LandInvestors.com Forums **Ask A Question** Selling land on lease option instead of terms

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    Lee Shuemake
    Participant
    Post count: 26

    I’m familiar with lease optioning houses and have been reading the good and bad about selling land on terms. I’m not sure how hard it is to remove people from land if they stop paying, I’m sure it differs from county to county and state to state. However, correct me if I’m wrong, but it’s always easier to get rid of a renter. You can make the math work the same, large deposit then monthly payments with option exercising on last payment for example. Does anyone do this and can you provide feedback? If you don’t do this, why?

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  • Kevin Farrell
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    Post count: 1363
    ProAdvanced

    Lee – I think it is about the same. We just call that a terms sale but the mechanics seem to be the same. We retain 100% ownership until the note is paid in full. Full control. No formal foreclosure if they stop paying.

    Kevin

    Lee Shuemake
    Participant
    Post count: 26
    Pro

    Ok, gotcha. I’ve seen people mention not recording anything, assuming this is how all the paperwork is fixed? How does that fix the process of legally removing them however? If they have paperwork showing they are the “owner” and not just leasing it seems like it would be harder to get them off the property?

    Kevin Farrell
    Moderator
    Post count: 1363
    ProAdvanced

    Lee – the seller holds the deed until all payments are completed. The buyer does not have legal ownership. If necessary, after giving proper written notice of default (certified letter, etc), some people have to call the sheriff to get people removed, but that is rare. A good sized down payment helps to reduce the defaults. The few that defaulted on me just disappeared and stopped making payments. Gone. I just resold the properties. No problem.

    If this is going to be your main business model, you will have frequent defaults – that is just part of the business. The profits are very high. Good luck.

    Kevin

    Lee Shuemake
    Participant
    Post count: 26
    Pro

    Thanks Kevin. I understand what you’re saying, looks like end result is the same. I think it’s smart to have multiple exit strategies with real estate if possible. I’m joining land academy this week, I’ve only done houses to this point. I like to know if I get stuck with a piece of property I can’t get sold for cash that I can sell it on terms, though more work I could get it sold. Thanks for taking the time to answer my question.

    Kevin Farrell
    Moderator
    Post count: 1363
    ProAdvanced

    Lee – that is exactly what I do. If I have a real slow selling property, I will put it for sale on terms to get it moving. Knowing that I will have to manage that buyer for a few years, etc.

    Kevin

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