Hey everyone, I'm new to BP and wanted to get some opinions of all the great people on this place. So here goes.
Here is my situation. The house I live in currently has some equity in it. Approx 69K if comparing to just the tax assessment. The same exact house in the same on the next street over sold recently for over $200K. So I think that is a good thing. Now I also have 2 parcels of land that are free and clear. One of them is assessed at about $20K and the other I think is $38K. I have 2 separate people interested in the lots. The issue is that both want to do owner financing so and so then I would do a CFD. The first lot the buyer will buy it for $25K with approx $6600 down and they are covering the attorney,escrow, closing which is about $1400 total. I would carry the contract for 3yrs @ 7% and get $500 something a month. Now the 2nd lot the buyer wants to buy it for $55K and maybe $60K and will give me $5K down but doesn't want a payment of more than $500-600 a month. So if you play with the interest rate and terms I can keep that payment where they are looking.
I had both pieces listed with a realtor for about a year and they were listed for $30K and $70K, I have sense stopped listing them about a year ago and just advertise a little here and there. I don't mind doing the installment thing and earning the interest either but would this be something you would do?
I was planning on going that route but it got me thinking about if I kept them then I could use the equity in those pieces as well maybe to help fund something to start my investing. But I am open to ideas as well.
Thanks for looking and have a great day.
Hey @Mark Gruetzmacher this isn't quite up my ally, but I'll chime in. In my opinion, I think carrying the contract would be a good idea -but because of the effort, I wonder if you couldn't charge a higher purchase price? Thoughts?
You can usually get a little more selling on terms, but If you've got workable offers on the table, IMO you should button them up. I see very little downside in selling on terms if you don't need the cash.
There's not much they can damage on the lots, and there's a very real chance they'll improve the property.
I wouldn't worry about equity in the lots, typically banks don't like to lend more than 50% on land and they really don't like doing that. You're probably better off showing the cash flow.
Hey @Brandon Turner thanks for the reply. I figured carrying the contract is too bad and I am actually getting more money for each lot than I would normally I think. Also if you figure in the interest it even makes for a better return. I guess my thought if the equity in the land was a better route I would maybe not sell. I am just trying to learn all I can at the moment and want to make the best use out of what I have to hopefully buy something in the future and start my investing. Gotta say I love the Podcast you and @Joshua Dorkin do. I just signed up to BP and have listened to the first 21 podcasts in the last week while working. I downloaded the next 20 and will continue listening. Appreciate all you guys do.
@Darrell Shepherd thanks for the reply as well. Yeah I am getting a little better money on terms and don't necessarily need the cash, well actually I do and could use it but if I can get alot more on terms then I guess I am not out anything at all. If I do both then I will have about an extra $1000 coming in each month to put away so maybe I can invest in something down the road. Maybe if I have contracts on both a bank will look at it as income maybe. My current bank says you have to show 2yrs income on rentals before they count it. I am going to check around.
Thanks again for the reply guys. Have a wonderful weekend.
Nice @Mark Gruetzmacher ! Love to hear that we've got you addicted!! :)
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing