Is a L/C a good way to purchase an 8 Unit Apartment? - Posted by Zoran

Posted by Harold Hutzler on May 11, 1999 at 01:25:34:

great forum, just stumbled on to it. A lease purchase aka contract for deed in my opinion is not the best way to go. If you put real money into it or sweat equity or both you have a real chance on losing it all. If the seller gets in any trouble ( IRS ) ect. and leans are put on the property, it can be very dificult for you to get a proper marketable deed and financing when it is time. In my area of South Carolina it is hard to find a good attorney that will do one.

Is a L/C a good way to purchase an 8 Unit Apartment? - Posted by Zoran

Posted by Zoran on May 09, 1999 at 20:02:48:

An 8 unit Apartment is for sale in my state of Michigan.
The add says Land Contract terms. Is this a good way to
buy an Apartment.Please send me some advice,Thankyou Zoran

Consult your local laws - Posted by John Behle

Posted by John Behle on May 12, 1999 at 13:35:18:

Any argument that a land contract is or isn’t a good way to go is fruitless. TITLE AND CONTRACT LAWS VARY STATE TO STATE.

There are some real problems with land contracts (contracts for deed, installment contracts, uniform real estate contracts, etc.) in most states. Some, like Utah have addressed and dealt with many of the concerns. Most states have not.

An AITD (All Inclusinve Trust Deed) is usually the better way to go. It is an actual trust deed and gives the buyer many more rights and protections. Even if people are commonly using contracts or advocating them IN YOUR STATE, doesn’t mean you should use them. Check it out. Take an excrow officer, knowlegeable agent or someone else that might know out to lunch and ask them about it. Just because a contract may work in one state or area doesn’t mean it isn’t dangerous in your state.

Re: Is a L/C a good way to purchase an 8 Unit Apartment? - Posted by Robert

Posted by Robert on May 10, 1999 at 10:33:37:

I don’t like Land Contracts…that’s just my opinion, but you don’t have to necessarily have the same. I know that a buyer here in our area recently bought some land through a land contract, built a house on it, got a buyer for the house some time later…the buyer said he was going to buy the property…the seller was getting a little behind on the land payments in lieu of the buyer buying the property (don’t ask me why). Anyway, the deal got all the way up to the seller having the paper work in front of him to sign and what does he do???..backs out.

The seller had the land repossessed and guess what…the house isn’t his anymore either. Land Contracts just make me nervous if I’m the buyer and not the seller. JMTCW

Re: Is a L/C a good way to purchase an 8 Unit Apartment? - Posted by Mike Oldfield

Posted by Mike Oldfield on May 09, 1999 at 20:38:09:

If its a good deal you should not hesitate to go this way. (with the advice of counsel of course)

The reason the seller wants to do a land contract is that if you defualt they do not have to foreclose which is expensive. Since the deed remains in their name until the contract for deed has been satisfied, on default they have the option of a simple, fast, and inexpensive eviction.

In my state (NY) they are getting sticky here. I have heard of cases where the courts are now saying that contracts for deed must be treated similar to foreclosures and also that the former owner must reimburse the buyer for the fair value of improvements if the deal goes bad and eviction is used but blah blah blah etc.

If its a good deal go with it. THe end results should be identicle. Nice cash flow, equity build up, you carry back for retirement to a new young hungry investor like you used to be. Happy World!

The benefit to you is that the seller has less risk and is therefore more flexible. Hurray!

One more thing. Watch out. You may be dealing with a sharp old timer who knows how to play or an old time dork that has outdated info. It depends on how your state treats these contracts for deed.

I love 'em because I can sell the shi_ out of my proposal to the seller because they have almost no risk that you, the investor will screw it up. If you do, they have your down and your improvements and this throw you in the street.

Write if you need more

Mike Oldfield

P.S. Make sure you find out why the seller is flexible so you dont inherit his problems unless you want them.

P.P.S. Land contract offers are sometinmes an indication of a lack of flexibility. If you god forbid plan on a substantial down payment or a substantial risk of another kind, insist on getting the deed in your own name. In this case contracts are OUT!

Re: Is a L/C a good way to purchase an 8 Unit Apartment? - Posted by Mike Oldfield

Posted by Mike Oldfield on May 10, 1999 at 23:25:34:

Ever heard a fool and his money are soon parted?

The buyer in the deal described above is an idiot and so is his attorney. The pathetic stupidity and total incompetence of these morons is no reason to throw out one of the most usefule tools for creative real estate investors … the infamous contract for deed a.k.a. land contract

Dont be misled by the post above. The circumstances do not relate to the circumstances of the original question in any fashion. And the poster throws away one of the most effective tools in the industry because he heard one time that so and so the idiot had brain deficiency and lost his etc.

The land contract is a most useful tool which is often the most intellignet way to purchase an investment. Every form of ownership has positives and negetives which can be overcome with careful language in the agreements. This is what competent attorneys are for

The most intelligent person in the post above is the origianl seller. I wish I had buyers and attorneys that stupid in my area. What a windfall for the original seller. It makes me blush. Come to think of it I do have buyers and attorneys that stupid. Its just my conscience that would stop me.

THe attorney who represented the original buyer can probably be easily sued for malpractice and the money will ultimately be recovered through his insurance company (although I have no experience with this). I am sure hhe hasnt thought of this solution is he is so incredibily stupid. If the original buyer did not use an attorney he is even dumber yet.

Ladies and gnetlement DO NOT throw away the land contract because of the morons above. If you must do so, please find a better reason.

Good Luck

Mike Oldfield