Is a 12.55 acres @ $3,200 acre = $40,160 with a drilled well which provides water to two other parcels and has a septic system, five camper hook-up with water, septic and electric. Owner financed as follows: $4,000 down payment with the balance $36,160 owner financed on an Installment Sales Contract for Deed payable over ten years at 10.0% interest with 120 consecutive monthly payments of principal and interest in the amount of $477.86 per month a good deal?
Thanks for your question. I can’t tell you if this is a good deal without knowing the real estate market where this property is located. Here is a list of things you can do and should consider to get started in evaluating this deal.
1. Evaluate the market for this type of property in this location. What have comparable properties sold for? You could see if a Realtor who specializes in commercial land or campgrounds can give you a market analysis to determine the value.
2. Create a cash flow forecast (real estate pro forma.) How much income can you logically expect to get from this property? What are all the expenses you’d incur, including this owner financing?
3. By when will you get your money back out of the property (ROI?)
4. Due diligence: You’ll need to know what the zoning regs are, and what is the property’s current use. Is it currently being used as a private campground? Are there any restrictions on use?
5. Can you get better financing elsewhere with better rates and terms?
There’s a lot to consider when buying investment property, so doing your due diligence is critical.
We have a lot of articles on our site that can help you. Here are a few:
Seller Financing (has a section on land installment contracts). https://fitsmallbusiness.com/owner-financing/
This is how to finance rental properties, but there are sections on cash flow projections and formulas for evaluating deals: https://fitsmallbusiness.com/how-to-buy-multiple-rental-properties/
Here are some articles on buying land:
Hope this helps!
Disclaimer: We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions. Click here to see our full disclaimer.
Product or company names, logos, and trademarks referred to on this site belong to their respective owners.