When it comes to marketing land, many investors choose to offer two price points: one for a cash purchase and one for a purchase that includes terms.
Let’s talk about calculating the terms of a sale with seller financing.
Unless you have the Rainman-esque ability to calculate large numbers in your head on the fly, chances are that you will need a little help determining the monthly payments – especially if there is interest involved.
The Investment Dominator (with its built-in loan calculator) is here to save the day!
After logging into your Investment Dominator app and clicking on “Land Deals” tab, make sure that the property you want to calculate terms for is in the “Complete/Ready to Sell” status.
Then, hover over the ‘Options‘ icon on the right-hand side of the record and click the option that says “Payment Calculator“.
A new window will open that will allow you to enter in information about how you would like to structure the term sale.
The ‘Sale Price‘, ‘Down Payment/ Deposit‘, and ‘Annual Property Tax, and HOA/POA‘ fields are REQUIRED to have a value even if that value is 0.
At the top of the screen, you will see a ‘Type‘ option which allows you to calculate either loan terms or lease-purchase terms.
NOTE: Regarding the ‘Deposit‘ for a ‘Lease Purchase’ this is not the same as a loan. For a loan when you submit a down payment it affects the price total which reflects when you ‘Summarize Terms’. While A ‘Lease Purchase’ will apply the optional downpayment as Rent Credit at the time of signing.
If you select ‘Lease Purchase’ some things you will notice by default is ‘Charge Deposit’ is set to No and ‘Additional Monthly Fee’ is set to ‘Flat Fee Amount’. However, if you were to select ‘Based Rate and Terms’ you are able to charge an ‘Additional Monthly Fee’ which can be automatically calculated by entering a percentage or just a fixed number. Then where it says ‘Enter Term’ you can input how many months you want this for.
IMPORTANT NOTE: Lease Purchase Notes do not factor in an interest rate; however, the ‘Additional Monthly Fee’ allows you to calculate a Rent Payment that is higher than the amount earned each month as Rent Credit. If you enter in 0 under the ‘Additional Monthly Fee’ field then the monthly Rent Payment will equal the Rent Credit amount.
NOTE: The “Taxes and HOA/POA” field refers to the total ANNUAL dues for property taxes and HOA/POA fees for that property. The system will prorate these by month and add it to the total monthly payment due to the buyer.
After you put in the information (both required and optional), click on the button that says “Summarize Terms” and the system summarize the details of the term.
Click the ‘Back‘ button to go back to the previous screen to make adjustments.
Click the ‘Copy To Clipboard‘ button to copy the contents of the Summary Page to your computer’s clipboard.
Click the ‘Create New Loan‘ or ‘Create New Lease Purchase’ button to set up the note.