Buy An 8-Plex Contract For Deed Style

Author

Kyle Reedstrom
June 03, 2024

What’s Crackin’,

This is the Midwest Invest Report. The Newsletter that will teach you about the real estate market you live in: Fargo/Moorhead/West Fargo.

Here’s the Rundown for today:

📕 Read: How Does a Contract For Deed Work?

🎧 Listen: Episode 015 - Negotiating a Contract For Deed On An 8-plex w/ Mason Peterson

Buying Property Using Contract For Deed - The Nuts & Bolts

Wait, wait, wait…..this contract stuff is supposed to be complicated right?

But it doesn’t have to be…Let’s learn together.

WHAT IS A CONTRACT FOR DEED?

A contract for deed is an agreement between a buyer and seller to purchase and sell real estate. The buyer agrees to buy the property and will take possession but will not receive legal title until the debt has been satisfied. This is a form of seller financing that occurs outside of a traditional mortgage. It allows the buyer to purchase a home, vacant lot, commercial property, farm, or other real estate. 

If the buyer does not meet their obligations, the seller can recover possession of the property and keeps the money that the buyer already paid. To be enforceable, a contract for deed must be in writing. If the buyer fails to meet their obligations, the seller can, among other things, cancel the contract, recover possession, and keep any payments made by the buyer. If the seller fails to meet their obligations, the buyer can sue for specific performance, damages, or restitution.

So let me get this straight.

  1. I’ll agree to give you your price.

  2. You agree to let me buy the property over the next few years.

  3. And I’ll pay you some down-payment plus a monthly payment.

That it?

Okay, I over-simplified it. But it doesn’t have to be over-complex either. Here are a few considerations to outline if you’re looking at this as a buying or selling tool for you.

Buyer Considerations

  1. The seller can set their own terms for the buyer’s creditworthiness, the amount of the down payment, and other terms that a bank might usually dictate.

  2. Will the buyer be able to afford the down payment?

  3. How much can the buyer afford in monthly payments? 

  4. What legal recourse will the buyer have if the seller defaults? 

  5. If the seller has a mortgage on the property, will the land contract present any legal issues between the seller and the seller’s lender?

Seller Considerations

  1. Will the contract for deed generate the required financial return?

  2. How to assess the buyer’s creditworthiness?

  3. Is the seller ready to take on the role of a lender?

  4. Who will be responsible for upkeep, maintenance, taxes, and insurance?

  5. Does the seller have a plan for accurately keeping records of payments from the buyer?

  6. How will the seller enforce the terms of the contract in the event of a breach? 

  7. If the seller has a mortgage, how will selling under a contract for deed impact the agreement with the lender?

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Need Contract Templates…

Contract for deed templates are a dime a dozen. If you need something simple, check out templates on sites like Rocket Lawyer. Still never a bad idea to have a legal professional review everything, but can save you $$ by drafting it yourself.

If You Are A Reader…

Of course Brandon Turner wrote a book on it. Check out Investing in Real Estate with No Monday Down

Pace Makes It Easy…

If you don’t know Pace Morby yet, he’s an excellent listen in the world of real estate contracts. 👇👇

INSTAGRAM

I like how Brannon explains it here 👇👇

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