# Owner Finance Horror Stories?



## Tango

I sold my last place with owner financing and the attorney wrote up a contract that heavily favored the buyer's and they breached a bunch of clauses anyway and we couldn't do anything about it. Luckily they did not stop paying, even though late often enough and they resold before the end of their financing so we were rid of them. 

I currently own a homestead on 10.3 acres and think owner financing will help it sell. There is a thread on it on the main homesteading forum "Suit or Walk Away" I found a local attorney that writes a more seller friendly land contract. I will also be looking at auction and I've contacted a 5% r.e. company in town as a back up to list itin spring if it is still available (they want a year and i'm not sure i want to give that much). Wanted to hear from anyone who sold with owner financing or anyone who purchased with owner financing to give me ideas or alert me to potential problems. 

Have been looking at the market here and I am within a reasonable price range. Don't think I need to absolutely offer to finance but thinking it might be helpful to someone and might sell quicker. Would ask for a 15% down and fair to good credit with stable job history and references of course. Any advice, suggestions...?


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## edcopp

So where is the horror story?


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## DAVID In Wisconsin

I did an owner finance years ago on 8 acres. I got 10% interest and good buyers. No horror story for me.


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## Tango

DAVID In Wisconsin said:


> I did an owner finance years ago on 8 acres. I got 10% interest and good buyers. No horror story for me.


Did you do any screening on the buyers? What do you think is a good interest rate nowadays? Am thinking a ten year note but maybe balloon in five. Just starting to think about these things.


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## topofmountain

Why not write your own finance terms with a buyer? I'm not for hiring attorneys. Contact a title company & use them they charge a % but not what attorneys charge. They know all the State laws on sale. They have owner finance forms etc. Last year I was going to sell a piece of property I was going to care the papers. I went to the local title company they said we can handle this. They would of collected the monthly payment & either write me a check every month or direct deposit into a bank account. That was the % charge. Of course they do a title search. Most common is buyer/seller split the cost of that. But that is all negotiable. 
Last year the title company told me that 9% was about average interest on owner finance. 
All this info I'm passing on to you cost me about 10 minutes in the office & zero dollars. In fact I knew the ladies sister that ran the title office after we talked a few minutes. So I had a nice visit. As it turned out a guy came by a year later & cashed me out & the same lady handled the sale & it was smooth as it gets.
Just a side note this was in State of Nevada.

One other thing people that don't want to go through a title company is a BIG WARNING SIGN FOR ME. As I stated in my post to your other thread you mentioned. I did buy a piece of property without going to a title company but the seller also didn't refuse to go that route. It was just the cost was so low & the County satisfied my questions that it wasn't worth it to me.


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## sidepasser

My best advice is to get a _really good real estate attorney _who specializes in handling real estate transactions (not a "oh I did three closings last year) but find one that understands the law, can write a contract that is fair yet, gives you the right to foreclose without a problem.

Let him handle the transaction but read everything yourself (trust but verify as one great President said..)

My transaction went off without a hitch, I hope you can get your place sold as well!


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## Tango

Thanks. There are no title companies in this area but there are real estate attorneys. A closing costs about $200 and a title search and title insurance is cheap. I've always had title insurance. I read the land contract for this attorney that I'm considering and it is in line with what I would like. The last buyers I dealt with had an excuse almost every other month. They waited for the grace period to expire each month as well so the end of the grace period became the due date for them. This contract allows the buyer to choose the payment due date and if he or she is late it is $50 extra. Nothing needs to be done about it. It also makes breaches of contract cause for a foreclosure. 
So it sounds possible so far. It would depend on where I go from here.


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## vpapai

I have owner financed two different properties, did well each time. Best advice is to run credit checks and have YOUR attorney draw up the contract. Also, if buying, buy the title insurance as you never know if others, such as heirs, have a claim on the property. Finally, decide what you want to do with the mineral rights if you have them.


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## Brooks WV

We are currently owner-financing our last farm. We knew the buyers well enough to feel comfortable with them, had a local attorney write up a simple contract and do the closing.
So far, its been smooth. The advantage to the owner/financer is the buyers defaulting. You get the property back, plus keep all the monies paid. So, I think it's important to get a good sized down payment. By having a significant investment in the property, the buyers are less likely to walk away.


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## ChristieAcres

Only thing I'd add is insure you have any clauses/restrictions along with clear concise consequences for violations (i.e. timber clause...). A horror story could occur with a Buyer who clear cuts all the trees off a property, without consequences to face... Another could be a Buyer runs a business off the property that causes damage to the property due to chemicals or oil being dumped on the ground (i.e. any type of home shop involving such...). Another example could be a radical poorly done remodel on an existing home or nice building... Locally, a nice piece of property was very trashed due to it being used as a race-track for motorcycles/off road ATV's etc... How about a Buyer using the property as a dump or the Buyer being a hoarder...

If I was going to offer Seller Financing, I would certainly include a yearly inspection in the Contract, with clear terms of notice to the Buyer (s). That would at least head off some of the worst case scenarios...


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## Tango

Thanks ya'll. I think if I didn't need the money for the next place I'd go that route with this attorney I found, but needing the money for the next place I'll probably try the traditional bank route. Good to hear there aren't the horror stories I was expecting. A large down payment and a credit check is definitely key.Grateful. 
Edited to add that I will be offering owner finance after all, as I think that will make it more attractive and will keep me from jumping into another property before I have a chance to sift through the rubble of this past year. Going on the market tomorrow. Thanks for all the help ya'll.


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## farmerj

I learned years ago, at least here in Minnesota, the state's district court website has a source for court documents that the lawyers download and fill in your comments and then you pay the same filing fees to the court administrators/ country auditor / appropriate legal office.

Found it's much easier on my pocket book to download those same blank forms and fill in the blanks myself once all the parties agree to the terms.


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## Tiempo

We bought via owner finance. We did 10% down, 7.5% for 5 years. We paid 100% on time and paid the balloon this past August as per contract.

We took a risk and spent quite a lot of money on a complete bathroom reno. I was worried about doing it (spending all that money) without a traditional mortgage, but now I know it helped us get a great appraisal for the VA loan.

I have to say, if the seller had required annual inspections I would have walked away...not even a landlord does that and it's a gross invasion of privacy imo.


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## Tango

thanks for your input Tiempo.


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## ChristieAcres

Tiempo said:


> We bought via owner finance. We did 10% down, 7.5% for 5 years. We paid 100% on time and paid the balloon this past August as per contract.
> 
> We took a risk and spent quite a lot of money on a complete bathroom reno. I was worried about doing it (spending all that money) without a traditional mortgage, but now I know it helped us get a great appraisal for the VA loan.
> 
> I have to say, if the seller had required *annual inspections* I would have walked away...not even a *landlord* does that and it's a gross invasion of privacy imo.


An Annual Inspection is a standard option in a WA Lease Agreement... Unless a Tenant has something to hide, this isn't intrusive, but an appointment must be made with the Tenant. This protects the property of the Landlord. If the home/property isn't inspected, a lot of damage can be down without the knowledge of the Landlord/Owner! Property Managers inspect often more than yearly, all contingent upon the Tenants.

If a Seller offerings Seller Financing with specific CCR's (Conditions/Covenants/Restrictions), which could include a Timber Clause, the Seller better have some way to monitor insuring the Buyer (s) isn't violating the Contract... After the fact, is not the best time to find out there has been polluting, including dumping chemicals on the property. Once trees are logged, they are GONE. I have seen the results... There are risks in offering Seller Contracts. If one doesn't want any risks, don't offer it.


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## Tiempo

I lived in rentals in NY and Michigan until I was 44 years old, mostly because my ex was a permanent student, until he was 40 he collected degrees for a living  so there was a good amount of moving.

Never, ever had a landlord want to inspect and for the 5 years we were under an owner finance she never asked to inspect, not even when we were going through appraisal etc for the VA loan to pay the balloon. It has nothing to do with having anything to hide, it's about privacy in my home.

I can understand wanting to protect your property but imo that's the risk you take when you decide to rent or owner finance. You may own the property but it is now someone else's home. We are private people, I pay my money to live in peace and invite into my home only who I want to.


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## DAVID In Wisconsin

As a landlord yearly inspections (if not more often) are a must. It is written into all of my leases and I have never seen a lease without an inspection clause. If I sell land with a house and carry the note it would have an inspection clause. I would worry about a tenant who had problems with signing this.


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## Tiempo

Odd. Never been asked of me, ever.


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## Tiempo

Just asked hubby as he's lived in a lot of rentals too, in Michigan, California and WA and he's never been asked to either.


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## ChristieAcres

DAVID In Wisconsin said:


> As a landlord yearly inspections (if not more often) are a must. It is written into all of my leases and I have never seen a lease without an inspection clause. If I sell land with a house and carry the note it would have an inspection clause. I would worry about a tenant who had problems with signing this.


You certainly won't be the one bemoaning a destroyed home or property due to neglecting to inspect your own ASSET. That seems to be the point that has been missed. I have been a Tenant and a Landlord, too. Every single Lease Agreement included Annual Inspections. According to the WA Tenant Landlord Act, Inspections can be done with an appointment and proper notice even more often when warranted. As a Tenant for 22 years of my adult life, I just considered it part of my responsibility and I had nothing to hide! It wasn't an intrusive, as it was only once a year with an appointment. Also, I rented in WY, CO, AZ, CA, and WA.



> Never, ever had a landlord want to inspect and for the 5 years we were under an owner finance she never asked to inspect, not even when we were going through appraisal etc for the VA loan to pay the balloon. It has nothing to do with having anything to hide, it's about privacy in my home.
> 
> I can understand wanting to protect your property but imo that's the risk you take when you decide to rent or owner finance. You may own the property but it is now someone else's home. We are private people, I pay my money to live in peace and invite into my home only who I want to.


Without an Inspection, a meth operation can sprout up, lots of friends and family move in, and there is a host of other situations that can start and flourish with an absentee Landlord/Seller holding a Note... In fact, someone can have great credit and be a criminal who just hasn't gotten caught yet... Every Landlord and Seller who finance retain the legal right to inspect his/her asset and it is simply to protect said asset. No Tenant can dictate the risk a Landlord must carry. Only the Landlord or Seller holding the Note can opt to forego and not require the Inspections. The consequences are not worth it!


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## ChristieAcres

Here is an excerpt from a WA Lease Agreement required to be used by all WA Property Managers via the NWMLS, but this excludes all those who use other Company or private forms:



> INSPECTION/SALE. Lessor may enter the Property *to inspect it or make alterations or repairs* at *reasonable times* and, except in emergencies, *shall give Tenant two days&#8217; notice*. If* Lessor wishes to show the Property* to prospective purchasers or tenants, Lessor shall provide Tenant with *one day&#8217;s notice*


This isn't even a provision for a Yearly Inspection, which I experienced, but is wide open based on necessity. Consider a neighbor reports a situation at the property...the Landlord/Seller can do an emergency Inspection...

I should add that said paragraph I quoted does adhere to the *WA State Landlord Tenant Act.*


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## Tiempo

I guess myself, my hubby and my ex must have trustworthy faces then


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## farmerj

None of your "inspection clauses" by state law allow you to randomly just show up and walk through a place. Everything I have read or seen on them says they should be scheduled and if possible, tenant available too.


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## ChristieAcres

farmerj said:


> None of your "inspection clauses" by state law allow you to randomly just show up and walk through a place. Everything I have read or seen on them says they should be scheduled and if possible, tenant available too.


What I posted was the complete paragraph and emergency inspections can be done without notice and are covered on RCW's of WA State Law. I am not going to keep posting as its everyone's option to check their own Tenant Landlord Laws specific to their States. Standard Inspections are done with two days notice and an appointment with the Tenant. However, there are legal exceptions clearly spelled out in the WA Tenant Landlord Act. Only thing I can add is that a Landlord or Seller can make their Contracts even stricter and as long as the Tenant agrees (as long as there are no Law broken, of course), the Contract must be adhered to. If a property is being sold, the Tenant does NOT have to be there during Showings. I list properties with and without Tenants. What we do is try to schedule certain days/times that work for the Tenant, but the Tenant is not to be there.


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## farmerj

"Emergency" inspection are with due cause. Stated specifics. As a landlord, it was not just so I could walk in. You seem to think you can. A family member calling and saying a member has been heard from in Several days outside of norm, including not showing up at work is one thing.

Just walking into a place because you feel as the owner it's your right is not and emergency.

You don't seem to want to acknowledge that's what people are telling you.


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## Tiempo

In Michigan you do not have to grant access to the landlord

http://www.michiganlegalaid.org/library_client/resource.2005-05-30.1117489737513/html_view



> You should set standards for your landlord to follow. *Write your landlord a letter making clear your expectations*. You might demand one to three days written or verbal advance notice for permission to enter. The landlord's request should state who is entering, at what time, and for what reason. You have the right to be present whenever someone enters and the right to refuse entry.


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## ChristieAcres

farmerj said:


> "Emergency" inspection are with due cause. Stated specifics. As a landlord, it was not just so I could walk in. You seem to think you can. A family member calling and saying a member has been heard from in Several days outside of norm, including not showing up at work is one thing.
> 
> Just walking into a place because you feel as the owner it's your right is not and emergency.
> 
> You don't seem to want to acknowledge that's what people are telling you.


I am not a WA State Attorney, but am required to adhere to WA State Law when I am a Landlord and I have been. In addition, I never just "walked in" whenever I felt like it, and never posted it was a permissible thing. However, I DID post an excerpt from a WA State Lease Agreement, which was written by WA State Attorney's. It reads rather literally:



> INSPECTION/SALE. Lessor may enter the Property *to inspect it or make alterations or repairs* at *reasonable times* and, *except in emergencies*, *shall give Tenant two daysâ notice*. If* Lessor wishes to show the Property* to prospective purchasers or tenants, Lessor shall provide Tenant with *one dayâs notice*


So, if an alteration or repair needs to be made, a Tenant MUST allow the Landlord access (at "reasonable times"). An emergency can be a number of different types. To respect a Tenant, I ask my RE Clients to find out what times/days work for the Tenant, otherwise the Tenant will be called every single time there will be a showing w/24 hours notice! They get to choose which option they want.

If a Landlord wishes to Inspect the property for any just reason (for suspecting a violation of the Lease Agreement), the Tenant is given 48 hours notice. The Tenant has to then allow the Landlord access. They don't get to refuse reasonable requests to access the home. It is up to a Judge to determine is a Landlord has over-stepped this.

I should interject here that I have had to go to Court one time only as a Landlord and won. The Judge explained this quoted paragraph to the Tenant in depth. He stated I had a very clear understanding of it and had violated nothing. The Tenant violated the Lease terms and he was evicted as a result. The Judge threw out his suit. It hinged on us performing repairs due to damage he caused and his refusal to allow us in when we had to drive over an hour each way to work on the house. 

Landlords/Sellers can write in whatever they want into their Contracts as long as it does not violate any Laws that pertain to the WA Tenant Landlord Act.

That all said, Landlords/Sellers can opt to forego whatever they wish and may be very sorry they did with the "wrong person"


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## ChristieAcres

Tiempo said:


> In Michigan you do not have to grant access to the landlord
> 
> http://www.michiganlegalaid.org/library_client/resource.2005-05-30.1117489737513/html_view


Now, we know you are in Michigan stating those Laws and I am in WA stating ours. I wouldn't waste my time trying to debate your State Laws. They are relevant for you and our State Laws are relevant for me.

The OP is in Tennessee and I think it would be prudent for the research on Landlord Tenant Laws to be relevant to that State. Back to the subject :thumb:


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## Jennifer L.

Request a credit report from anyone who wants to buy. You're acting as their bank so you should know their financial background. And if they don't have good credit, make sure you get a large down payment, so they aren't likely to just act like they are renting and trash the place and then walk away.


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## Tiempo

Jennifer L. said:


> Request a credit report from anyone who wants to buy. You're acting as their bank so you should know their financial background. And if they don't have good credit, make sure you get a large down payment, so they aren't likely to just act like they are renting and trash the place and then walk away.



We were very fortunate that our seller was understanding of the reason for my husband's bad credit score, hence our need for an owner finance.

He had been the victim of pretty spectacular ID theft. If I remember rightly we showed her the police reports. 

If someone has a poor score I would definitely want to know why.


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## sss3

I had rentals in Mi for 30 yrs. You can be granted access with 24 hrs notice. Just make sure lease or l c says so.


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## farmerj

Since the OP is from TN.
Tenant right laws for TN.
http://www.tn.gov/consumer/documents/LandlordTenantBrochure.pdf


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## kybound

For my owner financed property, I, as the buyer had a contract for deed written up by a local area attorney. It clearly states that OGM and timber cannot be harvested by EITHER party, while the deed is being paid on. There is no clause for the owner to inspect the property and surely he doesn't want to either. If their are damages or any of these are breached the owner can forclose and sue for restitution. The thing about the contract for deed, or any other contract, is that whatever you sign is what you agree to. Its not necessarily law that you must grant permission, but if it's in the contract, and you sign it, then your obligated to follow through with that provision. The contract must be signed by the seller and the buyer, so if there is something in the contract you dont like, then change it. (thats what we did) until we were both satisfied. As a buyer, I pay an extra 1,000 dollars a month on top of the minimum and have never been a day late. The funds are direct deposited every 1st of the month. The owner agreed to a 3.5 percent interest rate because I was able to get a 4.0 percent interest rate from the bank. I felt the interest would be better to go to the owner then those greedy banks. All in all I have had an excellent experience. I would NOT have bought the property if the owner had not agreed to owner financing. It boils down to you as the seller, do you want to deal with this person for x amount of years? Are you ready to fight legal battles if the buyer ruins everything, doesn't pay, breaches the contract? Be ready to check up on this person and their intentions before you agree. It should make a large difference on whether you want to work with them or not.


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## Tango

My first owner financed contract had a bunch of stipulations which the buyers didn't respect or follow and I had no recourse other than foreclosing and auctioning the place off to repay the buyers after my expenses were paid for. It was a lousy contract I would never have agreed to. I didn't read the contract before time; I was out of the country and the matter went through the co-owner who had power of attorney. This place here is mine outright. I've already chosen the attorney and have a land contract to go by if I do finance the place, would rather sell it outright. 

On the subject of inspections, I try to live by the Golden Rule and pray so much that others learn to also, would make life much nicer for all. I wouldn't want anyone coming to my place unannounced. Once my brother visited me for the first time to see my new place in Florida. He didn't call ahead. It was absolutely the worst day he could have picked and I am sure he walked away thinking I am a slob. I am very tidy and like things to not only look clean but BE clean and smell clean. The whole place inside and outside was a mess from taking on too many extra projects while I was still teaching. He has never visited me again. Putting that in the contract however, and making it only with advanced notice, seems okay to me. Not unannounced but with a respectful advance announcement seems okay. 
I will check out the buyer, his or her rental references, employer and credit rating before agreeing to finance. But if I can sell it outright, that would be my first choice. Thanks ya'll. Very informative.


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## Hossplay

Ya want a horror story I'll give ya one. I partially developed a three acre property adjacent to the one we live on. We put a double wide manufactured home on the parcel, installed a septic system and brought electric to the front of the property. The buyer needed to hook up the home to the septic tank, bring the electric to the house and drill a well. The R.E. agent sold the house to a drug addict who put $20,000 down and then never made a payment. She lost her well and electric money at an Indian casino. Then she got arrested and spent a couple of weeks in jail. Her 14 year old daughter was handling the finances. She was never enrolled in school. The mother had a boy friend who also got arrested. The daughter left to live with her grandmother. We filed for foreclosure. The buyer was violating all kinds of health and building codes and were living in a home that had not had a final inspection. They never hooked up the septic line and sewage was draining onto the ground under the home. County code enforcement refused to do anything. After we filed the foreclosure it took 180 days to have them removed. During that time they came and went. They had been gone for six weeks when I saw a cat in the window. It was the middle of February and the weather was sub zero. The window was unlocked and I rescued the cat who jumped onto my shoulder. She weighed about a pound. When we went into the house after the foreclosure there was food and feces all over the floors. Their dogs had clawed holes in the bedroom doors and holes in the carpet. The sink was full of garbage and the toilet was full to the brim. I disconnected it, put a trash bag over it and took it to the dump. We were lucky there were only a couple of holes in the walls. We hauled truck loads of trash to the dump. We lived for months in fear of being burglarized after they left. A couple who previously looked at the house when it was for sale wanted the house. He was a contractor and wasn't bothered by the needed repairs. We sold it to them for $10,000 less than the first sale. We bartered part of the down payment for the labor for installing a new metal roof on our house. We bought the roofing. Instead of finishing the job after removing the shingles the buyer/contractor started working on other jobs. Our roof was covered with tar paper and when it started raining water was running down the inside walls of our home. I had to threaten to sue him to get the job finished. The wife became angry at the husband and she stopped making payments. I had to threaten to foreclose after they were four months behind. They ended up getting divorced and he moved out. A boy friend who is a few years older than her sixteen year old son moved in. She has three teenaged children. Actually, they are a nice family and good neighbors except that periodically she stops making payments. I was on the verge of foreclosure once again a month ago when she started making the payment plus $100 towards the four months arrears that she owes us. They have been in the home for eight years now and owe more than when they first bought it but the monthly payment at six percent interest is a nice supplement to our fixed retirement income when she pays it. The problem is we can't depend on it. The first foreclosure cost us $3000.


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## Tango

thanks for the story hp. i'm so sorry for the troubles you've gone through. there used to be a regular on these forums that purchased owner financed land through another regular and then clear cut the timber and never made payments. we all found out about it right on this forum. it was a rough time and i know this stuff happens....with my luck it could as well be me next even if i do my homework. that is why i ask, to get an idea of what could happen and why it might have happened. gratefully....


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## fordy

..................For monthly collections go through a local bank , they'll set up the whole deal for a modest collection fee....
..................Make the buyer take out a decreasing term life ins. policy that pays the benefits directly TOO YOU....i.e. , doesn't get tied up in their estate at all . The decreasing term ins. policy payout decreases each month as the loan principal balance decreases also . Your investment is protected this way . 
.................Base your interest rate upon their credit rating..........I'd say a range of 7% to 10% ! , fordy


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## grandma12703

Sorry but I am still thinking about the inspections. I am a pretty good housekeeper but I am not sure I am in agreement with inspection without notice of at least 24 hours. I have no problem with company coming by because usually that just includes the living area and possibly the restroom, however sometimes my bedroom or sewing room or grandkids room is another story. Although it is obvious it is just messy, not dirty or torn up .... it still embarrasses me and I don't feel good when someone sees it unprepared. For instance a morning I am running late and can't find anything to wear you would walk into my room and find many clothes on the bed, dresser, hanging on the door... but come any other day and it is not that way. At least with some hours notice I have time to get home from work and get things tidied up. 

In my 30 years of marriage we have owned 5 homes - 3 regular mortgage and 2 owner financed - never has anyone surprised me with an inspection. Of course with the owner financed I have had them run by for something or another and I let them in no problem but that was very seldom. On the other hand we have owner financed 2 of our previous homes for others and I would not just go over for an inspection without notice. I have driven by the homes and as long as it looks kept up I have always been good with it. Usually if the inside is a wreck so is the outside.


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## Billie in MO

If you do owner finance make sure you pay the county taxes on it yourself. We owner financed our house in CO (Oct 2009) to my hubby's brother and his wife (not thrilled with doing it.....he had bad credit, wife had none but did have money to pay the loan off from settling her mom's estate). Wish we could have held on a bit longer (only had 5 years left on the loan) but certain circumstances were a factor.

The wife is a real piece of work and to put it bluntly, we do NOT trust her. I could write a book on all the stuff she has pulled. Up until July and Aug of this year everything has been ok. Then all of a sudden the amount they paid changed. (it is direct deposited into our account by the bank, we kept our account in CO and they use the same bank). Sent a friendly little note in the mail asking 'what's up' and to call Bill. Seems the wife was bored and was looking at our contract and decided to pay less because of the taxes. They are suppose to pay 1/12 of what the previous year's taxes are. Then they divided the remaining months by 12 and paid even less than the 1/12th. Math is obviously not their strong suit.

Made it perfectly clear they cannot change the amount they are required to pay. Only Bill and I can do that. They were paying extra (at Bill's brothers request...seems they forgot that). The extra went toward the principal. Their figures on what they had paid toward the taxes/mortgage was totally wrong. Other figures they had were totally off, as well. The wife is under the mistaken impression that the escrow account we have to pay the county taxes with are a personal savings account for her. That that is HER money!! That she can borrow money from it whenever she wants. She does NOT have access to it but keeps asking us to borrow from it.

Bill and I spent a month getting all our figures/facts together. Double/triple checking everything. Wrote them a full 4 page document spelling everything out. Made it clear that they had violated the contract and that we could in fact take them to court. We did change the amount they pay. Nothing extra going toward the principal. They have to maintain a certain balance in the escrow account. (I did research that to see what is normal and we chose to double that because of their history). We also have let them pay the insurance on the house themselves, however the insurance company has to send us a statement every year showing that it has been paid. Also, we will review the amount they pay every year based on the county taxes and Bill and I will determine what they pay. Then we will notify them what the new amount they pay is. Taxes go up, they pay more, taxes go down, they pay less, of course. However, the principal amount will never change.

I will NEVER allow them to pay the county taxes themselves. It was something I insisted on doing from the very beginning. (guess I had a feeling something would happen!!) We do not trust her. Obviously, there is more to the story but those are the highlights of my little horror story.


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## DAVID In Wisconsin

All of my leases and contracts give me an inspection with 24 hours notice. But in all of my years I that've never done this. On the few occasions I had reason to wonder, I just called and scheduled some service that I needed to do. Also whenever I have service people in my places they are always looking for me. So far I have been very lucky but I'd rather be on the look out than using hindsight. I have to say I have some of the world's best tenants. But I have 100's of thousands invested that I need to protect. 

I also do work for other landlords and property managers. I sometimes do service specifically to check on the upkeep. Like changing smoke detector batteries if there is any doubt about a tenant.


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## GardenGekko

Tango - I've followed your other post closely and feel very badly for your situation. I think you need to consider two independent questions. (I) your emotional relationship to this land, and (ii) the suitability of owner financing as a financial strategy for you. 

On point one, it feels like you've reached a point that you need to make a clean break from this property, so that you can move on with your life. It is clear it has been a tremendously physically and emotionally draining experience for you. For this reason alone, I would advise against owner financing and the ongoing energy and attention that it will require. You are potentially setting yourself up for years more of chaos and frustration. 

On point two, owner financing is a high risk / (potentially) moderate reward financial strategy (credit card companies charge these credit profiles 20-30% vs the 7-10% discussed above). You are by definition dealing with individuals who cannot get conventional financing and who are very likely high risk credits (no offense to previous posters who have used owner financing - this is not a universally true, but highly probable to be true. The odds are against the seller). It requires a lot of work to protect your investment, both in the transaction phase (contract, buyer diligence, etc) and on an ongoing basis. Please do not take offense to this next statement. We all must be aware of our own strengths and weaknesses (and you seem like a very insightful and intuitive person). Based on your previous experiences, do you think you have the diligence, focus and business judgement to make this work?

Let go of this experience. Sell the property for cash. Take the proceeds and find a new homestead. Do your homework this time. Make a clean break and move on to a better chapter in your life. 

I wish you the very best.


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## Tango

Thank you for your candor GG. The timing for your post is perfect... I took down the sign yesterday because of the "Lease to Own" part which was not what I had wanted. I have had some anger and depression outbursts that have given me lots of food for reflection. I think they are rooted in the craziness this place has been and a feling of being powerless in a captive sense. I really appreciate yoru advice and it rings so true as well. That was what I wanted to hear, perhaps when I posted this. Ironically, not having a paying job I also needed owner financing. This place was purchased on a land contract and was paid off within 30 days becuase my other place sold and suddenly my cash flow was excellent  funny, I didn't know my first farm was under contract - the real estate company - same company - didn't tell me until we were on our way to the closing, literally driving with the real estate agent to the attorney when she told me... i took this work on because i needed the financing and i am sure the seller washes his hands because, even though he received a cash dump within 30 days of closing (thankfully I avoided all interest) he helped someone who thought she could not do better at the time. all perfect conditions for what unfolded. 
The place has a 6 month contract with this r.e. company and I am looking to get entirely out of the homestead if it sells You are right; I don't need it to drag on. :soap:


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## Madame

I am buying my house on land contract...40% down, rest paid over 5 years (47 months to go). No problems whatsoever.


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## GardenGekko

Hi Tango - I'm glad my post was helpful.

Perhaps I could offer a few more pieces of advice, and I hope they don't cause offense? 

If you are not currently employed, perhaps it might not be the right time to go into debt to purchase land. You may want to work and save long enough to pay cash for the property, or wait until your current land is sold and use the proceeds to buy the new property. Owning an unsold / unsaleable property, living on a fully mortgaged property at 10% interest rate, and being not-currently-employed could result in another traumatic episode. 

Perhaps you should take some time to mentally and emotionally regroup? prepare yourself to enter the next chapter of your life without the emotional baggage of this experience.

When you do proceed with a sale of the current property or purchase a new one, don't rely on anyone else to do the homework for you - co-owner, real estate agent, lawyer, friends, etc. YOU have to be the expert. Read every version of the contract. If you don't understand something, ask you attorney to explain. If they give you a non-answer or you are still confused, ask again until you understand. Make sure everything seems right to you. Don't be intimidated. It's your land / your money. Don't allow the professionals to take any action on your behalf without your explicit and fully informed consent (eg, the real estate agent putting your farm under contract without your knowledge). Thoroughly walk the new property (preferably at various times of the year). "Interview" the locals (but be aware of their biases towards oursiders or their financial motives). Look at old areal photos and topo maps (they're available free on line). Imagine all the things that could be wrong (old gas station? Old dump? Nearby hazardous waste site? Pipeline right-of-way? Proposed highway? Mineral rights?). It's amazing what an Internet search can turn up. The key to diligence is imagining all the horrible things that can go wrong, and searching exhaustively for their potential existence. 

Don't co-mingle emotions with financial decisions. Falling in love with a property or dreams of what it could be can blind you. Dont be afraid of risk, but be fully aware of the work required to turn it into reward. Being charitable, empathetic and trusting are all noble and important traits, but are not the right mindset when negotiating a contract. That doesn't mean you are or should cheat the other party - contracts should be fair for all involved - but you should strive to be analytical and to protect yourself and your life's savings from others who would try to cheat you, or from professionals who strive for a quick payday with minimal work. 

Good luck!


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## Tango

HI GG, thank you for the advice. With hindsight, I see a lot of things that should have been a warning but I tried to look at things "rationally". My emotions were telling me to run  should have listened to my emotions  A lot of information - for this place - I already had since I am very familiar with this area. I lived 40 minutes away for five years and came to Savannah for most of my supplies. That might have been detrimental in this case. 

I am not feeling so overwhelmed right now, partly because of the support I've received from my family and friends this Christmas. I'm clear about the type of sale I will agree to and also have tried to look at the land again in terms of what I can do. It is a huge chasm of garbage but that is actually a small part of the property probably less than .25%. I can have dairy goats in the back when it is fenced. I have a pond and a new tiny cabin. The front is cleared for a tiny orchard. So whether it sells or not, I think it will be okay. 
I have just left a nun's order and am not looking to get back into work unless it knocks down the door. I resigned from public work over a decade ago and have found the rocky self-sustainable lifestyle and voluntary simplicity create a healthier and saner way of being. This means I have to have a means somehow and now being on grid - which wasn't in the plan- I have to have money each month. This added to the overwhelming feeling... and I know that being on grid is one of the reasons I am not at ease here. Whatever happens, I've learned a lot from the threads about this place and am very grateful for everyone who has shared experiences and advice.


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## GardenGekko

That's a great exception to my advice on emotions! When they tell you to run, run!

Sounds like you're on the right track. Looking forward to reading future post describing your farm once its up and running - either this property or the next!

Good luck and happy new year.


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## woodhogg999

HI,I was reading some of the posts about and such,what i have done in the past if i needed realtor to sell my property,but did not want a long term contract was if they had a pocket buyer i would give them a listing for that 
one buyer only,because realtor's know of buyers that do not want be bothered looking at a lot of parcels.


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## Deeplines

Interesting read, Thanks for posting Tango.

Lorichristie brought up some good points that never occurred to me in the owner financing scheme of things. I'll read some more topics and see if my question can be answered in them but I'm looking at a owner financing piece of land. It seems a lot of this evolves around land with a house on it. I'm looking just for land. 

This fourm can really help someone in lot of ways.


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## ChristieAcres

Deeplines said:


> Interesting read, Thanks for posting Tango.
> 
> Lorichristie brought up some good points that never occurred to me in the owner financing scheme of things. I'll read some more topics and see if my question can be answered in them but I'm looking at a owner financing piece of land. It seems a lot of this evolves around land with a house on it. I'm looking just for land.
> 
> This fourm can really help someone in lot of ways.


I am pleased if anything I contributed helps someone else! There is always much to consider. I wish you the best in your land search, too :thumb:


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## MaxBlast

I have Florida RE Broker License.

One does not have to immediately give a Buyer the Deed ! There are other options... to avoid lawyers and foreclosure processes.. etc...

One can simply make an agreement to ..."Rent with an Option to Buy". 
You can get a Non-Refundable Option Fee... applying it toward the purchase price if they fulfill the agreement.. 

Then give them a Lease for a certain number of months or years... with a certain amount credited each payment toward the purchase price.... just like mortgages work....

Finally set a deadline..... that it will be converted into a "Sales Agreement" after they have performed for that time period, or paid an additional amount of money... like if they had to sell their other property... then you carry the mortgage finally.

The Option to Buy is contingent on their Rent being paid each month, and the property maintained.... as well as any repairs agreed to. 

After all ... you are dealing with total strangers most times.... and no matter what they say.. you don't know how they will perform.

(Maybe not in Tennessee...if I remember correctly.) But one can also, even when you perform the Owner Financed Sale...*Deed the Property into a Land Trust*... with someone else at the Trustee... and In Case of Default... the Buyer you financed loses their Beneficial Interest.... without a Foreclosure or Attorney needed ! They can also be in Default for how they use the property, like a waste dump, operating a illegal Meth operation, etc... It is you Collateral they are destroying.... 

Folks.. the system is rigged to get you into court so the Attorney gets paid in case of any problems... Land Trust avoid Attorneys.... and avoids Probate. They can not be used in LA, and I think TN... PA also makes it difficult. 

Land Trust can protect Both Parties... so they perform... and neither party can back out. 

Buy Esq. Mark Warda's (My Attorney) - Land Trust books on Amazon... for more information and CD forms even.


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## Sturedman

I did my house here on land contract for five years. Worked out great. When we sell this house in 3 years and retire, I would do a 10 year land contract with someone to have the monthly income coming in. I don't want to be a landlord lol. I have no horror stories about it lol


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## Otter

Ummm - some of you folks seem confused on the difference between being a landlord and owner financing.
When you are a landlord, the property is YOURS, and leases have inspection clauses. Now - in all my years of renting, I have had 3 landlords actually want to use the clause, one big mega complex who started using it like crazy to find reasons to evict folks who were grandfathered in at lower rental rates, one guy who stole my propane and panties and one who used it to show the place to buyers. None of them followed the 24 hour rule - in fact, I once got out of the shower to find a real estate agent and 3 potential buyers in the living room - they didn't even apologize, without missing a beat, the realtor said "Looks like we can see the bathroom after all."
So - you can see how the "inspection clause" gets my back up from the get.

Now, if you are a seller, you have SOLD it and it is THEIRS. I bought my place on an owner finance, they hold the mortgage for me instead of a bank, so they get to benefit from the obscene interest rate and I got to buy a place even after having my identity stolen once. I am not to log it or take down any buildings until 1/2 the principal is paid - until then, they have not sold the timber or the building rights, so they maintain partial ownership. But any "inspecting" they want to do they can do driving by. "Hey look, are the trees still there?", "Yup, I see trees."
If they wanted to inspect, we'd have a problem.

But as it stands, it's not a horror story for either of us, I got to buy a place with a really low down, if a really bad 9% interest, and they got a steady, reliable monthly income. They just sent us our yearly payment report (X amount to interest, x amount to principal, etc) and included a nice little note thanking us, again, for our prompt and reliable payment. Besides the steady income, if they did ever need to foreclose - which won't happen while I breathe - we've already improved the property to the tune of 5 grand, and continue to improve it


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## Tango

No doubt there are many successful owner finance stories. It is a great opportunity to by-pass conventional bank financing. There are also just as many sellers who take advantage of buyers as buyers who take advantage of sellers. Sometimes all the due diligence comes to a luck of the draw. We can never know another's motivation or see into the future to see how it will work out. I used to be a r.e. agent in another lifetime and showed HUD homes, a majority of which were completely trashed out inside by the owners who had defaulted on the mortgage. That type of scenario is what I worry about.


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## sidepasser

My owner financed deal is going well - they pay two months in advance and I am happy with that. I don't have to worry about timber as most of the commercial timber was cut off the place back in the early 70's and hardwood (which is pretty much worthless in that area except for firewood and even then, you can't make much on it) took over. 

I do have to send an interest statement and they must provide proof of insurance. So far so good.

Never know how things will turn out, but I have a very good attorney who takes care of that stuff, so if it all goes south, I'll let him deal with it.


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## Joshie

My parents have owned a few rentals for several years. Their contracts have always required tenants to allow an inspection with 24 hour notice. Tenants have been known to ignore pretty obvious things like leaky roofs. 

We purchased our place without an agent. I would never do it again. We used a lawyer who was supposed to be good and had the place inspected. We had our last two homes inspected by two different people. Both inspections were jokes that missed issues that should have been obvious.


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## ChristieAcres

Joshie said:


> My parents have owned a few rentals for several years. Their contracts have always required tenants to allow an inspection with 24 hour notice. Tenants have been known to ignore pretty obvious things like leaky roofs.
> 
> *We purchased our place without an agent. I would never do it again.* We used a lawyer who was supposed to be good and had the place inspected. We had our last two homes inspected by two different people. Both inspections were jokes that missed issues that should have been obvious.


Those who use experienced honest Agents never regret it. I like to chirp in and interject that it is very wise to ask around and get referrals to a good one. Friends and family can steer you to a good one for next time!


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## Dutchie

Tiempo said:


> We bought via owner finance. We did 10% down, 7.5% for 5 years. We paid 100% on time and paid the balloon this past August as per contract.
> 
> We took a risk and spent quite a lot of money on a complete bathroom reno. I was worried about doing it (spending all that money) without a traditional mortgage, but now I know it helped us get a great appraisal for the VA loan.
> 
> I have to say, if the seller had required annual inspections I would have walked away...not even a landlord does that and it's a gross invasion of privacy imo.


That interest rate is very reasonable.

I usually charge 10-12%, depending on the circumstances


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## farmerj

The only time our landlord has come over is when I was out of town and the furnace or the water heater quit working.


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## FarmChix

My Mom has done some owner financing with a few of her properties. She had one property in particular that she "sold" FIVE times. Once the buyer was no longer able to satisfy their end of the transaction, the property reverted back to Mom. Buyer forfeited all monies paid to her. That being said, the property was in the poorest county in the state. Downpayment was pretty much the same as if they were renting. It was hard to find someone who truly could afford, and the property value was not huge. She is a trusting soul and never did credit checks, etc. It took her years to unload the property.... Her situation is/was very unique on that property, as the value was less than $20K. To some of us, that would have been a nightmare. Definitely check out your buyers.


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