Hear more on Flipping Land "nowadays"

7 Replies

So I pinged @Jay Hinrichs yesterday privately to ask him more about his experiences in land flipping, and we thought it was a better convo to have publicly so others could benefit:   

I wrote: So, Jay, I love reading your answers in the forums - SO MUCH WISDOM!! Just read your post in another thread about your background in land which I hadn't heard you share before, and have a couple Qs. Here's what you had shared:

"My first 15 years or so in the business I never touched anything with a house on it I only flipped rural land and made a killing.. NO COMPETITION> lol.. now I did not partake in what you see these guys who taught the landacadamy and such most of the stuff they buy and sell is worthless junk.

I bought buildable small acreages would perc them put well in maybe septic drive way pad and make a bunch on the resale.. a lot of folks just can't put their heads around how to do it.. it seems simple but to most its not... just like buying a junker house fixing it up and selling it to a home owner homeowner could do it and cut our fee's for doing a fix and flip but they can't see it.

your area is FULL of Acreage.. and then if you can get some with Timber.. well then you just hit the mother load.. I spent 10 years in the timber business in Portlandia area.. boy was and is that a fun one. its a business you can literally make a million a year at with not HALF the problems of cashing crap box houses. LOL"

It's SUCH a fascinating approach I want to hear more. So, basically it's not a House Flip, but a "Land Flip"... You're turning raw/uninspiring land, and doing just enough improvements for the homeowner directly (not a builder necessarily) to be able to envision something on your lot, which they couldn't envision on it, nor another similar lot. **But not going as far as a developer would putting in roads, drainage, etc** -- Pretty ingenious! I'm just really curious whether it's a strategy that COULD STILL work today? 

1) Did you "think it up yourself" and go it alone? Or did were you modeling after something you had seen another do, and have a mentor?

2) I'm wondering if the method would still work in today's world of Google Earth and GIS mapping, and Tax Records being so readily available to view online, and so forth. Do you think people nowadays who wish to build new STILL not have enough vision to do so from raw land? Or would the benefit to them nowadays be that you're mitigating their risks with raw land  -- KNOWing it will perc, KNOWing there's water, etc?

3) How did you source your land deals - ones that provided big enough spreads?? As I think through this, I'm thinking only tax sales would bring wide-enough spreads...would that be accurate? Or could there be other ways, like maybe writing owners directly to sell off 2-6 acres of their LARGE tracts? 

4) What were your metrics for this type of a 'land flip'? In other words, what would you want to see your MINIMUM NET profit be for it to be 'worth it'? Example: if you purchased 2 acres @10k, would you only do the deal if it would return you 20k after expenses...? And since time is a factor as well, how long would you typically have your 10k + expenses tied up from purchase to resale? (Assuming cash purchase)... 

5) Lastly, do you know of someone doing this here on the east coast where land is abundant? Which seems different than west coast where land sells at a premium? I know of no one around here doing this as their MAIN strategy.

If anyone else has recent experience trying this, and wishes to chime in, I'd love to hear more. In the age of the internet, where you can target market your LandFlip direct to people wanting to build, like Facebook Ads,...seems to make a lot of sense. Taking raw/uninteresting land and creating a marketable "Product", ready for purchase direct to the consumer...! 

Thanks Jay, and others.

Raw land or buildable lands for estate homes is a big part of our industry on the west coast as we have a shortage of buildable lands.

the lands we target are no different than what guru's teach about SFR's long time owners etc etc.

the nice thing about land is so many times ( because financing is not available on land) the land is paid for.. and has been handed down to next generation..

this leaves a lot of opportunity.. however I caution those.. some of this can be bought on terms but predominantly and like all my markets and my deals.. our strength in doing this is CASH NOW.. No BS no double escrow no wholesaling.. WE are interested in your land.. we will close in 5 to 10 days for cash.. etc etc.

Were we make our dough is much like rehabbing and selling homes retail.

Many folks who are looking for an estate setting or country setting.. can't envision things. .and they may need to do a finance package for a construction loan.. they don't want to risk EM  risk perc and well.. they want to know it shovel ready.. this is were we make the value.. we put the roads in we perc it we drill the well  we survey  we do a REsidential harvest of timber.. etc etc so that when the buyer comes out they see a property that looks FABULOUS not a rough hillside all over grown..

And of course you throw in the Timber revenue and these deals just went to 6 figures on the profits.

Very interesting. I have flipped several smaller unimproved lots this year, but I can see how your model could help me sell these lots for a higher margin.

Thanks for sharing!

@George Taylor   been asked that a lot.. the timber in your areas is completely different than west coast doug fir  cedar  and Pine.

a lot of what I see up your way is more hardwoods.. and yes there is stumpage value for all wood even fire wood.

you should talk to some Mills  ( lumber mills) they usually have a log buyer.

and or look up forestry consultants in your area engage a conversation with them

each state has their own rules regarding harvesting timber

for instance in California quite difficult ERGO the timber industry is a shell of its self

WA easier but still somewhat complex needing a forester to run your plan through

Oregon over the coutner free and as easy as it gets...

@George Taylor   when I was engaged in this heavily that's all I did...

but I grew up in it.. and another thing that allowed me to excel at it is.

I am very good in the woods and mountains.. I can find properties using usGS quad maps I can find property corners with uncanny accuracy for a non surveyor.

my competition if you think about it.. out here any ways is ladies selling RE.. they are not going to walk a blaze line 1200 feet up a mountain side wielding a machete or riding the quad out looking at a big 500 to 2000 acre tract..

now don't get me wrong there are land brokers in the WEST that are very good at this.. I was just one of them.. most markets will have a broker or two that specializes in ag and land.

listing times for many of these bigger props is measured in years though..

our speciality in the 90's and up until today is 30 minutes from metro area but still in rural settings.

my specialty in the 70 s and 80s was selling land to Cannibis growers in the northern CA forests

not many would do it but I made a killing doing that.  and of course its all legal now.. I did not grow it I just brokered the dirt what they did with it was their choice and it was of course illegal then you would get arrested if caught.. but I like the woods and the open spaces. always have.

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