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Using Land Contracts to Get Rich By: What is a land contract or contract for deed? A contract used in a sale of real property whereby title to the property remains vested in the seller until the buyer who receives the right to possession has paid in installments over a long period of time a preset amount or all of the purchase price and upon default by the buyer all payments may be forfeited.

Also known as a Conditional sales contract, an Installment sales contract and a Real property sales contract. I've used land contracts to buy apartment buildings, single family homes and land. I do recommend buying real estate on land contracts but not selling on them. Using a land contract allows you to use leverage when you are buying a piece of real estate. If you decide to sell property on a land contract, beware of the fact that if the buyer does not honor his end of the deal, you will have to foreclose on them.

This will NOT be a simple eviction out of the property. This is because, when you're doing a land contract, you are giving the buyer equitable title. As the buyer makes payments, he actually owns equity in your property, thus requiring you to foreclose in order to legally separate them from the equity that they have paid for.

Not a good strategy for selling, unless it's a property that you simply can't sell to anyone, for some reason.

It is important to note that a land contract is really a mortgage on the property. It's a seller-financed mortgage, which can be refinanced, just like a regular mortgage.

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Land contracts these days are for much shorter terms than in past decades. The average term for a land contract is anywhere from years with a low interest rate, but is totally up to the parties involved.

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I always go for the longest possible term. This give time to get the property, make improvements and decide if I want to refinance or flip. Here's one of my past deals. I bought small apartment building from a worn out landlord using a land contract. If someone didn't step in to turn things around, the seller would have been foreclosed on soon. Fixed up the units by using the proceeds from the few tenants that were paying.

I was able to get control of the property with almost no money out of pocket, use the collectable rents to fix up the building and sell because of the flexible financing terms of a land contract. You have to be very careful when drafting or signing a land contract. Read about home loans , insurance , mortgages , dealing with real estate agents and many more.

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More on SD Editorials? Back to SD Editorials Mainpage. Users Reading this article are also interested in;. Who Needs Music Contracts , by tycohen. What Are Options Contracts , by chammer Contingency Contracts , by Eddy Kicker. About The Author, Real Estate Ninja I'm a seasoned real estate investor and licensed Realtor, with years of experience transacting commercial and residential real estate deals.