Wholesaler · Omaha, NE · Member since 2012 · 14 posts · 0 votes
If I were to sell a property on land contract, how do I ensure that that the buyer maintains homeowner's insurance and stays current with property taxes?
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
13y
Jerrad Carranza,
You could either escrow the payments for them or you could just check in on it every so often to be sure. They should be listing you as a lender on the insurance policy. You would then be notified if the policy lapses or is cancelled. Most counties allow you to look up the payment status of a property.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
13y
Jerrad Carranza,
You could either escrow the payments for them or you could just check in on it every so often to be sure. They should be listing you as a lender on the insurance policy. You would then be notified if the policy lapses or is cancelled. Most counties allow you to look up the payment status of a property.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
Jerrad Carranza I have sold many houses on land contract, like what you are looking to do. What I did in the past was have the LC buyer pay principal and interest to me and then pay their taxes and insurance on their own. The problem is that for most of these people who can't qualify for a mortgage also can't manage their money properly to have a lump sum when the taxes and insurance are due.
I now make the taxes and insurance as part of their monthly payment. I don't set up a seperate escrow account. It involves more accounting and hassle. I do what my accountant calls "the old way" where each month, I take the interest out of their payment and all of the rest goes to principal. When I pay taxes or insurance, I write a check and add that amount to the balance. Each month, their principal goes down more than an average amount, but each time a tax or interest payment is made, it comes back up some. It's super easy to do that way. Also, the buyer can pay one set amount each month and you don't have to keep checking if it's been paid.
Make sure the land contract forms spell out how much of the payment is principal and interest and also how much is for taxes and insurance. You also need some kind of clause that the amount can be increased if taxes and/or insurance goes up.
Wholesaler · Omaha, NE · Member since 2012 · 14 posts · 0 votes
13y
Thank you all for your comments! Rob K, I'd like to talk with you more about land contracts, if you don't mind. I don't know the best way to get ahold of you on BP. Let me know if you'd be interested and I can give you my email. Thanks!
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
You're getting some really bad advice except from Ben and Steven.
No escows, adding to balances under a note? Really? I'd like to see that future advance note......Not a clue!
PM me, I'll point you in some directions of servicing issues of your privately financed transactions. You might search here as much as been covered about CFDs, a primary issue of doing so with consent or your lender or without consent and doing the deal on the side. But it's here if you search. :)