No. 06 & 07 – Landing A Land Contract Deal – Part 1 (Marine St – Duplex)

How Did We Find The Property?

We actually found this property through our property manager at the time. The property management company had a list of sellers who were looking to sell, as well as the property management companies, who owned properties they were looking to sell. After reviewing something like 50 properties that were available, there were 3 that we agreed to purchase all at the same time.

How Did We Fund The Property?

The property management company agreed to sell this property to us on a land contract. The deal was we would pay $5,000 down on the $55,000 purchase price and our payments would be $353 per month. Then we would pay 7% interest on the deal and there was a balloon at 5 years. Because I was a newer investor and I really wanted to protect myself, I asked for the option to renew the contract at the end of the five years in case the economy was bad or interest rates were high. They agreed to allow me to renew the contract for an additional five years if I paid an additional $5,000 down at the end of the five years. The great part about this was that the entire $5,000 would go towards my principal payment, so there was no downside for me. We ended up refinancing out of the property about two and a half years later at a 4.9% interest rate on a thirty-year loan.

How Did We Fix The Property?

Initially, the property had tenants on each side, so we didn’t do any rehab. The tenants have moved out a different times, and each time the unit was in fairly good condition. However, on each unit we have painted the cabinets, cleaned, done some work in each bathroom, and some other minor repairs.