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What Works: A Profitable Land Contract Deal Example

 

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This video will show you how to do a quick flip by buying on land contract and selling through a real estate agent on the MLS. Very simple, very quick.

 

Land Contracts have some valuable uses if you know what you are doing. Most investors don’t know when to use a specific type of financing structure. They don’t know if it makes more sense to buy it with a Land Contract or a Lease Option, to sell it “Subject To” or for Cash.

If you learn these deal structures and you learn my hierarchy of zero down structures, you will ALWAYS know the best offer to make – and by best, I’m talking about the one that is the most profitable, has the best exit strategy for the situation, is the safest legally and puts you in control of the deal.

 

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Read Transcript for “What Works: A Profitable Land Contract Deal Example”

 
How can you do land contracts and profit from them? – Let me show you some of the different ways you can buy properties using land contracts that will be profitable for you both in the short and the long term.
 
Joe: This next video I’m showing you here is about buying properties on a land contract and when it makes sense. There’s several ways that you can do it that make sense. If you’re working in Texas, then land contracts are pretty easy to do there because you can foreclose on them in 30 days if the buyer doesn’t pay you. They also help because there’s some regulations on lease options in Texas that they don’t have in other parts of the country that land contracts will help you comply with. I’m going to talk about that a little bit.
 
Joe: Also, if you want to do a quick flip, or if you’re buying something that’s dramatically under market value, you can buy it on a land contract, turn around and sell it through a realtor on the MLS, make a quick chunk of money and then move on. I’ve done this quite a few times in different states and different areas.
 
Joe: You don’t have to do it locally. It’s very easy to put together, and I’ll give you an example of one of the ones that we did recently where we made just a quick 5 grand and then turned around and sold it under market value on the MLS, paid the realtor and then everyone was happy in the transaction.
 
Joe: The other thing that you can do with land contracts is you can buy any property on terms with a land contract. I prefer not to buy properties on land contract when I’m buying them for the long term. I much prefer taking them “Subject To” or through “Multi-mortgage”. That’s what I stick with because there’s so many of those available that you don’t have to go down the hierarchy and go to land contracts. But I’ll show you an example of what might make sense.
 
Joe: Sometimes when you’re not as good at negotiating or talking to a seller, a land contract sometimes makes the seller a little more comfortable than just deeding the property to you. Once you get good at talking to them and making them feel comfortable that you’re actually going to follow through with what you promise, then selling it Subject-To is really not a problem. And if you use the techniques that I have in the “Push Button Method”, I think it’ll be a lot easier for you. So let me show you these types of deals here and then I’ll be right back.
 
Joe: Here’s a little house that we bought on land contract in Pennsylvania. I had to go online to get this picture because we never even got a picture or needed a picture to sell this property. The current value was $57,000 on it. This person responded to one of our ads in the paper to sell their home and they went to our website and they filled out the form so we knew pretty much what the values were. They actually told us that the current is $57,000, they wanted to get rid of it and they gave us a price.
 
Joe: We offered a little bit less on it, and we said, ‘Sell it to us on a land contract. We want that land contract to be no payments at all for 6 months, 2 year land contract.’ We figured that if we couldn’t get it sold in 6 months, we probably weren’t going to get it sold anyway. So, we had no payments on this thing.
 
Joe: Then we went out and called a realtor local to the area. We had him list the property in the MLS for $39,000 and we sold it within 7 days through the MLS for $37,000. Now, after our closing costs and the deal that we cut with the realtor to get a good deal, we ended up making $5,000 profit on this deal simply by talking to the seller, getting the land contract put together, finding the realtor, having the realtor do the work, and a week later they got it done. They sent out a check to us. They sent out a check to the owner, who got her full $25,000 in cash in 7 days and so she was very happy. We were happy – we made $5,000 and didn’t really do anything to deserve it.
 
Joe: This is how land contracts work. You can also do this with an assignable deal. But if you’re going to go to a realtor, its better if you’re a land contract holder – they’ll be more likely to list it and they don’t want any problems with it. We have run into realtors that wouldn’t list a property because we bought it on land contract before, but that’s pretty rare. I’ve even gotten realtors to list properties with me that I had options on, so it’s possible to do it that way as well, but the land contract just makes it a little smoother.
 
Joe: We didn’t know anybody in Franklin so we had to call around to a couple of realtors and found one, which I didn’t do by the way – I had an assistant do it for me. We found somebody that sounded like they knew what they were talking about, and gave them the job and they made a little bit of money, and we made a little bit of money and got it sold very quickly. So, this is the kind of thing you can do on land contract when you’re making it happen.
 
Joe: The other thing that I told you in the previous video about how I sell properties that I bought Subject-To on land contract to end users or to investors sometimes works pretty well as well. That keeps me in control of the property because I’m on the deed. When I buy, I don’t usually buy on a land contract unless I’m planning on getting rid of that property pretty quickly but a lot of people are happy to buy land contracts and they do very well. Investors keep them that way. Again, I think it’s so easy to get them Subject-To that I don’t bother with land contracts unless I’m doing something like this with it.
 
Joe: There are a lot of ways to make money using land contracts if you understand the hierarchy of structures, how to analyze a deal and the exit strategies, then that’s how you make money in real estate. Those are the things that you need to know in order to know if you’ve got a good deal on your hands, and once you can do that, then you can look at any deal and usually in 5 minutes if you have the numbers, you can determine if it’s going to be a viable deal.
 
Joe: Almost every deal I’ve put together in the past 15 or 20 years, I’ve not done any due diligence on. I’ve simply created structures in a way that is completely safe to me, so I don’t have to close it if a problem comes up or if there’s a due diligence issues. I put the onus of due diligence on the person I sell to and on the person I buy from rather than taking that myself so that I don’t have to worry about those issues. I think that if you do the same thing, then you can analyze deals as quickly as I’m doing it, and you can do them remotely so you don’t have to be nearby, you don’t have to be in a town, you don’t have to see the house, etc. And, you can bring all of these people in through the internet marketing techniques that we use, so learn them, and you can have an awesome business. Thanks, now.

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3 Comments

  1. December 9, 2010 at 8:53 am · Reply

    I had the same problem as Michelle, until you got to the part about the land contract in PA…then your voice went louder, and I was able to hear you.

  2. December 8, 2010 at 2:53 pm · Reply

    Will do, Michelle – Joe

  3. December 8, 2010 at 2:26 pm · Reply

    Joe,

    Thanks for all your videos; I really enjoy hearing from you. If it’s not too much trouble, could you please INCREASE the volume on your videos? I have my computer’s volume cranked to the Max, along w/ the embedded video player cranked to Max Volume. Even with Max Volume everywhere, I’m still having trouble hearing you sufficiently on the past few videos. Your YouTube videos are nice-and-loud. However, the videos you’ve embedded into your blog (via the stand-alone player) are very quiet.

    Could you please increase the volume when recording your videos, so we can hear your excellent advice better? Thanks a bunch.

    Michelle

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