground water is locked away under a thick layer of rock. Everyone has to have cisterns and fills them up at the town pump. in a water tank on a trailer or truck bed--- least. sustainable. system. Ever.


What Dusky Beauty said is dead on about water. I've heard of 3,000 foot wells in some areas of N. Arizona. I've also heard of a lot of wells that failed -- usually because the owner ran out of money. 

Also, depending on where you are in N. AZ, it can also be fairly cold in winter, hot in summer, very windy year round, and -- in the high country -- very hard to grow things even with water due to wind and due to fighting off critters. Land with good water is expensive. And by wind, I mean 30-40mph winds can spring up at any time on a clear sunny day, and 60-70mph gusts in certain areas (Rim country!) don't even make the news. 

If anyone IS interested in Arizona for homesteading, I would suggest looking at the low desert of southern AZ rather than the high country. It's much easier to grow things and finding property with good water is easier. You get used to the heat. (And you don't have to shovel a couple feet of sunshine out of your driveway to get to the road in winter.)


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## AngieM2

GeorgiaLady said:


> Thanks for all the wonderful replies. I am reconsidering Colorado. From my research I have learned what an issue water is in that part of the country. I want to be in the mountains and Colorado seemed ideal, but not so much anymore. I want some snow!!! It rarely snows here in Georgia and I just cant take the oppressive heat for 4-5 months out of the year.


Check out West Virginia - they have nice hill, and snow. 
And I believe the property is not as expensive.
Just a thought.


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## Bob Huntress

My wife and I bought our house and land from a man who owns a real estate company, and they did the financing. We have had very good arrangements for the past eight years. He gave us a 20 year note. Many owner financing is shorter term, but we do pay interest, while 5 year deals often don't.


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## SashayXP

Golden City Muse, we may be related! I moved from Texas to NM too...and then to Oklahoma. Not sure where you were in NM but there were PLENTY of issues with water. Near ABQ, where I lived, my well was 400 feet deep and the water smelled bad, tasted worse and was totally worthless. Two miles down the road the water was sweet. There are plenty of folks that I knew who had to haul water and I can tell you hauling water from town gets very old very quickly. More so if you have a garden or animals. I am in oklahoma and looking to move back to texas soon! We should talk!

Georgia Lady on the original question about buying a land contract...there is something else to consider and that is if you are using the original example of someone buy a large tract of land and then cutting it into smaller pieces and selling on contract, even if you pay off your portion early, you may or may not be able to get a clear deed. If the original purchaser bought 100 acres (as an example) and cut that into 5 acre plots, you can't get a clear title and deed to your 5 acres until the original purchaser pays off the 100 acres...it speaks to your level of trust from whom you are purchasing...but my land in Oklahoma is a total waste for me. All the money I have paid, I can't sell it becuase I can't get a deed until it is paid in full...and that means the big piece is paid, not just mine...but in the interim I can't sell this property. Check your contract carefully because you may not be able to rent it either if you decide to move. For me...all that I have paid the last several years is just a waste. I can pay off my contract and still not get a clear title or I can walk away and lose everythign I have spent. Neither option is very attractive to me. Most sellers will not allow someone to assume your existing contract either. We are in the same boat...single lady with some money but not loads and I got stuck in a contract that I cant get out of, can't sell and even if I pay off will not get a deed to my land. ALSO, please check carefully about utilities and ignore anythign that says "utilities near" because the utility companies charge you by the foot to run electrical line or water pipe and that gets very expensive very quickly. Where I am, the water coop will not turn on the water until you have a state inspected septic tank (meaning you can't install it yourself) and the cost to turn on water with the local water coop (the ONLY provider available) is $1750. yes really. That is the cost to join the coop, and that is what it costs to get water turned on. Other than hauling water from town there are no other options. Proceed carefully! Email me if you have any other questions I can answer...but I have a friend who moved from NM to colorado and promptly moved back because the cost of living in colorado is so high and as an example the tags for her truck were three times the cost of tags in NM for the same vehicle. LOTS to consider when making a big move.


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## Pony

Have you considered the Ozarks?


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