My dad starting buying a piece of raw land for back in 1998 for $19,000. He made arrangements for nothing down and only 10% interest which came out to be $181.57 for 180 months with nothing down. He cleared the land and put up a septic tank down, and set up electric, gas, and water to this land.
My dad died in 2008 and I took over payments with only 5 years left on the loan from an individual. I got my Dad's ExWife to sign over her part, only to find out it was actually part of the divorce decree and my brother signed over his part. I paid this loan off 100% and the owner put the land in my name free and clear. I actually have a clear deed.
When it was all said and done me and my dad spent $32, 682.00 on this land. In the 5 years, I actually spent 10,894.20 of my own money.
The land is about 60 miles from where my wife wanted to live, and now I had to drive and mow the land at least 2 times a month due to the city rules. I had a bright idea of selling the land.
I recycled the same Contract Of Sale letter that the previous owner gave my dad and sold the land on payments for $22, 500 at 10% interest with nothing down. This Contract of Sale has a clause that if the land falls in default of 30 days or more that I could take full possession of the property. The contract has a no sublease clause.
The new tenant paid about 8 months on time before he went over 30 days. I went and talked to him and he quickly wrote me a check for the full some and told me that he just forgot due to his home business and this would not happen again. This happened about 4 times in 3 years until his last payment he forgot to pay me for over 120 days.
I wrote up a breach of contract letter informing him about our contract and that I was taking back the land as per our contract unless he had the remaining balance due. I paid the local contractor to had him served. It took another 2 months before I got the confirmation that the letter has been served.
He quickly called from his cell phone number he never answered before and demanded to know why. I told him that our contract was null and void and told him the reasons why, which echoed the original letter. We talked for several hours since this tenant was kind of talk and overall a very nice guy.
I told him I would do him a favor and let me he rent the land at a reduced rate of $150 per month for a period of 12-18 months and if he made payments on time I would sell him the land. At the time this seemed like a winner because I did not want to mow the land again.
In that time a trailer as moved in and setup.
I was under the impression that it was his for over 15 months. I went over his place of business which he owned and was going to talk about our deal. After a long talk, he told me that he started renting out the first trailer. He told me that he was very interested in buying the land again and I told him I would check my contract and get back with him.
Now I am stuck, he is clearly subleasing the property so I can't use the same contract I used before which clearly does not allow subleasing the land.
Currently, he is collecting $200 rent from the land only, someone else owns the trailer.
A few months later I get a bill in the mail for over 1 year of water and garbage that will be added to my next real estate bill. After paying a visit to my tax assessor I found out that my dad's homestead credit was still active and I was double taxed on the same property. I pay taxes ever year. They assumed the trailer there now was the same trailer my dad had.
I finally convinced the tax assessor that it was not and almost written a 3-page essay on what happened to the original trailer and how the existing trailed came to be.
I gave the number of the tenant to tax assessor, they called him while I was in the office, and he told them he was not the owner and not responsible.
I am toying with the idea of what I should do next.
I am wondering the following...
1. If I am going to finance the land for 15 years did I set my price too low? Currently the land is worth between $17,000 - $20,000 for 1.5 acre zoned as resident/commercial. I can only assume that that the original owner sold the land to my dad because she knew what the land would be worth after 15 years.
2. It does not set to well with me that the renter is subleasing the land and making a $50 cash flow at my expense because I was under the impression he would save up the money for a down payment. When I went to talk to him, he was fully expecting no money down financing like before.
3. should I sell the property to someone who will finance the land to the renter for 10% interest like I did the first time? I have been itching to get some income to hold until a great deal comes along. I have 2 other people who are also interested in real estate that have money but don't know how to get started.
I am still looking for suggestions on how I should proceed and make everyone happy.
Have any suggestions?
