(501) 474-6679

As a real estate investor, I’ve always been passionate about sharing my experiences to help others navigate the often complex world of property investment. Today, I’d like to tell you about an investment strategy that has not only diversified my portfolio but also generated consistent passive income and minimized the hassles of being a landlord. It’s called Contract for Deed, also known as a land contract, an installment sale agreement, or what I refer to it as Owner Financing. 

I acquired this strategy from an exceptionally generous mentor, and observed the advantages of evading the hassles of property maintenance, repairs, and tenant turnover associated with rental properties.

Understanding Contract for Deed

A contract for deed, also known as a land contract or an installment sale agreement, is a financing arrangement where the seller finances the purchase directly with the buyer. Instead of obtaining a traditional mortgage from a bank, the buyer makes payments to the seller over an agreed-upon period until the total purchase price is paid off.

Benefits of Contract for Deed

The contract for deed strategy brings several benefits:

  1. Passive Income: As the seller, you receive regular payments from the buyer, providing a steady stream of passive income.
  2. Higher Interest Rates: The interest rates in these deals are typically higher than traditional mortgages, meaning more profits for you.
  3. Security: If the buyer defaults on payments, you can reclaim the property without going through a lengthy foreclosure process.

How Contract for Deed Differs

Unlike traditional real estate investments where you’re either the landlord dealing with maintenance and tenant issues or a passive investor relying on a third party, the contract for deed puts you in control. You’re the bank, and you set the terms.

My first foray into this strategy involved a vacant mobile home on 1 acre of land in Central Arkansas. The property was in dire need of renovation, and the owners were eager to sell. I purchased the property with a line of credit from a bank and marketed for sale with owner financing. Getting lending from a bank for a homeowner would be impossible due to the low price and condition of the property. Owner financing gives homeowner access to people who may not get approved through Big Banking due to various reasons. 

Because I was able to purchase the property below market value, I was able to create equity and sell it slightly above market value due to adding value with the owner financing option. I keep the payments around rent prices for comparable properties, and usually cashflow around $300-$500 net per property

The Contract for Deed strategy has proven successful for me, leading me to replicate it on multiple properties. It’s an ideal solution where both parties benefit. I can acquire hassle-free cash flow assets without the burdens of being a landlord, while the borrower gains the opportunity to purchase and own a home that may have otherwise been out of reach.

If you’re interested in real estate investing but prefer to avoid the intricacies of running a business, partnering with an experienced investor like myself can be highly advantageous. By joining forces, you can leverage the expertise of seasoned professionals and avoid the day-to-day responsibilities associated with the industry. Investors are constantly seeking private money partners who possess funds to invest but prefer to delegate the operational tasks.

In conclusion, my personal experience with Contract for Deed has been a game-changer. It’s allowed me to diversify my portfolio, generate consistent passive income, and invest in properties that I might not have considered otherwise.

Remember, every investment strategy comes with its risks and rewards. Always do your due diligence, consult with professionals, and make sure the contract terms are clear and beneficial to all parties involved. Happy investing!