I hope this post finds you well.
I purchase and sell vacant land using the following method: 1) use direct mail to find people who do not want their property, 2) purchase that property at 15 to 25 cents on the dollar of retail value, 3) sell the property on Seller financing with a down payment that recovers 25 to 100 percent of my cost basis followed by 120 months of monthly payments.
As a way to maintain my ability to continue to purchase more land, I would like to find a lending solution where I was able to borrow an amount that equals the difference between my cost basis, and the amount that I was able to recover on the down.
In this scenario: 1) I would borrow somewhere between $1,000 and $4,000; 2) Lender would get all of the monthly payments until they were paid back in full (principal and interest); and 3) repayment in full would take between six months and two years.
Of course, such loans would be secured by the property.
Additionally, I wonder about borrowing a lump sum (ex. $20,000 to do five deals), continue to reuse the principal, and create an income stream for Lender.
My questions: 1) does this idea seem reasonable, 2) what would it cost (interest and / or points), and 3) where would I look to find one or more such Lenders?
Any help is appreciated, Thank You for your consideration.
That is some very cheap land. At those low rates I don't think you will find anyone willing to give a mortgage type loan. I would go to some local banks and ask for a personal loan. They might give a better rate if you offered the land as security or they might not want to bother. Also places like Prosper, Discover Personal Loans, Lending Club, etc have fair rates for little loans.
this was common in the land boom days.. and a business I was raised in.. My dad would create the notes like you are doing then he would sell them..
to get note investors to buy these notes you have to give them a 30 to 40% APR return.. Risk of default is sky high on this stuff.. Ergo the reason you can buy the dirt this cheap in the first place it has no real market value.. your creating your own market by low down and long term payments.
I would look for a money partner.. share the deal with some one with money 20k is a pittance in the world of investors.. this should be a no brainer.. their money your work.
In my dads best year he sold 800 plus properties all on seller carry back just like what your talking about. he would buy them at tax sale for 50 to maybe 300 a parcel.. .sell for 990 to 5k each..
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