Best Deal Ever Show #10: Substitute Teacher Makes $80K on First Land Deal
Best deals come in all shapes and sizes, and investors have their reasons for why they consider it their best. This particular investor considers it his best because it was life-changing, as it was the rocket fuel to launch him into his investing career.
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Prior to running his own successful real estate wholesaling business, Brett Snodgrass was a substitute teacher making around $15,000/year and was an occasional bird dog for a land developer who specialized in timber. While scouring for properties, Brett came across one on an auction site; however, it wasn’t going to auction—it was just being sold outright as an estate sale.
How One Investor Sourced a Life-Changing Real Estate Deal
So, Brett reached out to his buyer, who declined the deal because there wasn’t enough timber to interest him.
Despite the developer not wanting it, Brett saw the opportunity and decided to approach his dad about partnering and buying it. The property was configured with a road that divided it into two tracts of land, which made it more attractive to Brett—he saw the potential of turning one parcel into two and selling them off individually.
Since the property was most likely going to be used for recreational purposes (e.g., hunting, ATVs, etc.), he believed that he was more likely to sell two smaller parcels than one larger one.
Making an Offer
As mentioned before, this was an estate sale. There were six siblings involved, who were going to be dividing the proceeds from the sale six ways. They were asking $252,000 for 126 acres, which comes out to $2,000/acre.
However, Brett felt like there was room to negotiate. They would be splitting the proceeds anyway, so it wouldn’t feel like that much of a difference if he offered less.
Instead of communicating the offer with a new dollar amount, one significant negotiation tactic that Brett used was to make an offer per acre. So, he offered $1,200/acre, which seems a lot easier to swallow than him asking for a price reduction of $100,800.
After some back and forth, they ended up agreeing to a purchase price of $1,200/acre or $151,200.
Surveying the Land
Prior to closing, Brett and his dad decided to start the surveying process to verify the acreage; however, due to the age of the previous survey and the rudimentary process used, it took much longer to obtain than normal. The surveyor—aware that it was taking longer than anticipated—contacted Brett to let him know that he was almost finished. It would be another month, but he believed that the property wasn’t going to survey for less than 126 acres—in fact, it would probably end up being more.
Since the sellers were wanting to close, they decided that they would take the risk of closing before the survey was completed and put 126 acres on the deed. That risk paid off big time…
Once the survey was finally completed, it came back showing that there were actually 133 acres, giving Brett and his dad an additional seven for free!
Selling the Deal
So, now they had a 40-acre and 93-acre tract, which they ultimately sold for $1,750/acre to two farmers. After paying closing costs, the loan payoff, and other fees, they ended up with just over an $80,000 profit in only a few short months.
What We Can Learn From This Experience
Brett didn’t immediately jump into full-time entrepreneur mode. He continued to work for other investors until he was able to consistently replace his salary with the efforts from his own side business.
He suggests before doing your first large deal and immediately taking the plunge into doing your own thing, make sure it isn’t a fluke and that you have consistency in your business.
Questions about this deal? Would you ever buy/sell land? Why or why not?
Leave a comment below!