Raw land - Owner Carry Terms

3 Replies

Hi everyone - I have raw land that potential buyer wants me to consider carrying the loan.  If anyone has experience with this, I'd appreciate feedback.  Re: term to lend for, at what percentage rate, etc. I own this free/clear. Appreciate any/all comments.

@Gloria C. Presumably your buyer cannot get bank financing, so your terms do not need to compete with the bank. I might start with something like 25% down, 7% interest, balloon in three years. The idea being, that your buyer would refinance before that time, and you would be paid off.

If you come to a deal, it's a good idea for an attorney to prepare the note and deed, and consider getting a third party loan servicer to handle payments and reporting.

I recently sold land on a note where the buyer put down 50%, and is making double payments. 

@Gloria C.

Agree with Jon. If the borrower can show the bank that they have the property as collateral to build on then they can use it for equity towards their 25% down for the construction loan. 7% interest only on a 5 year balloon would work.

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