I have a land deal that I wouldn’t normally do but am considering in order to help a friend of the family. Owner purchased 29 acres in the NC mountains several years ago and received seller financing. It is road accessible and has electric to it, though I’m told it needs a septic system before they’ll hook up a meter. He owes approximately 30k payable over the next 5 years. He has provided comps valuing land at $100+k. He is looking for payment relief until he can list and sell it.
I don’t really want to payoff and replace his existing mortgage. I am more open to paying the monthly payments on the existing mortgage (approx. $500/mo) in return for a stake in the property. I’d like to let him remain in control of the sale for a little while but then have the ability to take control if it appears he is being unreasonable in selling.
I’m not expecting this to be a large profit driver due to the relationship – I am thinking something along the lines of $XX for every payment I make on his behalf for the first year and build in a “penalty” amount if not sold after 12 months. Can I do something like this with an option or is there another structure that would make more sense? What terms would be fair for something that could sell after the first payment or could take a long time to sell?