Land Contract
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Forum Name: Shops, Barns, Varmints, and Trucks
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URL: https://www.allischalmers.com/forum/forum_posts.asp?TID=186040
Printed Date: 30 May 2024 at 7:10am
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Topic: Land Contract
Posted By: Tbone95
Subject: Land Contract
Date Posted: 27 Jan 2022 at 11:05am
| Has anyone been on either side of one in the last year or so? Wondering what typical interest rates are for one currently. |
Replies:
Posted By: Kansas99
Date Posted: 27 Jan 2022 at 11:22am
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Bank or private treaty? I assume your talking loan ------------- "LET"S GO BRANDON!!" |
Posted By: JC-WI
Date Posted: 27 Jan 2022 at 11:45am
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Isn't a land contract usually between two parties for a parcel of property that one is selling...? and the seller holds the loan until it is satisfied and then gives full title to buyer. And the terms are set between the two parties ... or lawyers. ------------- He who says there is no evil has already deceived himself The truth is the truth, sugar coated or not. Trawler II says, "Remember that." |
Posted By: Kansas99
Date Posted: 27 Jan 2022 at 1:01pm
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I would think so JC, but wasn't sure if he was asking about bank rates. If Tbone was talking about a private contract, he could probably get a sweetheart interest deal on land in Europe right now, I've been told in some places over there you have to pay banks to leave money in a savings account.  ------------- "LET"S GO BRANDON!!" |
Posted By: Tbone95
Date Posted: 27 Jan 2022 at 2:00pm
Yes, exactly. So….has anyone done this RECENTLY, and what was the interest in the agreement, that’s what I’m asking. BTW, googled it, perused quite a while and didn’t see what I was looking for. 
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JC(WI) wrote:Posted By: Hubert (Ga)engine7
Date Posted: 27 Jan 2022 at 2:37pm
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Lots of variables: credit rating of buyer, length of loan, market in the area, provisions for default, etc. Check with banks in the area. I sold a small tract this past June but told the buyer it would be cash at closing and he would pay closing costs. ------------- Just an old country boy saved by the grace of God. |
Posted By: WF owner
Date Posted: 27 Jan 2022 at 3:10pm
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A few years back, I had some interest on a guy that wanted to buy some land on a land contract. My attorney strongly advised against it. It's been a while, but some of his reasons were: ~ If the buyer defaulted, legal costs could quickly outweigh any (tax) advantages. ~ if something happened to my wife or I, settling the estate could be costly and the estate may not be settled until the end of the land contract. ~ He seemed to think the advantages were very much in favor of the buyer. ~ He advised that any added interest we would make, would be taxable (maybe capital gains?) and would negate any tax advantages of being paid over several years. ~ In our case, the potential buyer had previous credit problems and was unable to borrow money to purchase outright. The attorney (and I agree now) said the risk was too great. If you are thinking about doing it, my recommendation is that both sides should consult an attorney familiar with doing a contract that protects them.
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Posted By: Tbone95
Date Posted: 27 Jan 2022 at 3:19pm
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I was hoping to keep it generic, but I guess that isn’t going to do. In this case, I’m the buyer. I don’t know, can a person request a credit rating on another person? I suppose you could ask the person for a report but could you request it directly? Wouldn’t have a clue. I sold (well tried to) my old house on land contract but that was about 10 years ago. Interest market has changed since then some. Private contract rates on these is a bit more than banks due to the risks, I get all that. Was just wondering if someone was interested involved recently and maybe could compare what they came up with to a bank. Or something. We have farmed this ground for 45 years but what’s left of the family we rent it from lives out of the area and doesn’t want it anymore. I have to write him an offer. Wanna be close. |
Posted By: Tbone95
Date Posted: 27 Jan 2022 at 3:25pm
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WF Owner I would 100 % agree the advantage goes to the buyer, me! After what I went through on my old house, it would have to be extremely special circumstances for me to sell anything that way again, to someone I know and trust for sure. In this case, we the 2 parties know each other. |
Posted By: dr p
Date Posted: 27 Jan 2022 at 3:50pm
| i bought thirty acres from a good friend on land contract over three years. We did 3% since savings rates were zero. The big advantage for us was we did not need to do a bank appraisal so the price was artificially low to protect against capital gains. I probably took more risk than I should have but it was the easiest way to clean title for me |
Posted By: Lars(wi)
Date Posted: 27 Jan 2022 at 4:20pm
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My Grandfather sold the farm in 1970 on a land contract. The two parties agreed on a sale price, no down payment, agreed on a monthly payment for 10 years, after ten years the buyer could pay off with a ‘ballon payment’, or negotiate the pay out of the ‘ballon payment. Both sides agreed to pay the balance off in another 10 year schedule. ------------- I tried to follow the science, but it was not there. I then followed the money, and that’s where I found the science. |
Posted By: Kansas99
Date Posted: 27 Jan 2022 at 4:25pm
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Tbone I have a land note at the local bank from about 3 years ago 3.75% fixed for 5 on a 15 year note. Right now at the local bank 4.25% fixed for 5 on a 20 year note if need be Interesting enough FBN had called me awhile back trying to get the note and had good numbers I just choose local, well because I'm dumb I guess. Out of curiosity I looked on there site again is as follows: Fixed rate loans start at 2.78% 5 year Variable rate loans start at 1.93% 15 years Seriously doubt too many people would qualify for that number starting out but it's just for an idea. Personally I always get my money from the bank. That way when I sell grain or cattle I don't have to wonder what I'm going to do with the money, I just take it to the bank and hand it to my long lost body and he smiles as I walk out the door empty handed, works great!!
------------- "LET"S GO BRANDON!!" |
Posted By: Kansas99
Date Posted: 27 Jan 2022 at 4:28pm
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Also each to their own but I personally would not consider a variable loan right now. ------------- "LET"S GO BRANDON!!" |
Posted By: dr p
Date Posted: 27 Jan 2022 at 7:05pm
| Kansas is right on that |
Posted By: tomNE
Date Posted: 27 Jan 2022 at 8:09pm
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the deals i work depend on the down payment. min down probably 7%; bunch down 4% same way with length but numbers are much closer. no place to get any interest in a bank.
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Posted By: victoryallis
Date Posted: 27 Jan 2022 at 11:35pm
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Closed on a parcel under land contract roughly a year ago probably more like 11 months ago. Off the top of my head 1/3 down and at 4% interest. Amount down was more so a “even number” than exactly a 1/3. That was my 4th land contract only time I went to bank to buy real estate was the house and the 12 acres around it. Call your local Greenstone FCS and ask questions they have always been very friendly to me. I know before the end of the year they were pushing a 2.9% equipment loan. ------------- 8030 and 8050MFWD, 7580, 3 6080's, 160, 7060, 175, heirloom D17, Deere 8760 |
Posted By: victoryallis
Date Posted: 27 Jan 2022 at 11:36pm
I certainly agree 110%. ------------- 8030 and 8050MFWD, 7580, 3 6080's, 160, 7060, 175, heirloom D17, Deere 8760 |
Posted By: Tbone95
Date Posted: 28 Jan 2022 at 1:27am
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Thanks guys. Also agree with a lot that was said. Insomnia sucks. |