Becoming A Land Contract Buyer To Reap Hefty Rewards

The Money Is In The Land

Although the financial industry is by far the worst hit sector because of the current economic crisis, a savvy land contract buyer can do very well in these tough financial times. In the cash flow notes business, many people only consider the act of finding note sellers and hooking them up with potential note investors and collecting a middleman fee on the transaction as the major part of the business - this is brokering notes. However, if you have cash, you can become one of many land contract buyers whom have reaped hefty rewards during this economic turmoil

What is a land contract buyer and what do they have to do with the cash flow notes business. The note buying and selling business can be looked at from both sides of the transaction, the selling side and the buying side, since both intend to make money on the deal. Land contract buyers are primarily investors that invest in land. Land can be defined as property which has a dwelling or building located on the property or land which is just that - land, with nothing built on the property.

Property is at an all time low due to the financial crisis which has caused property values to plummet, making this a prime for land contract buyers to swoop in a pick up land for sale. The reasons can vary as to why the owner of the property wishes to sell, ranging from financial stress or another investors looking unload a property and turn it into a monthly income stream. Traditionally with land contracts, the middleman is eliminated and the transaction takes place between the buyer and seller, further lowering added cost associated with closing and the sales process. The seller actually holds the title on the property, eliminating the need for a mortgage company and reducing cost.

The seller will hold the title of the property and the land contract will become an income stream for them since payments are made on a monthly installment basis, in essence, a cash flow note for the seller. A buyer or investor that purchase property via a land contract can benefit since third party fees are removed. For those of you holding property and considering selling them to land contract buyers, there is another benefit you should be aware of…the contract can be structured how you wish. The traditional down payment for property which in many cases eliminates many candidates form purchasing property can be removed allowing you as the seller to ask for a higher selling price, which allows you to make more money in the long run by removing added cost when using a land contract as the instrument for the sale.

The guidelines of a this type of land contract is a simple agreement where the seller holds the title until all monthly installments are paid at which point the seller transfers the legal title of the land to the buyer. During the term if the installment agreement, the seller agrees to allow the buyer full access to the property. If for some reason the buyer defaults on the land contract, the seller has the right to re-posses the property.

Although higher asking prices can be had, the current financial economic crises favors the land contract buyer since there are so many distressed properties available. We will cover how to finding motivated sellers and buy a land contract from the in a future article here in the cash flow notes blog at a later date.

4 comments:

Phill said...

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Tracy Z. Rewey said...

Thanks for the timely information. We've worked with land contracts and mortgages with cash flow notes. Both have their pros and cons but can be very helpful in today's economy.

Purchase structured settlements said...

In the crisis this is really a good option for some good investments. This is a great guide.

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