Purchasing a large tract of land is often a monumental decision. If purchasing a home is a stress-inducing time, finding and buying property is even more so. Exasperating this process is the fact that banks are hesitant to loan money for land that is undeveloped. In these circumstances, the path to take is searching for land that is owner-financed.
Finding land for sale that is owner financed can be done by using specific land sale sites. Use existing filters to select for land that is owner financed. Sites like landwatch.com allow you to specify that you only want to view owner financed properties for sale.
Although finding owner financed land can be difficult, there are steps you can take to make the search process easier. Keep reading to learn five tips for finding owner financed land near you.
What Is Owner Financed Land?
Banks, unfortunately, are in the business of making money, thus even when lending, they are looking at the benefit to their own institution. To that end, banks will often be wary of lending money to finance the purchase of undeveloped land. The fear on the bank’s end is they have no recourse without an existing property for use as collateral. Yet, many people interested in purchasing land are not in the position to purchase it outright.
In those cases, buyers can finetune their land searches to filter out any land listings that are not available through owner financing. Owner financing means that the listing owner acts as the lender. They take payments directly from the buyer. The buyer in turn has the land and is able to develop it or earn income that can be used to pay the owner. There are a few things to keep in mind when considering owner-financing:
- These agreements tend to be short-term, over the course of a few years
- The buyer is taking on a risk assuming that the owner will continue to make payments on the property
- Owner financing generally involves a large balloon payment at the end of the short-term financing
Being aware of these potential issues ahead of time allows the buyer to plan accordingly on how to safeguard against pitfalls. Several contract options are available for people interest in purchasing land through owner financing:
- Rent-to-Own Agreement: In these agreements, the buyer pays monthly for the property for an agreed-upon amount of time. In the end, the buyer purchases the land for the agreed-upon amount, with any rent paid debited from the price.
- Contract for Deed: Here, the seller maintains the deed until the sale price is paid. The paperwork on the front end of this agreement is a contract for the deed. The deed itself is not turned over until the balance of the loan is zero.
- Purchase Agreement or Promissory Note: In these instances, the owner acts as the lender. The contract appears more like a traditional loan agreement with the current owner acting in the stead of the bank or mortgage company.
Regardless of the results of your negotiation with the seller as to price, fees, and interest rates, make sure that your agreement is written out in a formal, signed contract. You need to safeguard your investment and documenting your purchase is one way of accomplishing this.
Why Use Owner Financing vs Conventional?
Purchasing a home or property through conventional financing is a long, yet frantic process. It is characterized by fits and starts and a great deal of hurry up and waits. Financing through the property owner moves much more quickly. Aside from timeliness, there are additional reasons for choosing owner financing.
- Ability to negotiate lower interest rates
- Few closing and other fees associated with land sale
- Willingness to work with a lower credit score than bank policies allow for
- Agree to lower initial down payment
If you are purchasing large tracts of undeveloped land, securing a conventional loan may
be difficult even if you have a steady income and a solid credit score. In this light, starting search by limiting results to owner financed listings will save you time not only in searching for properties but also in terms of finalizing the sale. You will not have to wade through the red tape and constrictive regulations of conventional mortgage lenders.
5 Tips to Finding Owner Financed Land Near You
Although it can be difficult to figure out where to start to find owner financed land for you, there are several search engines that exist to help you with the process. In addition, the 5 tips below will provide you with some starting places and things to keep in mind throughout the land searching and purchasing process.
Use Land Listing Searches with Owner Financing Search Limit
Landwatch.com is one of the most popular land search engines on the web today. It has a full range of listings from across the United States. One of the key features of Landwatch is that you can limit your search to the only owner financed properties. This allows you to start with a pool of properties that you can further narrow down through additional filters.
Some sites, like Land and Farm, do not have a filter option for owner financing. Instead, you can do a keyword search for owner financing. Doing this will eliminate conventional financing from your search results. Further, some of the listings will even indicate whether a credit check is required. Details like these are very helpful if you are just building or are rebuilding your credit history.
Use Location Filters
Once you have cleared the conventional financing-only properties from your results list, you can further limit your search by adding your ideal locations. You also can do this by choosing a state to start your search. Some sites like Landwatch have the option to search for listings by using a map of the United States. Land and Farm requires you to enter a city, state, or zip code to search by location.
Other sites that you can use to help you find land for sale near you include:
- Landwatch – One of the best sites to search by location and limit your search to only owner financed options.
- Land and Farm – Has a large listing base of rural locations throughout the country. Although you cannot click to limit your results to owner financing, Land and Farm have a robust keyword search that will do so.
- Landhub – The user-friendly setup of Landhub allows you to select “owner financing” from a dropdown menu on the main page. From there, you can limit it to a location near you.
- Trulia – A popular household name for real estate searches, this site can be hit or miss in terms of land for sale, especially listings with owner financing available.
- Zillow – The Zillow website and app are some of the most popular available today. Land listings are available on Zillow; however, it is difficult to limit your results list to the only owner financed listings.
Additional sites are available that can help you search the land, especially special use or rural locations. In many cases, going with the best-known home listing sites may not be the best option when you are interested in purchasing land. Zillow and Trulia can be worth a quick perusal every so often, but may not end up offering much to view in terms of owner financed land for sale.
Know Why You Want the Land
Spend some time thinking about or brainstorming what you want to do with the land. If you are looking for a quiet, rustic get-away far from the hustle of the city, check out the area around the land you are viewing. It is not going to be a dream locale for long if your nature hideaway borders a camp-in festival site that is busy all summer.
Similarly, if you want to develop a recreational vacation spot, you need to ensure that the area has a variety of activities to entice visitors from all over. A horse lover’s paradise can descend rapidly if the woods are too thick to break trails. How you want to use the land is as important in determining the location as the actual physical locale. Knowing what you want on the front end saves you a lot of frustration.
Think about Accessibility in All Seasons
Once you have found that perfect owner financed property near you, make sure that it will be accessible to you all year. Keep in mind the quaint dirt road that looks so idyllic and picture-worthy during the summer months can turn into a muddy quagmire in the spring. A cabin on the side of a mountain has great views all year and access to great skiing, however, you need to be able to navigate the access road in winter.
Keeping in mind what you want to use the property for and when you will be using it as you search listings near you will help you hone in on the perfect spot. It is easy to get lost in the season in which you are viewing the property either in person or via the pictures shown on the listing site. To make sure you are able to make the most out of your investment, take a moment to envision the site during the different seasons.
Modern Convenience or Primitive Living?
As you search you limit your search of nearby properties, know what your expectations will be. If you want a rustic cabin in terms of aesthetics, but not in terms of amenities, you will need to investigate if you are able to develop the land in terms of the following:
- Internet Access
- Cell Phone Service
- Electrical Access
- Plumbing and Running Water
- Heating and Cooling
- Septic or Sewer
A Victorian farmhouse in a rural valley may look like the ideal writer’s escape. If the only way to access electrical service, however, is to run a cable all the way to the end of the driveway, it may be more trouble than it is worth. Similarly, if you need to have access to email or work servers while away, a location with no cell or internet service is going to a place you end up using very little.
Outro
Owner financing can be one of the best ways for interested buyers to purchase land. Whether for investment purposes or as a location to build your dream home, owner financing offers different opportunities and benefits when compared with conventional loans. The quicker turnaround from interest to purchase is a big draw for many people, while the other benefits quickly make owner financing an even more enticing option.
Owner financing is a great alternative for individuals who are employed seasonally or for those who are in the process of rebuilding their credit score. Owners financing their own properties have more latitude than most banks when it comes to the down payment amount and the interest rate which is to the benefit of many buyers.
