my experience with Land Contract

[Mike Marzolo]

Investment Info:

Other commercial investment investment in Washingtn Twp.

Purchase price: $140,000
Sale price: $222,000

Terms: 10 year Land Contract. 6% interest only payments on balance. no early payoff penalty.
1 acre of C-1 commercial land with old Farm house and Barn grandfathered for residential use...
Purchased with current tenant lease.
$1150.00 monthly rental. all utilities and maintenance required by tenant.
I decided to sell in 2015 on Land Contract.
Terms: 200K purchase price. 25k deposit. 6% interest only payments for 2 years.. Balloon due at 24 months.

What made you interested in investing in this type of deal?

This area is up and coming. population boom happening over 15 years period
more business needed to accommodate growth.

How did you find this deal and how did you negotiate it?

Realtor in the area. Happen to chat about investments.. He had this listed
negotiation was pretty simple. the current owner was ready to sell. right place at the right time I suppose.

How did you finance this deal?

my cash deposit with Land Contract terms

How did you add value to the deal?

cash deposit. Interest only payments for 10 years to keep payments low... and property had secure tenant with good payment history.

What was the outcome?

Collected rent for many years. I am carpenter and rehabber so I do all my own maintenance/property management to keep repairs low.
great passive income. Eventually I paid off Balance and continued to have passive rental income with no mortgage.

Lessons learned? Challenges?

I should have sold earlier with the market was hot, rather than hold.
potential capital loss of 100k had I taken a better offer.
Challenges? upkeep on 100 year old farmhouse/Barn........... not worth the money to restore as the house was a knock down.. but still in good enough shape to keep as rental....

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Purchased from real estate agent.
Sold by owner (me)
no lenders