Is It Better To Do A L/O Or L/C For High Priced Properties?(m)
My broker said that because of the amount I'm asking for a dwn payment I would have to do a Land contract. Why? I really don't want to give equitable interest if I don't have to. The property is priced at 282,000 with 5% dwn. Why should I do a L/C instead just because of the amount I'm asking down?
Any ideas?
quinn
if there is equity you could always auction it off too. just another way to sell.
The broker is my money lady and my friend. When there is something I don't understand about financing or RE in general, I can always call her and get answers. She finds me alot of deals too. She invests too. Thats how I came about the L/O vs. LC advise.
quinn
Typically, a LC demands 10 percent. She may be unaware of how easy it is to find a T/B.
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When the T/B finally purchases, where do you usually apply the option money? Do you knock it off the purchase price or is it used as part of down payment? Also, with L/O can you make them responsible for taxes?
Thanks everyone
quinn
Some people apply it towards purchase price, because they feel it helps to prevent equitable interest, and that's true; however, you can still stack the deck in your favor by allowing it to go towards a down payment (which is what I do). Depending upon the lender used, if your Contract doesn't state it will be applied as a down payment, your T/B will have to come up with another full down payment from scratch. Never ever ever under any circumstance have the T/B directly pay your taxes or insurance. The T/B only pays rent. If you do and your T/B shows up at the eviction proceedings, you likely will be told you have to foreclose. There's also a chance you will have to refund any monies paid to you above fair market rent, especially option consideration.
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