Posted by Randy (SD) on May 30, 2006 at 13:54:24:
You have been searching the archives, good for you.
Yes land contracts can be used to purchase raw land. There are basically two types of instruments (documents) 1 is a contract for deed the other is a note and deed. In a contract for deed of the deed remains in the name of the seller until the terms of the contract are satisfied, in a note and deed the deed is transferred to the buyer at the time of sale “subject to” the note. Either one is a negotiable instrument that can be sold at the time of closing or shortly thereafter.
As for the rate and terms that is 100% negotiable between the buyer and the seller I would recommend higher than market interest rates…9%-10%, a thirty-year amortization with a balloon payment in five years or seven years. The most attractive “marketable notes” for raw land are those that have a 50%-60% loan to value, so you may have to create a second if you wish to make the first a marketable note otherwise if the seller is willing to wait… it doesn’t matter anything between a willing buyer and a willing seller is okay.