Eric Scharaga
Founder, Damen Capital
Private lender and direct land note buyer serving land investors nationwide. Featured on REtipster, Legends of Land, and Land Investing Online. LinkedIn →
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.
The single most important document decision in seller-financed land is covered here: promissory note with a recorded deed of trust, or land contract. This module explains how each one works, what happens under each when the buyer defaults, and why the secondary market pays dramatically more for notes than for land contracts, many buyers, including us, do not purchase land contracts at all. If you are about to create a land note, watch this before your attorney drafts anything, the structure you choose at closing decides what your paper is worth for the life of the loan. The difference compounds at every stage: servicing, delinquency, payoff, and especially the day you want to convert the payments to cash.
A land note (also called a promissory note, mortgage note, owner financed note, or seller carryback 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 the loan amount, interest rate, monthly payment amount, when payments are due, and when the final balance is due.
Important: the land note is not the same thing as the mortgage/deed of trust. The note is the buyer's IOU to you. The mortgage/deed of trust is the document that gives you a legal claim on the land if they stop paying.
If you're new to seller financing, see our guide: Seller Financing for Land — How It Works and Why It Sells Faster.
When you sell vacant land with seller financing, these three documents work together to protect both you and the buyer.
The buyer's written promise to repay you — the "land note." Spells out loan amount, rate, payment schedule, and maturity date.
Uses the land as collateral in case the buyer defaults. Gives you a recorded lien and the legal right to foreclose if payments stop.
Transfers ownership to the buyer at closing and is recorded with the county. The buyer owns the land from day one.
Instead of waiting years, we buy your land note at or soon after closing — often paying 80-90% of the note balance in cash. You keep your down payment plus most of the future note value, without the hassle of servicing or chasing payments.
When you sell land with owner financing, the land note includes these key details.
The principal balance the buyer owes (sale price minus down payment). Example: $100K sale with $20K down = $80K note.
The percentage the buyer pays you for financing. Typical range: 9-12% for vacant land notes.
Monthly payment amount and term length. Typical terms: 5-10 years with monthly payments.
Specific date each month when payment is due (often the 1st or 15th).
When the final balloon payment or full balance is due.
Penalties for missed payments and your rights if the buyer defaults.
Whether the buyer can pay off early without penalty. Best practice: no prepayment penalty (makes note more valuable).
Legal description of the land securing the note.
Not all seller financing is structured the same. Here's why the note + mortgage/deed of trust structure is the better option.
For most land investors, a promissory note + mortgage/deed of trust is the cleaner, more marketable structure — and it keeps the most options open if you ever want to sell the note.
If you'd rather take most of your profit up front instead of over 5-10 years, you can sell your land note in 3 simple steps.
Property details, note balance, down payment, payment history, and buyer info.
We price the risk, structure, and property value. Quick 24-hour turnaround on most quotes.
If it's a fit, we make a written offer to buy the note — often for 80-90% of the remaining balance.
These factors determine how much you'll receive when selling your land note.
20%+ is best
690+ credit score
Lower loan-to-value ratio
9-12% interest
Good location, access, buildable
No liens or issues
Professional note & mortgage/deed of trust
On-time payments if existing note
A land note (also called a promissory note) is a buyer's written promise to repay a seller who financed a land purchase. It spells out the loan amount, interest rate, monthly payment, and maturity date. The note is secured by a mortgage or deed of trust recorded against the property.
Land notes are typically purchased by note buyers at 80-90% of the remaining balance. The exact discount depends on the down payment, interest rate, loan-to-value ratio, property quality, and buyer payment history. Notes with higher down payments and lower LTV ratios command higher prices.
A land note (promissory note plus mortgage or deed of trust) transfers the deed to the buyer at closing. A land contract keeps the deed in the seller's name until the loan is fully paid. Land notes are preferred because they are easier to sell to note buyers and offer cleaner legal protections for both parties.
Yes. Note buyers like Damen Capital purchase seller-financed land notes at 80-90% of the current balance. The process typically takes 7 days from agreement to closing. No seasoning is required — notes can be sold at or shortly after origination.
We'll review your deal and give you a clear, straightforward offer.
Private lender and direct land note buyer serving land investors nationwide. Featured on REtipster, Legends of Land, and Land Investing Online. LinkedIn →