This is an image from Google Earth of the Blessed Little Homestead. It dates back a couple of years ago, so the Blessed Little Garden Shed is not there.
The cleared field to the far left is not the Naugler property. I’m not sure where their property ends to the right or toward the rear.
Since people have asked about the property, especially with regard to who owns it, I thought I’d answer that question.
The property (apparently 28 acres, more or less) was purchased by the Nauglers a couple of years ago in the form of a land contract.
We have owned about a dozen houses in several different states over the years and most of them followed a near-universal pattern. We put in an offer on the property, got a signed contract with the seller, and then applied for a mortgage with either a bank or a mortgage company.
Once we were approved and signed the closing documents, we got title to the property. The loan was a separate thing. The property was collateral for the loan, but we held the title in our possession. We were recorded as the owners of the property at the local courthouse, and when the taxes came due, we were billed.
When we paid off the mortgage (either by selling the property or simply by completing all the payments), we got a copy of the paid-off note from the lender.
That’s a typical conventional mortgage.
Since the mortgage melt-down in 2008, the requirements for getting a mortgage have tightened up considerably. If you remember the whole mess, people were getting mortgages (called “liar loans”) where they fabricated their income and other details that would determine if they qualified for the loan. As a result, they got in over their heads with mortgage payments they could not meet. The result was a huge disaster.
So, it’s much tighter now. You have to have a decent credit score and some sort of reliable income in order to qualify for a conventional mortgage.
Enter the land contract.
This is way for people who would never be approved for a loan to buy property.
With a land contract, the seller retains possession of the deed to the property until all the payments are made. Since the seller remains the legal owner of the property, it becomes a huge question as to who gets the tax bill (answer: depends on how the contract is set up), or what will happen should the seller declare bankruptcy (answer: depends again on how the contract is set up).
The Nauglers have a land contract. (Click thumbnail to enlarge.)
I have obscured the actual address, but this is the Blessed Little Homestead. Gordon Board and Steve Aulbach do a lot of business doing land contracts under various company names.
There are definite pros and cons to buying property this way.
People with poor or nonexistent credit can get a second chance, and sometimes it actually works out very well. Sometimes the down payment is either small or none is required. All the loan origination fee stuff and the title searches and the mortgage insurance is not required, so that supposedly reduces the payment amount.
And for people like the Nauglers, there probably isn’t any other choice. They have a large family, with a pretty dismal credit history, and most people would be loathe to rent to them.
The seller gets the advantage. Of course, the seller is the person taking a huge risk as well. People who can’t get a conventional mortgage have financial woes and people who are thinking about lending such a person money need to think carefully about the wisdom of doing so. The default rate is very high for obvious reasons.
The interest rate is also very high, as it should be. Higher risk = higher interest rate.
Some land contract properties are “sold” over and over again, with the seller collecting a down payment each time, and with a high interest rate, and with a clause stating that the buyer has to do all the maintenance on the place and perhaps pay all the taxes. The buyer then at some point defaults on the payments and the seller takes back possession and “resells” the land.