What Is A Vacant Land Note

Land for sale

When a parcel of vacant land is sold with owner financing, a vacant land note is created.  The note will be accompanied by a deed of trust or a mortgage, or be included in a land contract.  Vacant land refers to land that has no structures that could be used for living or for commercial purposes.

In the note buying world, we separate vacant lands into those with utilities like power, water, and nearby paved roads (improved land) and those without any or most of those items (unimproved land).  Generally speaking, notes on improved land are more marketable and will be given a better price by note buyers.

How Do Vacant Land Note Buyers Price Notes

Vacant land note buyers consider a number of factors in deciding whether to buy a note and how much to pay for that note.  As with notes on other property types, payer credit, the amount of down payment, the terms of the note (interest rate and duration), and the history of payments all play a large part.  With land, other factors like those shown below also come in to play:

  • Size of parcel, zoning, views, and how it can be used
  • Level of improvements.  As noted above, land with utilities on the property or near to the property line will get better pricing.
  • Urban vs. Rural.  Properties that are close to cities, houses, and major roads are considered safer than vacant land notes in very rural areas.  The main reason for this is that properties in or near urban areas can be more easily marketed and sold in case of a note default.
  • Land with potential or real environmental issues, especially if there were gas stations or similar types of businesses there, will be looked upon more carefully by vacant land note buyers.

Why Keep A Vacant Land Note

If a note holder does not need a lump sum of cash, is comfortable with managing the risk of late taxes or defaulted payments, and has good knowledge of real estate, it may make sense to hold on to the note.  The note holder should recognize the risks of holding a note and be aware of things that can go wrong with the note payer over the term of the note, including health issues, divorce, or financial hardship.

Why Sell To A Vacant Land Note Buyer

As the note holder, you probably never wanted to sell the land using owner financing.  Most people would have preferred to sell for cash or for the payer to have gotten a bank loan.  The latter can often be hard to get on vacant land.

The downside of selling a note is that the note holder will need to sell the note at a discount, meaning they will receive less than the current balance on the note.  However, selling the note frees up money for other investments, and relieves the note holder of having to worry about late payments or delinquent taxes.  Especially for older adults or those struggling to pay bills, not having to worry about the note payments can relieve a lot of anxiety.

What To Look For In A Vacant Land Note Buyer

While note buyers like Seascape Capital will buy notes on almost all property types, some investors will not buy notes secured by land because of the higher risks.  When considering selling a vacant land note, be sure that:

  1. The note buyer has worked full-time in the note buying industry for at least five years. This increases the chances that the note buyer has the experience and competence to get you a good price and work through any issues.
  2. The note company has positive reviews on search engines and with the Better Business Bureau, and no negative reviews on any site.
  3. The buyer of the note is licensed in at least one state, which again increases the odds of having a knowledgeable and competent person at the other end of the line.
  4. Your gut instinct tells you that the vacant land note buyer is trustworthy, service-oriented, and working in your interests to get the best price for your note.

Seascape Capital has been in business since 2002, and has all 5- star reviews with the BBB and on Google.  Feel free to call Alan at 858-208-7776.


Written by Alan Noblitt

Alan Noblitt is the President of Seascape Capital, LLC, and works as both a real estate note buyer and a business note broker. Alan has an MBA from Arizona State University, a B.S. from the University of Wyoming, and is licensed as a California Real Estate Note Buyer.
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