Almost every real estate book, podcast or guru I’ve ever read or listened to has said seller financing, also known as a contract for deed or land contract is a great way to acquire real estate.
For almost a decade, a contract for deed has been hard to find. Many sellers have received much higher rent than the post-tax proceeds they would have received after a sale in a down real estate market, so they have stayed invested in their properties.
Thanks to a decade or more of low mortgage interest rates, many buyers have wondered why on earth they would ever use seller financing either at a higher than current market interest rate from the seller or, face the prospect of higher interest rates when it comes time to refinance and take the Seller out of the picture with a balloon payment.
Yes, sellers willing to accept a contract for deed are still a needle in a haystack. Having said that, however, I have run into two of them in the last three months!
So here are reasons why buying a property on a contract for deed is a great idea, no matter what current interest rates are:
While there are some risks buying property this way like a mortgage due on sale clause, and the seller’s ability to foreclosure quickly if you miss two payments, the benefits far outweigh the risks.
If you’re lucky enough to find the rare seller who’s willing to help finance your wealth-building, it may be an opportunity too good to pass up!