My sister and I inherited a property in a rural, backwater area rather inconveniently located to where we live. We've got zero interest in keeping it. To wit, we put it on sale and now are recieving a few offers. But, because this is a rural backwater where no one makes any demonstrable income, many of the potential buyers are asking us to either enter into a land contract or some sort of owner financing arrangement where we essentially play the role of the mortgage as well as the seller.
My questions are:
- How to perform due diligence on the buyer? I'm not a bank nor a PI.
- How to figure out what interest rate to charge?
- Are there any strange tax implications here?
- What sort of entity, if any, do I need to setup to handle the ongoing transactions? Property is in a state neither I or my sister reside in if that is important.
Please let me know if there are any details that are relevant here and I'll try and provide.
- Yes, we've got representation for this whole transaction. Problem is this is a bit fubar for the guy we trust -- this sort of thing don't happen down here -- and I don't completely trust the guy up there for advice.
- Additional question -- does anyone know of any sort of operation that handles the transactions for you. Definitely suck at accounting and cashing checks in a timely manner here.
We managed to find a vendor who would handle payment processing and took on the seller financed mortgage. Terms of the deal were roughly 33% down and a 30 year note w/ a 3 year balloon. The folks bought it, moved in, fixed it up and got a bank note late in the 2nd year of the note and it is now off our books. 10/10 would repeat.