Land Contract to Traditional Mortgage to Improve Cashflow

[Brennen Waldron]

In 2021, I purchased 3 residential properties through a single land contract deal (2 SFHs and 1 Double). The sale was 121,400 @ 2.5% for 10 years. This breaks down my mortgage payment to be around 1,200 a month, with about $400 in expenses. My total income on the duplex is $1000. I live in one SFH and the other SFH is uninhabited and temporarily my business' shop and storage (general contractor, full time). Since this sale, I had a hard time finding a bank that understood the Land Contract when I was purchasing another additional property a year later . Luckily I did and now I own and rent another SFH. ALL of these properties are adjacent to each other and are situated in a very unique part of a growing downtown.

The duplex and my house were very well maintained and in great shape thus I have done absolutely nothing in regards to improvements. My intentions, over the next few years is to: 1. Bring the duplex to market rent (From $500ea to $800ea). 2. Totally gut and renovate the uninhabited SFH to rent. ($1,100 rent) 3. Add major improvements to the duplex (roof, HVAC, kitchens, etc.).

With all this is mind, would it be insane to take my land contract ($95K balance) to a bank and get a traditional mortgage? The reason is to lower my monthly payment (virtually in half) and most importantly have easier access to drawing HELOCs for these improvements as time goes on.

I found a bank who gave me a quote for 6.5%, 30yr fixed on each of the properties. I am getting killed in interest but am I better off improving my cashflow?

[Chris Seveney]

@Brennen Waldron

No that is not crazy as long as that cash flow you are taking in is put to good use and reinvested. Run analysis of what your portfolio looks like in 3 or 5 years if you keep the land contract and how much equity you have and net worth compared to refinancing and using that cash for other deals

See which one wins and that’s the choice