Securing Private Funds for a Land Contract

[Paul Murphy]

Hello all. Currently I'm involved in a land contract with 11 single family homes and one duplex. The total purchase price is $720,000 which is $60k per property. The homes are rented out and located in Cleveland Heights, Ohio. I'm currently paying interest only for 5 years, then will be required to secure financing for the remaining balance. After putting a down payment on the principle, I talked to the seller and they would consider the contract fulfilled if they could get $500K cash now.
My question is, if I find a private money lender that would agree to buy them out and take over this deal, how would I secure the transaction so they wouldn't just walk away with the properties considering the equity in it would be equal to what they acquire it for? Paying a lower amount monthly would be ideal, but I just don't want to be left with nothing.
Thoughts?

[Bill Gulley]

You need to see an attorney and a tax advisor. Was the deal recorded and was the sale reported by the seller. If he agrees to take less there may be a forgiveness of debt issue for you to pay taxes on. If he claims a payoff, his taxes are due. See if you can modify the CFD, then proceed. You are simply refinancing, so you'll go to closing and the clsoing agent will payoff the CFD and record the new note and deed(s). :)