A contract for deed is an alternative means of financing in which the seller acts as the lender for the duplex purchase rather than a bank. The buyer makes monthly payments to the seller and takes immediate possession of the property.
Terms of the loan are negotiable. The seller and buyer agree on an amortization schedule and interest rate.
One common misunderstanding is that a seller must hold a contract for deed for 30 years. Nothing could be further from the truth. Most contracts for deed are for five years or less, with a balloon payment. In other words, when the balloon payment is due, the buyer will need to refinance.
There are advantages and disadvantages to a contract for deed for both a buyer and a seller. In this post, let’s look at it from the buyer’s point of view.
A contract for deed can be a wonderful way to acquire property if you can find a seller willing to carry the loan. There are advantages to the seller as well, and I will cover them in my next blog.