I had a guy tell me the other day that Contract for Deed was the way to go with properties over renting. Keep in mind I am from a small town where property values average around $50,000 or so. He said you can get a $10,000 down payment this way and if they miss a payment on time or violate the contract in any way by not paying, you can kick them out and keep the $10,000 they paid for down payment and do it again with the next person. Seemed to me that there may be legal issues with doing this, not to mention it just seems very unethical, and outrageous that someone would be willing to agree to a deal like that anyways on a $20-30k house.
Any ideas on that strategy or how that would work?
Some states, like NC, regulate contract for deed transactions. What you posted would violate NC legislative intent and statutory declaration. Without knowing your state, I don't know the (il)legality. For sure, the reason the NC legislature passed the bill(s) regulating CFD in NC was precisely the reasons you posted. There were abuse by unscrupulous REI and the NCGS put in writing the minimum standard for a 'legal' CFD transaction.
Thanks for the reply @Chris Martin , this is in Kansas. Not sure if the guy who told me this has actually done it or it was just an idea, but I was just curious whether or not this was actually a feasible thing to do. And it may not have been CFD he was talking about, but a variation of the transaction.
Also I'd like to add this isn't something I was considering, just curious on the legality.
Typically down payments are less than $2500 and at $2500 that may be high
I have not seen many CFD's where buyer was putting $10,000 down.
That's kind of what I thought. Definitely seemed like an idea that is sure to backfire.