Land contracts and “must have” clauses in them? (kinda long) - Posted by Jim IL
Posted by Jim IL on February 11, 2000 at 20:17:35:
Well, all the work and followup is finally, (fingers crossed) coming to fruition.
I had a seller call me a few weeks ago.
Went to look at the home, and did a thorough inspection myself. Went back for a second look with my brother/contractor and got some hard numbers on estimated repairs.
Took a few pictures also.
The seller lives out of state, and has been renting the place for a year or so, with bad luck collecting his rent on time.
As we went back the second time, the tenants were boxing up there belongings and appeared to be leaving.(thats good, cause I will not take posession until it is vacant and the seller knows this.)
So, I call the seller, and talk to him and gather info.
Did all my due diligence, and the deal looked alright, IF the seller would sell to me ALL CASH for LOW or on terms, and still low.
So, after talking to the guy a little more, and asking what his LOWEST price would be, I drafted a letter with 3 offers in it.
The home has an ARV of ~$80k, and needs at the most (BIG fudge factor in here) $10k in repairs. I’m sure if I do the repairs, it will be less, perhaps half of that.
The seller said he’d go no lower than $55k. Not a bad price, but still too high for me.
My three offers were:
All cash; $36k (close at least 45 days away)
Lease Option: $46k (no option money, $300/month rent credit, and no payments for at least 60 days.)
Land Contract: $45k, 4 years, no money down.
The guy called me today, and said, “No way!” to the L/O and CASH offers, but like the land contract idea.
Fine with me, they all work.
I have done Land Contracts before, and frankly always start out with a “Boiler plate” of sorts that is “buyer friendly”.
And then the exact terms we hash out during negotiations.
So, here is my question:
This guy said that for him, his ONLY requirement (his words) was that my payments cover his underlying loan payments. Not hard to do, I can calculate that and figure it up. He NEVER mentioned an interest rate, and neither did I, so I’ll make sure that it all fits right. Done that before too.
But, are there any REALLY GOOD clauses that any of you have used or added to your Land contracts?
I can make my own contract, and have done it before, but since it appears that this seller will sign anything that I put in front of him, as long as the sale price and payments are right in his mind, I want to make this the BEST L.C. I’ve ever written.
So, any input is appreciated.
P.S. I already have SEVERAL exit strategies for this home.
I arranged late this afternoon for a partner if I need them to cover the rehab, should I decide to keep the home. I then talked to the city, since the home is located in an area eligible for city grants, and learned the process for obtaining them.
And, I talked to a few of my previous “flip” buyers and told them about it briefly, and a few seem interested.
So, we shall see. Probably will not make cash from it before Atlanta, but sure is nice to know it will be on the way.