Owner Financing Land
Financing a land sale involves less risk to the seller than home financing. The obvious factor being the fact the buyer probably can’t destroy the value of land as easily as they can a house.
Properly done, seller financing of land can work really well for both buyer and seller. In the most successful land deal I ever did I used money borrowed from an investors Self Directed IRA to buy 40 lots in a old subdivision from a long-time owner for cash. In turn I sold the lots of easy terms to a developer who installed utilities and set up used mobile homes for sale on easy terms. When the new buyers got their home financed I got paid off.
Of course when I look back I was exposed to a lot of risk that I wasn’t really aware of. Ten years afterward the market and economy has changed and the lots are mostly vacant again. The homes have been repossessed and the improvements (well, pumps, etc.) are gone.
Successful investing is never easy.
{ 2 comments… read them below or add one }
My question is! If I owner financed a lot with a house and the house burned down do I have to pay off the mortgage before I can replace the house with another dwelling?
It depends.
If the paperwork was done properly, the Lender will be named on the insurance policy as a Loss Payee. That means they have to agree before the insurance check can be cashed. If the lender was a private party and willing to work with the buyer, something could probably be worked out. They would need a lawyer to escrow funds, make sure work was completed before funds were released. It would be complicated.
If you have owner financed the sale of a property with an existing mortgage then I doubt it could be done. It might be possible, but there are so many complications I doubt it could be done in the real world. Especially in our current economic conditions.
Note that I am not a lawyer and don’t know enough about your particular situation to be sure this is correct.