I've just got my first signed contract back on a piece of raw land/vacant land that I am planning to flip and I am super excited! However, now I need to figure out what due diligence to do prior to closing. I have already called to county (in SW Mississippi) for zoning/flood zone, buildability, and back taxes. I've also looked into terrain, road access, and there is a mobile home next door, so I would assume a septic tank or public water is doable.
The purchase price is about $600 with $950 owed in taxes, so I was thinking of ordering a title search online instead of going with a full closing process. Is there anything else that I should be considering for due diligence prior to closing?
I'm excited to get this first deal under my belt!
Congratulations on your first contract Harry!
I'm so glad you asked this question. I've recently decided to focus on vacant land and have been going through every piece of info I can find. I'm interested in seeing the responses you get.
Just before I saw your post, I was reading the latest blog post by Seth Williams. It's a good article and related to your comments on the title search. Check it out if you haven't seen it yet.
Maybe Seth or Mark Podolsky will chime in here as they both have a lot of experience in the land niche.Let me know how the deal goes. Good luck!
Nice job @Harry Asnien - That's exciting!
It sounds like you've already looked into most of the "hot buttons" and potential issues that can come up with vacant lots like this. Were you able to get a good handle on a ballpark market value of the property? This is another area that can be a little tricky (but honestly, if you're getting anything for that cheap - you'll probably be just fine).
Regarding your title search method, I think the low purchase price can warrant this approach, but rather than just relying on an online service to tell you this, it wouldn't hurt to do your own independent title search (looking at the documents that the county has on record), just to make sure you're seeing ALL of the relevant details, first-hand.
I've encountered at least a handful of online title services that weren't 100% up-to-date (which can definitely create problems in some cases). If you're going to go this route (which it okay with smaller deals like this, but admittedly more risky), it never hurts to make sure you're looking at the actual documentation that the county has on record.
And thanks for checking out the article @Vicki Stewart - I'm glad you found it helpful!
Thanks for the reply Seth, I wouldn't have gotten this far without your blog!
As far as market value goes, properties go for about $2500/acre on the conservative side and I'm purchasing at $400/acre. The property surrounds a parcel with a mobile home, so I'm going to get in touch with them to see if they want to buy it before listing it.
As far as the title search, I've pulled several deeds from the county's online records database so far for this property, and I think with some digging I could get a pretty good idea of the chain of title, but I would be worried about missing liens or catching errors since I am not that experienced. When you mentioned looking at county documents, did you mean looking online, or actually going to the county, or ordering an abstract?
Also, is there a good place to search for IRS liens?
Thanks again for all the help!
Hey @Harry Asnien I agree with @Seth Williams... In fact, I typically won't buy title insurance on deals $5k or less. I had a great podcast guest David Pelligrinelli from titlesearch.com discuss in amazing detail the process and the importance of getting the physical documents not the online docs... Even if you aren't going that route this is important information to know as you grow your land flipping business.
Learn more here at http://www.thelandgeek.com/title-search/ I guarantee you'll learn a lot from this interview. IRS liens will be recorded with the County and can be cleared, plus they are very rare... In fact, since buying and selling over 5000 parcels since 2001 and I've run across ONE deal with an IRS lien.
Congrats on your first deal!
Thanks @Mark Podolsky , I had listened to that podcast before having a signed offer, so it may be worth a refresher.
I've pulled the deeds and the chain of title looks clean. However, over the years they subdivided the property and sold a few parcels. I have the original metes and bounds legal description and the deeds selling off the segments of the property, just not sure what to put in the new deed. Would I just reference what the assessor has on file (very non-descriptive).
Here's the link: http://www.biggerpockets.com/renewsblog/2015/01/08...
Spot on, thanks Vicki!
To answer my own question from above (in case anyone is wondering), you can use a "Less and Except" clause in the deed to reference the sections of the property that were already sold. This essentially says the seller is conveying the entire original property, less and except, the property recorded on xxxxx date in xxxx county on xxxx book and xxxx page.
Hope that helps someone.
Just an update:
I closed the deal by doing the title search and deed work myself and just sold the property for a 500% profit! I'm excited to have completed my first deal start to finish (even if it took me a long time to stumble through) and I can't want to get more deals in the pipeline.
Thanks everyone for the help.
@Henry Asnien - that's great news! What tools did you use to market the property?
I sent the neighbors a letter. It was 4 acres surrounding a mobile home lot, so I had high hopes they would want to purchase the surrounding land. The buyer was very happy since the land had been in her family for generations prior
Nice job on your first land flip, man! @Harry Asnien
How difficult was the closing process in LA? Did you have to use an attorney or experience any legal hurdles?
Thanks @Will Hollingsworth ! I didn't have any real legal problems, just figuring out how to actually complete the transaction.
This transaction was in MS though, not LA.
Working on two more deals now :)
Sounds like you're on a roll! @Harry Asnien
I'm planning on doing a marketing campaign in TN, and I'm in the process of getting all of my legal documents together right now. When you did your first deal in MS, how were you sure that you had all of the correct documents in place?
@harry asnien this all fron one mailing ?
@Will Hollingsworth , this was from two mailings and setting up a website. The mailings were fairly low volume, 100-200 per mailing.
i just ventured into land flipping as well. love the idea and the potential. if you don't mind sharing, did you mail to tax delinquent property's if so did you use a program like agentpro or did you go straight to the county. i just sent out my first mailer using agentpro and click2mail yesterday.
This was to tax delinquent land with a list from the county. I had a really hard time finding any useful data out of agentpro (besides researching).
I also may have been to quick to toot my own horn, the first seller had a tax deed and the second property was inherited and had no legal access. Looks like I'll be learning a lot about right of way, easements, and inheritance laws shortly!
@Harry Asnien very cool, I hope to see similar success here very soon. Love to hear any updates about your investing success!
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