Consider owner financing.

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Consider owner financing. Owner financing refers to you financing your land purchase through the seller (or owner) of the land. This can be an attractive option for buyers if they are having difficulty obtaining a bank loan, or if interest rates are too high due to poor credit. For the seller, it may be attractive if they are having difficulty selling the property. If these conditions apply, consider approaching the owner and inquiring about owner financing.

• For example, assume you wanted to buy a plot of land for $1 million. You would pay a down payment to the owner, and then the owner would finance the property and allow you to use the land. You would then pay the owner back regular payments just as you would with a bank loan. Typically, once all payments are complete, the deed to the land would be transferred to you.
• Benefits of owner financing include lower costs for you (due to the lack of fees like closing fees, and a potentially lower interest rate), no qualifying required (since it is not through a bank), and fast closing of the sale (since there is no third party involved).
• There are a few risks to be aware of. Typically, these transactions will involve a relatively high down-payment of 20% or more. In addition, it is important to be aware of whether or not the seller still owes money on the land. If so, you are exposing yourself to the risk that the seller could go bankrupt and be unable to make payments. Bring this topic up with both the seller, and your lawyer, to fully understand the risks and what you can do about them.
• Always involve a lawyer when conducting this sort of transaction. Formal contracts will need to be created and signed, and a lawyer can help to make sure the transaction is fair to you and that the seller meets all their obligations. The lawyer can also assist with the financial aspects of the deal such as interest rates, amortization period, and documentation of the loan.