Raw land - Owner Carry Terms

[Gloria C.]

Hi everyone - I have raw land that potential buyer wants me to consider carrying the loan.  If anyone has experience with this, I'd appreciate feedback.  Re: term to lend for, at what percentage rate, etc. I own this free/clear. Appreciate any/all comments.

[Jon Klaus]

@Gloria C. Presumably your buyer cannot get bank financing, so your terms do not need to compete with the bank. I might start with something like 25% down, 7% interest, balloon in three years. The idea being, that your buyer would refinance before that time, and you would be paid off.

If you come to a deal, it’s a good idea for an attorney to prepare the note and deed, and consider getting a third party loan servicer to handle payments and reporting.

I recently sold land on a note where the buyer put down 50%, and is making double payments.