Unlike improved property loans, land loans lack the security of a built structure, making them riskier investments. The following results from this: Lenders typically require higher down payments, often 20% to 50% of the land's value. Interest rates are usually higher than traditional mortgages.
If the thought of finances seems a bit overwhelming, here are a few tips guaranteed to get you on the right track! Separate Your Financial Accounts. Tracking Rental Income. Tracking Rental Expenses. Budgeting for Maintenance and Repairs. Watch Out for These Financial Pitfalls.
It's important to note that while the buyer is responsible for making property tax payments, the seller may still face certain tax implications related to the interest income received from the financing arrangement.
In general, owner-financed interest rates in Texas tend to stay at around 8% or higher. This can be slightly higher than the rate set by traditional lenders. However, it's important to remember the advantages of owner-financing that make this higher rate worth it.