Contract for Deed
(Land Contract, Bond For Title)

Carlton Sheets Alternative

Credit Repair

Principles of Success

Real Estate Investing Info

Order

Contact

The Land Contract, originally designed for the transfer of raw land, is also useful for purchasing properties that have homes, apartment buildings or other structures. Also known as a Contract for Deed, it is probably the oldest form of "seller financing", dating back over 1000 years.

Under a land contract, you simply agree to pay the seller "X" dollars each month, either until it is fully paid off, or until a certain time, at which point you would then finance the balance through a bank. Perhaps the seller will require a down payment; perhaps not. And it is unlikely he will check your credit.

It is important to note, however, that a contract for deed CANNOT be used on any property that is subject to an existing mortgage that includes a "due-on-sale" clause. Most mortgages have such a clause. A Land Contract (contract for deed) will trigger the due-on-sale clause, regardless of the hype being spread by some "gurus".

Some "armchair" investors will try and tell you there are ways around the due-on-sale clause. But the fact is that there is only one way around it, and that is difficult to achieve. It involves having the property placed into a trust. Then the seller sells the trust that owns the property, rather than selling the property, itself.

Imagine trying to explain this to "average Joe Seller", and asking him to go through all that trouble and expense - for your benefit! Remember the first law of marketing: a confused buyer or seller always says "no".

The Land Contract is a powerful tool for the wise investor, as long as it is used on the right properties, and executed in the proper fashion. This is because you can often obtain ownership without any cash out of your pocket. And, if the property appreciates, you can flip it. During the period in between, there is no reason why you should not be living in it or renting it out for a profit.

"The Simple Man's Guide to Real Estate", by veteran investor Bill Vaughn covers this strategy is detail, and provides the special agreements necessary to use it effectively. And with a free mentor at your disposal 24/7, it's a piece of cake!