My First Buying / Reselling Experience
In 2015, I did something incredibly stupid, and I bought a tiny house at 18 years old. An unfinished, 200 square foot, heavy, freakin’ tiny house. I thought it was almost exactly what I needed at the time though. I was young, I had no family I needed to support, I didn’t want any debt, or a lot of house to maintain. I found a great deal through my fiancé’s family’s friend on a shed conversion that he had for sale.
Sure, I knew that not having wheels wasn’t good, but teenage me thought I could some how “work around that”. I paid $3,500 cash and brought it “home”. When I dropped it off in it’s little field, I had a “now what?” moment. For months I just kept looking at it, unsure what to do and feeling lost. I’d walk inside, look at my tiny kitchen, my tiny living room, my tiny bedroom, and my tiny bathroom. The electrical work and insulation were ready, and all the interior walls were up, but the plumbing was only half finished. No appliances had been bought, and my flooring was only plywood sheets. “What should I do?”. Of course I wasn’t ready for that tiny house, especially one that wasn’t mobile and couldn’t make the treks back and forth between Montana and Indiana. I also wasn’t confident enough to completely fix it up for someone else to use and then sell it. I mean, what if I got something wrong and it caused a fire? What if I accidentally killed my buyer??? For months I just looked at the stupid thing, and I thought, “Sarah, you’re an idiot”. I wanted to live in it, but I also knew I had got myself into a mess, knowing that I couldn’t easily move it when I wanted to up and go. It couldn’t be rented by the month either, that would be against my county’s laws. It was almost worthless to me. So I made the tough, but obvious decision to sell it.
I was embarrassed, I felt like such a quitter and a failure; I needed to redeem myself.
So I did what any dumb teenager would do, and I put it up for sale, for way more than I had in it. Craigslist, Facebook, Tiny House Listings. All over the place.
Nothing happened. No one was interested, and especially not for my price of $7,500.
Taking Payments was the Answer
I did some more brainstorming, and came up with the idea to sell the house on contract. $1,500 down, $500 a month until $8,500 was paid. BOOM. I had literally hundreds of inquires, and within 2 months, it was “sold” (Even today, years later, I still get an email or two from serious buyers even though I took down all my ads a long time ago!). I made $5k over the course of about a year and a half. Luckily, my buyers were great people who were truly thankful for the opportunity to buy a house without a credit check, and they didn’t try to give me much of a hard time during the repayment period. But, to protect myself and my investment, I created a contract that my buyers and I officially notarized.
The Contract that Made it all Possible
If you’d like to get started buying and reselling, you NEED a contract for payment type sales. And you NEED to have it legally notarized. If you don’t know what notarizing is, or how to do that, check out this page and come back here. Don’t worry, if you already have a bank or credit union that you have an open checking account with, they’ll typically do this for free. Of course before you notarize, you need to have a contract created. You can either buy one online, pay someone to write it up for you, or you can be brave like I was (maybe the word I’m looking for here is naive) and write it yourself.
What a Good Contract Should Include
DISCLAIMER: I AM NOT AN EXPERT NOR A PROFESSIONAL. THIS IS NOT SOUND LEGAL OR FINANCIAL ADVICE. I TAKE ABSOLUTELY NO RESPONSIBILITY FOR WHAT YOU DO WITH THIS INFORMATION.
- The Date it will be notarized on.
- The Buyer and the Seller’s full names, and mailing addresses. Should you ever have to contact one another, you should be doing that via the mail.
- Description of the product you’re selling, as well as a statement that the item you are selling is being sold “as is”.
- If you sell the item “as is” (which I strongly suggest you do) you need to have your buyer inspect the item before notarizing the contract. In the contract, you need to have to buyer sign that he or she has inspected the item, and agrees to buy it that way.
- Next, you need to state the total selling price.
- State how often payments are due, for how much, and when. Such as “$500 is due every 2nd Monday of the month, every month, until the total sum of $____ is paid in full”. Also state when the first downpayment is due, and when the first payment is due.
- You need to have a plan if your buyer backs out on you, and state that in the contract. Will you refund all their money minus the deposit? All the money? None of the money? Be sure you include that information.
- Have a plan for the shipment / hauling of the product. Who will cover that cost? Who will be responsible for pickup? Who is responsible for the product if it is damaged during transit? Where will the item be shipped to?
- Also cover WHEN the item will be moved. The day that the item is fully paid for? When the item is 50% paid for?
- State what will happen if the item is never picked up. Will you offer a full refund? Partial refund? No refund? Describe when the item is officially “abandoned”, such as “two payments have been missed” or “item was paid in full, but was not picked up 90 days after the final payment”.
- Describe your risk of loss. This is what if the item is having payments made on it by the buyer, but it gets struck by lightening. What happens then? Do you owe the seller his or her money back, and, how soon?
- I like to include in my contract that I the buyer will do the best that I can to ensure the safety and well being of the product while it is still in my possession. I take no responsibility for natural disasters or disasters that are out of my control, but I will protect the product within reason. This is not necessary for you, but it will help your buyer see that you care and that the contract they are signing protects you both.
- State whether the item has a title or not. Tiny houses do not have titles. Cars and boats should. Make sure you make the title’s existence or lack thereof known.
- Also state whether you will be writing receipts or not, and when they should be given to the buyer. Will you send one every month? Or just one once the item has been paid in full?
- State your rights to cancel the sale as a seller, under certain listed circumstances. These circumstances can be “the buyer did not move the product within ____ days of final payment” or “a check bounced” or “the buyer has missed two month’s payments”.
- State how your notices that should be delivered to and from the buyer and seller should be made. Such as “in person”, or “by registered mail”, etc. Again, in this section you should again show both buyer and seller’s addresses.
- State the policy on mediation and arbitration. How long should you dispute before sending the issue to a mediator, and if that fails, an arbitrator? Who will pay the costs of a mediator and/or arbitrator? The buyer or seller?
- State what happens to late payments or missed payments. Will you charge a late fee? Will you completely cancel the sale? How many missed payments are allowed before terminating the agreement?
- General provisions at the bottom of the contract, such as “headings are inserted for convenience only and are not to be considered when interpreting this agreement”, “This agreement cannot be modified unless in writing and signed and notarized again by both parties”.
Get a Free Copy of My Contract
This is just a brief overview of the contract I wrote up. If you’d like to actually get a copy of the contract, click this link right here, it has simple instructions to download it instantly and for free.
Let’s Talk!
- What are your thoughts on my contract? Anything I should add to it?
- Do you have any experience flipping items on payment plans? Has it worked for you?
- What is your best money making advice? Share that below please!
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