• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
NoteInvestor.com Logo with House next to words

Note Investor

How to buy, sell, broker or invest in private mortgage notes for cash flow!

Your #1 Source For
Note Investing Information!

  • Home
  • About
  • Articles
    • Notes 101
    • Note Brokers
    • Note Buyers
    • Real Deals
    • Seller’s Corner
    • Cash Flow Business
  • Learn
    • Sell Your Mortgage Note
    • Note Broker Training
    • How To Buy Notes
    • Note Buyers Directory
    • Creating Notes With Seller Financing
    • Note Investing 101 Series Videos
  • Bookstore
  • Contact

Real Deal #145 – Iowa Real Estate Contract

October 13, 2008 by Tracy Z Leave a Comment

Welcome to Real Deals! It’s always easier to learn from real life so here we share information from actual owner financed transactions. While a note and mortgage or deed of trust are the most common real estate financing documents, sometimes seller financing utilizes a Real Estate Contract.

Photo of Iowa Farmland with Words: "Real Deal #145 - Iowa Real Estate Contract"

The Terms – Real Estate Contract

The seller agreed to accept owner financing on a 20-acre land parcel in Iowa. The sales price was $50,000 with a $5,000 down payment made by the buyers at closing. The balance of $45,000 was carried back by the seller at the rate of 8% interest per annum with monthly payments of $377.00 for the next 240 months.

After receiving 6 monthly payments the seller was interested in receiving cash now for the remaining payments. The buyer had started building a home so the property now included water, electric, septic, foundation, and framing. These improvements increased the value and served as additional collateral should there ever be a default. The seller accepted an offer of $30,000 for the investor’s full purchase of the remaining 234 monthly payments.

What Happened When the Seller Sold the Contract?

When the seller originally sold the property to the buyer they utilized a Real Estate Contract. The seller remains vested in fee simple title until the buyer has made all contract payments in full. Once the seller receives the full principal balance plus interest, a warranty deed is delivered from the seller to the buyer transferring fee simple title into the buyer’s name.

With a mortgage or deed of trust the seller transfers the fee simple title to the buyer upfront at the time of closing (rather than at the end with a contract). The buyer then gives a lien back to the seller as evidenced by a note and mortgage or note and deed of trust.

Since the seller remains vested in title until payment in full on the Real Estate Contract, an investor would take on these same responsibilities. An investor must be certain the seller is holding clear title in order to accept the deed from the seller and hold it in trust until the buyer has paid in full. The investor also receives an owner’s policy rather than a mortgagee’s title policy from the title company upon purchasing the payments from the seller.

Learn More About Real Estate Contracts and Note Investing

  • What is a Land Contract? (Link)
  • Creating Notes with Seller Financing (Link)
  • Note Investing 101 Min-Series (Link)
  • NoteInvestor.com Bookstore and Trainings (Link)
  • Real Deals Series (Link)

Disclaimer: Real deals are based on actual transactions completed within the past ten years. Market conditions change frequently resulting in pricing and underwriting changes by note investors. Work with qualified professionals when creating new notes to obtain accurate and up-to-date pricing and investment parameters.

Filed Under: Real Deals Tagged With: cash now for payments, How to sell a Real Estate Contract, Land Contract Examples, Note Seller Real Deals, Owner financed real deal, Real Estate Contract, sell contract, seller financed example, seller financing

About Tracy Z

Tracy combines her knowledge of real estate notes with the power of marketing online to help grow your business! She can be reached at Tracy@NoteInvestor.com or by calling 1-888-999-7905.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Learn Real Estate Notes

Click the reports below to download your FREE copy of 5 Ways to Cash in on Notes AND a BONUS!

Search This Site

More to See

Investing Notes Risk

21 Tips To Read Before You Get Started Investing in Notes

Note Buyers Directory 2018 by NoteInvestor.com

Selling Mortgage Notes? Find the Right Note Buyer!

Learn Note Business

Learn the Note Business in 60 Seconds?

Cash Flow Notes Business Truth

5 Myths About the Cash Flow Notes Business

Most Read Note Buying Info

How To Buy Mortgage Notes
Creating Notes With Seller Financing
Note Broker Training
Get Direct With Note Buyers Directory
How Can I Find Cash Flow Notes?
Buying and Selling Notes For Residual Income
How Dodd Frank Mortgage Laws Apply to Seller Financing
How To Calculate Cash Flow Notes
Note Investing 101 Series Videos
Best of Notes 2022

Connect With Us

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube

Footer

Places to Visit

  • Creating Notes
  • How To Buy Notes
  • Note Broker Training
  • Note Buyers Directory
  • Sell Your Note
  • Bookstore

We Are Here to Help

Photo of Fred Rewey and Tracy Z of NoteInvestor.com
Fred Rewey & Tracy Z NoteInvestor.com

Receive the Note Investor Newsletter

COPYRIGHT © 2008-2023 NOTE INVESTOR | PRIVACY POLICY | CONTACT US
This website is for informational purposes. This is not an offer to sell or purchase any security. Nothing is intended as legal, financial or investment advice. Any historical data represents past performance and does not guarantee future results. NoteInvestor.com is owned by Diversified Investment Services, Inc.