Anyone buy or sell on contract for deed/ installment land contract?
BP Nation:
I'm considering buying a slightly distressed but under-valued SFH, renovating it, and then selling it to a tenant-buyer on installment land contract. Can anyone with experience (either buying or selling) share any relevant experiences and/or insight that might be instructional, cautionary, or otherwise useful?
My goal is to have passive cash flow and be relatively free of landlording worries since the tenant-buyer will be responsible for repairs, capex, utilities, and the like. We will either escrow taxes/insurance or I will receive them directly from the tenant-buyer to ensure payment. Theoretically, gross payments will be my net payments.
I realize I lose tax benefits, but the hassle-free aspect is worth it, and I do have other write-offs from other business.
I understand that the vetting process for tenant buyers is crucial since their lack of payment or lack of maintenance is the biggest headache to prevent. Lastly, I understand that the legality of the the contract for deed must be triple-checked, as there are many regulations (SAFE, Dodd-Frank, etc.) that affect this type of transaction. We plan to have lawyers draft and regularly update the legality of our process and paperwork.
Please feel free to chime in, O Wise and Experienced BP Nation. Thanks in advance for your words and guidance.