Resale during a land contract: Who receives the gains?

Starting Out
4yFollow

Resale during a land contract: Who receives the gains?

Sean Dezoysa
Investor · Toledo, OH · Member since 2012 · 292 posts · 34 votes
I know there are some land contracts where payments are treated as rent, and others where payments count towards the balance on a note.

Most of the time when a buyer resells the house before the full term is up, is he getting any gains from appreciation? I know in the later case he will be credited for "equity" but am unclear if it is the (initial) seller, or the buyer that receives appreciation gains when the buyer resells the house before deed transfers to him.
0Reply
9 views

2 Replies

Jump to latestLatest
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Sean Dezoysa:
    I know there are some land contracts where payments are treated as rent, and others where payments count towards the balance on a note.

    Most of the time when a buyer resells the house before the full term is up, is he getting any gains from appreciation? I know in the later case he will be credited for "equity" but am unclear if it is the (initial) seller, or the buyer that receives appreciation gains when the buyer resells the house before deed transfers to him.

    Just because there are doesn't mean it's wise.

    Over 80% of all land contracts fail. I suspect the Seller loses money in about 80% of those. If you're a buyer, these can be a great option to get into a property. If you're a seller, tread very carefully.

    If the property sells at any point, the equity would go to the Buyer unless something else were specifically agreed to in the contract.


    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Sean Dezoysa

    As mentioned the land contract borrower gets the equity as they would be paying off the loan. Think of a land contract like a car loan, when you finance a car you are not on title the car. Whoever bought the car if they sell it, they get the gain

    7e investments53 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free