When investing in real estate there are a lot of contracts you will have to use. Some of these contracts are used when buying or selling real estate the conventional way; others are used when buying or selling unconventionally. One contract you can use when you’re investing in real estate is a land contract. A land contract is a contract that lets a buyer have temporary control of a property. Usually the seller will get a small monthly payment and set benchmarks that the buyer will have to accomplish. The buyer will also usually put up something as collateral. If the benchmarks are not accomplish on time or if the monthly payments are not made the seller can terminate the contract. At the end of the contract it is up to the buyer to decide if to buy the property or not.
Another contract you can use when investing in real estate is a promissory note. A promissory note is a contract a seller and a buyer use when they are using the option of seller finance. Seller finance is when the buyer pays the seller directly instead of going to a bank for the money. In most cases there is a balloon payment. A balloon payment is when the buyer after paying the seller directly for a certain amount of time, pays off the promissory note in one lump sum. The buyer usually goes to the bank and gets a mortgage to pay off the seller. Some things a promissory note should have on it are the monthly payments, interest rates, penalties, and when is the balloon payment due if any.
One last contract you can use when investing in real estate is a lease. A lease is used when renting out properties. The things a lease should have on it are rules, penalties, rent amount, when rent is due and when rent is late. When investing in real estate contracts are a way of life. If you use the information you read here you will have some idea what these contracts are and what information they should have on them.
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