Seller Financing in CO

Land Investing
1

Hey everyone, I am feeling intimidated in staying on top of record keeping, legality, and paperwork involved with seller financing. I keep coming back to it though because of the many benefits it has, mainly increasing passive income and overall money paid over the life of the loan.

From my understanding, I will need a few documents along with Quickbooks (or other software?) to make this work well. I just re-read Seth’s article https://retipster.com/supercharge-your-profitability-with-seller-financing/ but still have some questions for anyone out there.

  1. Would you recommend a new land investor target seller financing deals or should they stick to full cash transactions?

  2. Is there any easy way to limit the risk of people putting up mobile homes/RV’s etc on the land? I keep hearing about people receiving county fines for the buyer’s actions.

  3. How do you personally decide what interest to charge, down payment, and how long the loan will extend?

  4. In your experience, how much more accessible does seller financing make buying land for people?

  5. What ways do you personally vet sellers credibility in ability to repay the loan?

Feel free to answer any part of this or just add other thoughts.
Thanks all,
Grant

2

@choicelandbuyer depending on which state you are selling, I am a fan of Fabrica. Whatever you do, automate it! If you don’t it will drive you crazy - at least it does me. You can do a Land Contract that specifies the terms of the deal. I generally would allow use of the property but not alterations to the property in any way and specify such in the Land Contract. The financial terms I have determined based on comps but also what I feel makes it easy for someone to buy. My intention would always be for people to be able to keep their land. I do have some properties I have had to sell with seller financing. My personal preference is to buy and sell using cash deals. However, with a good system seller financing can be a very powerful tool.

3 Likes
3

From what I’ve gathered one needs a couple things;

-Deed
Document that transfers ownership to buyer
-Promissory Note
States all loan terms (interest rate, loan amount, payments, etc)
-Deed of Trust
Acts as lien on property until note is paid in full

State specific ‘Power of sale’ language included to avoid court process

Need ‘Trustee’ who will foreclose on buyer if they default
Often a title company or lawyer