Land Contracts can make you money!

Dealing with Land Contracts can be very profitable. You do need to know a few things in order to make sure you are doing them right.

Land contracts is like a mortgage the owner of the property basically becomes the bank. The payments are usually higher than a traditional mortgage. For example I come up with my payments based on the rental rates in that area + $25.00. That number is not written in stone, but it's a great place to start.

The interest rate is not the issue with most land contract people, it's the payment. I was reading a book that was written buy a financial guru, and he stated that people would start looking for payments only not interest rate. I think that is true today.

Most Land Contract buyers are renters and are schooled on the going rental rates in the area. The great thing about the land contract deal is that the buyer can write off the interest on the property. Like a bank you are charging them an interest rate which by law is a tax write off. Always consult with your tax advisor on this.

The document should always be drawn up by a lawyer in the state you are doing these Land Contracts or what ever version is allowed where you live. They make everything legal.

Make sure that the payment is collected by a disinterested 3rd party to verify whether or not a payment has been made. I have a property mangament company pick mine up.

Base your Land Contract price on the values in your area. I always look at my spread and try to leave some equity on the table. This is great for a leverage tool when your trying to close the property.

Try to close within a 2-3 year period with a credit repair agency. Make sure that agency follows up and makes sure their credit is indeed getting repaired in a correct matter so you can close with them on time. It's always best to let the credit repair company do the loan also.

I had a client that was closing one of my deals once. He needed $2200 to close the deal. The property had considerable equity, and I didn't care if he closed it or not (leverage). He asked to borrow it. I said I would let him borrow it and I would charge him another $2200 for the trouble. That was a $2200 profit for using my money. He agreed and the deal was closed.

So when your carrying a contract on your property make sure you know the law, and the rental rates for that area. Then go make some money! Brett Young www.Rooftopinvestment.com