I own some land that has been subdivided into smaller lots and I am going to offer to seller financing on some of them for cash flow. Anyone ever done this? Looking for any and all advice for those that have any experience with this. Thanks!

Jagvocate has been selling raw land on terms accoring to this thread on B&I. Most of the guys I know doing raw vacant land are just flipping it because of all the headaches from collecting to repos they find better returns with the sales. I do understand the appeal of the cashflow, good luck.

NPH- said:

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dc509 said:

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Make sure that you secure it against something that you can actually collect, and have a very good attorney draft the documents.

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secure it against something that you can actually collect? the lots themselves serve as collateral. they stop paying, you foreclose, turn and resell.

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Just that simple, eh?

dc509 said:

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NPH- said:

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dc509 said:

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Make sure that you secure it against something that you can actually collect, and have a very good attorney draft the documents.

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secure it against something that you can actually collect? the lots themselves serve as collateral. they stop paying, you foreclose, turn and resell.

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Just that simple, eh?

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never said it was "just that simple", but your original post implies taking other security as collateral, which is not the norm.

NPH- said:

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dc509 said:

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NPH- said:

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dc509 said:

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Make sure that you secure it against something that you can actually collect, and have a very good attorney draft the documents.

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secure it against something that you can actually collect? the lots themselves serve as collateral. they stop paying, you foreclose, turn and resell.

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Just that simple, eh?

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never said it was "just that simple", but your original post implies taking other security as collateral, which is not the norm.

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Well I put I put together a few of those non norm deals last year. Do what you want, but I wouldn't do it without something as collateral.

dc509 said:

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NPH- said:

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dc509 said:

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NPH- said:

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dc509 said:

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Make sure that you secure it against something that you can actually collect, and have a very good attorney draft the documents.

---

secure it against something that you can actually collect? the lots themselves serve as collateral. they stop paying, you foreclose, turn and resell.

---

Just that simple, eh?

---

never said it was "just that simple", but your original post implies taking other security as collateral, which is not the norm.

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Well I put I put together a few of those non norm deals last year. Do what you want, but I wouldn't do it without something as collateral.

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i guess that's my point -- the "norm" collateral is the lot itself. any real estate attorney or individual in the industry that does not draw up the docs this way and take the lot as collateral is either ignorant or extremely misguided in their approach to putting together these deals. you want to take other security as additional collateral? that's fine, doesn't hurt, good for you on getting additional collateral. but if you aren't placing a lien on the lot you are owner financing as the standard/baseline collateral, you should not be dealing in real estate.

NPH- said:

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dc509 said:

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NPH- said:

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dc509 said:

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NPH- said:

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dc509 said:

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Make sure that you secure it against something that you can actually collect, and have a very good attorney draft the documents.

---

secure it against something that you can actually collect? the lots themselves serve as collateral. they stop paying, you foreclose, turn and resell.

---

Just that simple, eh?

---

never said it was "just that simple", but your original post implies taking other security as collateral, which is not the norm.

---

Well I put I put together a few of those non norm deals last year. Do what you want, but I wouldn't do it without something as collateral.

---

i guess that's my point -- the "norm" collateral is the lot itself. any real estate attorney or individual in the industry that does not draw up the docs this way and take the lot as collateral is either ignorant or extremely misguided in their approach to putting together these deals. you want to take other security as additional collateral? that's fine, doesn't hurt, good for you on getting additional collateral. but if you aren't placing a lien on the lot you are owner financing as the standard/baseline collateral, you should not be dealing in real estate.

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I agree with that, and I never suggested otherwise.

dc509 said:

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Make sure that you secure it against something that you can actually collect, and have a very good attorney draft the documents.

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Interest Rates are a gauge of the proposed risk the sponsor/borrower present. The higher the perceived risk, the higher the rate. Obviously can't make it criminally high interest rates, but there's a reason why wrap around mortgages or rent to own exists. It's especially prevalent in small towns where conventional financing is tougher for borrowers to get due to trouble pasts or other extenuating circumstances.

Good stuff here. Overall land size and how many lots has it been subdivided into? Location?

Thanks for everyone's input so far. Very much appreciated.

Working on an 8 acre tract that has been in family for a while in Brazoria County. Subdividing into eight 1 acre lots.

Also looking at some larger tracts. I want to make sure my ducks are in a row. I got my RMLO license and now looking for attorney to make sure the loan process and TRID rules are being followed to a t. I am learning there's a lot more to this than I initially thought (as with most things in life).

I've sold about 40 lots on owner financing in TX and FL, but have gone to cash money lately. I don't want the inflation risk eating into my profits (plus I'm a goldbug and planning on putting the cash from my latest lots back to work in physical gold, silver and some mining stocks).

* The cheaper and uglier the land, the higher the ROI (assuming you purchased it well);
* Don't try to service more than a couple of notes yourself unless you have a back office -- get a 3d party company to handle payments, escrow, and late penalties
* If the lots are nice, take them to an agent for listing and work out a deal. 10% is normal on land but I've negotiated lower with multiple lots;
* I used to joke, before COVID, that if you let me offer owner financing, I could sell influenza to AIDS patients. I don't make that joke anymore but the underlying point that selling land w/ financing is EASY, especially in the current markets. You'll be beat up by potential buyers, their cousins, everyone looking for land.
* Have a good local RE attorney draft your Deed of Trust and WDw/VL

Good luck, it's a hell of a money maker.

Hey man shoot me an email figtreehomessa at gmail, sounds like we have a similar path and goals.

Incidentally we just closed on our first deal using the land academy methods and hit an absolute home run on the Nueces. So good we aren't going to sell it but work to develop it as vacation property with RV hookups to start and cabins in the future. Plus it's the perfect bug out land for us when the shtf.

I also have a 2 ac tract in similar subdivision with Nueces access that I'll be looking to sell quickly soon and a 53 ac hunting land that I hope to put into escrow today.