The Other Side of CFD's

[Chris Seveney]

Wanted to just share this with people as many people like to do land contracts. I have acquired many of them and have done very well, but it is not for the faint of heart. I received a call today from the county inspectors office who has noted we have 30 days to replace a sidewalk and cut down four trees. When we (my atty and I) noted we own it but its a land contract the jurisdiction noted they do not recognize land contracts even if recorded and whoever is on title is responsible and needs to fix it or accrue fines of $500/day. 

So just wanted to share this as there are a lot of risks involved with land contracts that people should be aware of.

[Chris Seveney]

@Andy Mirza

They are very state by state specific and where people get in trouble typically is not knowing state laws and understanding them as CFD's are a completely different animal in some states.

They can be more profitable than notes because they are typically sold for a greater discount and have faster exit strategy timeframes with defaults if you buy in right states.

I have started seeing people selling performing CFD's for very low yields single digits and to me that is insane as they are higher risk in most instances.

I have been converting many of mine to traditional mortgage / deed of trust to get my name off property

One thing to remember is if a borrower doesn’t care for the property and it is getting liens, whether it’s a cfd or a mortgageat the end of the day it still will be your problem in a foreclosure situation....