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Owner Financed Land: The Definitive Guide (2023)

Believe it or not, buying Owner Financed Land is much more common than you might think. In this complete guide, you will learn how to purchase owner-financed land how to find it, and we will even address the most common questions buyers have about the process.

So you’re ready to buy some owner-financed land and have questions, well, look no further.  Here is my complete guide to content marketing in 2023.

How does owner-financed land work?

It’s pretty simple. Here is a short guide to help you:

  • The seller determines the down payment and the monthly payment amounts.
  • You make the down payment.
  • The seller will create the required documents and you will sign them electronically.
  • Once signed, you can start enjoying your land.

It is that simple. On a recent Facebook Live video, I spoke with a land seller about how simple the process is. In the video below, I talk to  Tate and the conversation I’m referencing starts around the 1 minute, 50 seconds mark.

Why would a seller offer to sell the land with owner financing?

There is a flaw in the land market; here’s why. Some key players help keep the market moving in most real estate transactions. These key players are the realtors and the banks.

In most land transactions, the banks don’t participate. 

Banks see land as a risky real estate transaction, they don’t want to finance it, and if the loan amount is less than $50,000 or, in cases even up to $100,000, they have no desire to hold a mortgage on the property.

Banks don’t create small mortgages; they want homes and more significant real estate deals. So without bank financing, the sellers of these properties offer owner financing to help provide liquidity to the market.

If you would like to read more about the challenge of getting a small mortgage, this article offers an excellent explanation [link].

Why not just get a personal loan from a bank?

Using a personal loan to buy land is a great option; however, you will likely need a minimum credit score of 610 to 640. And since most sellers are willing to owner finance the land with no credit check and probably no interest, getting a personal loan may not be your best option.

Do I need credit to buy owner-financed land?

In most cases, no.

Some sellers will ask to perform a credit check, but this is not often the case.

Even if it is, you are likely not to be affected by a low credit score.

The best practice is to ask the seller what their requirements are and then discuss your situation. As mentioned above, the seller is simply looking for a way to keep the property moving to you.

What type of documents will I see in an owner-financed land transaction?

Typically, the seller will prepare three documents: a Land Sale Contract, a Promissory Note, and a Purchase Sale Agreement.

Here is a quick summary of the three of these documents before we further go into each of them.

The Purchase Sale Agreement obligates the seller to sell the land and the buyer to buy. The Promissory note says that the buyer will pay the seller for the land; it’s a promise to pay. Finally, the Land Sale Contract is the document that secures the transaction and ensures that the buyer will receive a clean title after completing the payments.

Let’s break these documents down even further.

What is a Land Sales Contract?

During typical cash or bank-financed transactions, the property buyer will receive a deed when they close on the property. However, since the owner is financing the property, you typically won’t get the deed in your name until you pay the note in full.

In this case, the land sales contract will be the stand-in for the deed; it says that if you make all the payments you’ve agreed to on the promissory note, then you are provided with the deed.

What is the promissory note?

The Promissory Note is an agreement between you and the property seller. It lays out the commitment you are making, and it says that you promise to pay each month on time a specified monthly payment. In most of these notes, there are no pre-payment penalties.

The note also outlines other fees that could increase your monthly payment, such as interest charges, points, and even late fees.

The promissory note also explains the process of what happens if you are late on your payments. For example, buyers who are typically 35 to 60 days late will receive a notice of default. So the promissory note discusses the default process and how many days you have to cure the default.

The cure period is crucial because it allows you to be notified and make the required payments to avoid losing your land.

Cure Period example – Recently, on an owner-financed land contract, the buyer (Mr. Doe) would mail his monthly payments and pay with USPS Money Orders. His note payment got behind, and he received a notice of default with 35 days to cure. This notice came as a surprise to Mr. Doe because he mailed his payments every month, but as it turns out, a couple of the payments were never received, so Mr. Doe’s account appeared to be late. When he received his notice of default, he contacted the seller and explained that he mailed the payment every month, they were able to identify the issue, and Mr. Doe had the money orders reissued. Without this cure period, Mr. Doe could have lost his land.

The beautiful thing about buying land with owner financing is that most sellers are flexible. If, for some reason, you are late on your land payment, you communicate with the seller, and they will likely work with you to resolve the issue or to modify your payment plans.

What is a Purchase Sale Agreement

This agreement outlines the terms and conditions of the sale. The main highlights of this contract are:

  • The purchase price.
  • Financing terms.
  • Receipt of your down payment.
  • Any guarantee in writing.

Without this agreement, there could be some misunderstanding of the terms you and the seller have agreed. We certainly know that the key to any good relationship is excellent communication without ambiguity.

Can you build on my owner-financed land?

Great question; that is really up to your seller; it’s really up to them since the seller still owns the land until you pay it off. Most will not have an issue if you want to build or access the land.

Most land sellers will allow you to access the property and use it while making monthly payments.

However, since the seller functions as the bank in this transaction, it is up to them. Therefore, each seller will have to assess the risk.

If you have questions, you are encouraged to speak to your seller directly about handling this aspect of the agreement.

How can I find  owner-financed land?

Finding land with owner financing is easier than you think. Here are three resources that will help you.

#1 - Landmodo.com

Landmodo.com is the premier resource for owner finance land and land for sale by owner. With over 11,000 properties, all with owner financing, you will likely find what you are looking for here.

Searching is straightforward; you can search from the homepage for the property you want or do a detailed search getting down to even the county level.

#2 - Craigslist

You know Craigslist, but did you know they have a section for land?  Here’s a tip, go to the Craigslist site for the area you are searching for and then go to real estate for sale

Then, on the left side of the screen, under housing type, choose Land and then update the search.

Then start searching for the land you want.

Facebook Marketplace – Like Craigslist, Facebook marketplace is also a classified resource to help you find the land you want.

While Craigslist offers the ability to drill down to land, Facebook Marketplace will require you to actually search as shown below.

Notice in the search box on the left, we searched for “land owner financing”


Can I buy owner financed land through a Realtor?

It is possible to buy land through a Realtor with owner financing, however, you’re probably going to have to talk to a lot of realtors to find a seller who is willing to do it.

Here is a shortcut that might help you on your search.

  1. Go to Google.com
  2. Type into the search box,  “possible owner financing” site:realtor.com

You can further zero in on a more specific area, like a county, by adding the county name into the Google Search box, as shown below.

In this example we are looking for land in Pasco County Florida, and while we did find properties for sale with owner financing, most what we found were home and mobile homes for sale with owner financing.  On Platforms like Realtor.com, it’s rare to find owner financed land, but it is possible.

You can use this example on other websites as well.  For example, in our example we used the term, site:realtor.com, however, you can replace realtor.com with whatever site you want to search.

Next Steps to buying land!

It’s time to take action to find and invest in the land that you want.  There is no reason to keep putting it off, now that you know how to buy owner finance land.

Good luck in your journey and if you have questions not covered in this guide, please let us know.