Posted by dutch on June 17, 2006 at 16:59:54:
Ok, I misunderstood.
You are worried about them tearing the place up and forfeiting on the note? Then you are in the wrong business or very unsure of the worthiness of your buyer. Get better buyers, or don’t worry about it. Every lender, and YOU ARE A LENDER in a land contract, gets bad deals occasionally. Take measures to reduce the risk, then live with it. Or go do something else.
Just my opinion, worth the price you just paid for it.
Dutch
Please help - land contract issue - Posted by chris
Posted by chris on June 17, 2006 at 10:56:37:
I have a buyer lined up, but how long should I give them to get bank financing? They are putting 5% down. Also, what if there is damage to the property while they are in it, what clause protects me and allows me to fix but then tack on to the balance if needed? The borrower doesn’t have any credit either so I was trying to think of an incentive to have borrower get a credit card and not drop the down payment a few hundred bucks to allow it (securred card that is)
Re: Please help - land contract issue - Posted by Pboone
Posted by Pboone on June 17, 2006 at 12:20:25:
Chris,
The risk of Land contracts need to be taken with great caution, remember you are the bank. If you wish to do a 95/5 loan on the property with a person that has no credit history…consider a Lease / Purchase program with a roll over land contract after a couple of years, because there is nothing to keep them from leaving the house damaged or destroyed and no insurance. yea you could sue but so what you get a judgement on someone who doesn’t use credit as a vehicle.
Good luck
Patrick
Re: Please help - land contract issue - Posted by dutch
Posted by dutch on June 17, 2006 at 11:15:28:
You let the buyer into the property before they own it? Shame on you. Now, you need to get your happy-a$$ over there and get a rental agreement signed, and take a security deposit. When AND IF they come up with the cash, THEN you sell it to them. If not, boot them out.
Good luck. Your really shouldn’t put the horse before the cart.
Dutch
Re: Please help - land contract issue - Posted by chris
Posted by chris on June 18, 2006 at 12:17:45:
Thanks for the advice. Is the major difference between the land contract and lease option that the home owners insurance isn’t in the buyers name? I have the land contract and lease purchase forms, but is there a hybrid between the two for what you suggest? How do I do the land contract roll over? Would it just be a situation of lease contract and then after year 3 it converts to a land contract and have the buyer sign a new form?
Re: Please help - land contract issue - Posted by chris
Posted by chris on June 17, 2006 at 12:06:02:
I haven’t let them in the property yet, not without signed agreement and deposit check- but that is in 2 weeks.