What Is A Vacant Land Note?
A plain-English guide to seller-financed land notes—how they work, how to structure them, and how to turn future payments into cash today.
In this guide, you’ll learn:
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What a vacant land note actually is (and how it differs from the deed)
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The pros and cons of offering seller financing
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How to structure a strong land note buyers will pay a premium for
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How Damen Capital can buy your note so you cash out sooner
Understanding Land Notes
A land note (also called a promissory note) is the buyer’s written promise to repay you for a piece of land you sold with financing.
When you sell land with owner financing, the land note spells out:
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The loan amount
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Interest rate
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Monthly payment amount
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When payments are due
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When the final balance is due (maturity date)
Important: the land note is not the same thing as the deed of trust or mortgage.
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The note is the buyer’s IOU to you.
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The deed of trust or mortgage is the document that gives you a legal claim on the land if they stop paying.
How a Seller-Financed Land Transaction Works
When you sell vacant land with seller financing, there are three key pieces:
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Promissory Note - the buyer’s promise to repay you (the “land note”).
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Deed of Trust (or Mortgage) - uses the land as collateral in case they default.
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Warranty Deed - transfers ownership to the buyer and is recorded with the county.
Together, these documents let the buyer use the land immediately while protecting your interest as the lender.
Why Offer Seller Financing on Vacant Land?
Seller-financed land notes are a powerful strategy for land investors:
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Sell 2–3x faster. “Owner Will Finance” listings attract more qualified buyers.
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Get full asking price. Cash buyers want discounts; financed buyers will often pay list price.
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Earn interest income. Many vacant land notes earn 9–12% interest.
The trade-off:
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You wait 5–10 years to get all your money.
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You become the loan servicer and take on default risk.
How Damen Capital Solves This
Instead of waiting years:
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We can buy your land note at or soon after closing, often paying 80–90% of the note balance in cash.
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You keep your down payment plus most of the future note value, without the hassle of servicing or chasing payments.
How Seller Financed Land Notes Work
When you sell land with owner financing, the land note includes these key details:
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Loan Amount
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The principal balance the buyer owes (sale price minus down payment)
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Example: $100K sale with $20K down = $80K note
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Interest Rate
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The percentage the buyer pays you for financing
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Typical range: 9-12% for vacant land notes
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Repayment Schedule
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Monthly payment amount and term length
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Typical terms: 5-10 years with monthly payments
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Payment Due Dates
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Specific date each month when payment is due (often 1st or 15th)
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Maturity Date
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When the final balloon payment or full balance is due
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Late Fees & Default Terms
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Penalties for missed payments and your rights if buyer defaults
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Prepayment Terms
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Whether buyer can pay off early without penalty
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Best practice: No prepayment penalty (makes note more valuable)
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Property Description
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Legal description of the land securing the note
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Important: Land Notes vs. Land Contracts
Land Note + Deed of Trust
(What We Recommend)
✅ Buyer gets the deed at closing
✅ Buyer has full ownership and can improve the property
✅ You hold a recorded lien via deed of trust
✅ Easier to sell or refinance later
✅ This is the structure Damen Capital buys
Land Contract / Contract for Deed
(What We Avoid)
❌ Property stays in your name until paid off
❌ Buyer doesn’t receive the deed until the last payment
❌ More legal complexity if the buyer defaults
❌ Harder to sell the contract or borrow against it
Bottom line:
For most land investors, a promissory note + deed of trust is the cleaner, more marketable structure—and it keeps the most options open if you ever want to sell the note.
How to Sell Your Land Note for Cash
If you’d rather take most of your profit up front instead of over 5–10 years, you can sell your land note.
3 Simple Steps:
1. Share the basics – property details, note balance, down payment, payment history, and buyer info.
2. We review your deal – we price the risk, structure, and property value.
3. Get an offer – if it’s a fit, we make a written offer to buy the note, often for 80–90% of the remaining balance.
Learn more about our vacant land note buying program →
Real Example:
Property Sale: $100,000
Down Payment: $20,000 (20%)
Note Balance: $80,000
We Purchase Note For: $64,000 (80%)
Total Cash to You: $84,000 at closing
You keep 100% of down payment + 80-90% of note = 84-90% total cash immediately.
What Increases a Land Note's Value?
Factors that make your land note worth more:
✓ Higher Down Payment (20%+ is best)
✓ Good Buyer Credit (690+ credit score)
✓ Lower LTV (loan-to-value ratio)
✓ Competitive Interest Rate (9-12%)
✓ Desirable Property (good location, access, buildable)
✓ Clean Title (no liens or issues)
✓ Proper Documentation (professionally prepared note and deed of trust)
✓ Payment History (if existing note, on-time payments)
Pro Tip: Higher down payments from buyers = higher payouts when selling notes (up to 90%+)