What if ranchette buyers/borrowers stop paying on their loans? (2 of 2)


3. The fund then issues a new loan against the land at a maximum amount equal to what we have invested in the ranchette (purchase + improvements) or 65% of its projected sales price, whichever is lower.


4. We are typically able to sell the ranchette again on owner financing within two to three months. When we do, we pay off the land loan from the fund.


5. At that point, the fund issues a new loan against the new note. The maximum amount shall be equal to the amount whereby the monthly payment to the fund will be at least 10% less than the incoming monthly payment to Hawthorne Interests.


The outcome for us can be positive or negative each time this scenario plays out. We are always able to collect a new down payment and are sometimes able to sell the land for more the second time around. This is more likely if land values have appreciated over time and/or the buyer made improvements to the property.


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