Flipping Land

24 Replies

I would like the folks from BP to give their opinion on flipping land.  I skipped back to podcast 039 with Seth and had to listen to it twice to try and get my head around it.  I live in the Pocono Mountains of Pa, we have plenty of open land and have been hit exceptionally hard by the market over the years.  I am geographically located relatively close to major metropolitan areas both east and south.  Just wondering, I really like the idea of no tenants and no toilets.  Thanks in advance fro your time. 

@Stephen Dominick  storage units are no toliets and cash flow too. havent listened to the podcast whats the 30 sec version. I think you already know what I do. As another note if you can get ground cheap enough you can farm it until something better comes your way. They aren't making any more dirt, lol

I guess land flipping is not as sexy as other REI, but that intrigues me all the more. The Pocono Mountains of Pa have traditionally been areas where NYC and the greater Philly area have come to vacation and hang out. I believe that market is beginning to make a comeback. I would like to lean on your advice as I start my initial marketing campaign. Thanks again for your support, and someone some where said buy land " they just are not making anymore". Thanks again for your time.

@Seth Williams  is another land guy, we are all considered a little crazy in our own right.I might be interested in talking to you about that more, hit me up.

Yeah, Seth has the Pod cast that I referenced.  Very interesting. I will be in touch for sure, thanks again for time. Got to go to sleep for my day job. (for now) later. 

Empty lots with septic tanks, city water or well, and sewer sell well in the Panama City, FL panhandle (if you buy then at the right price).

I have been following @Seth Williams   RETipster blog for a few months now, scouring his archives for information. He has a TON of great information and includes video tutorials describing how he operates his land investing business.

From my comprehension so far, one of the most important considerations for vacant land is ensuring you will be able to sell the parcel after you buy it. It sounds like you have vacationers coming to your area, so you could possibly market your land to them as potential vacation home sites, or for camping/RV use. If you are selling your properties below market value, this would likely be pretty appealing to those folks.  This also means that due diligence is of utmost importance. You have to verify the land actually has reasonable (legal) access, is zoned for your intended end use, there are no local land-use ordinances that interfere with the intended land use, etc.

Another tricky area in the vacant land business seems to be determining the market value of the parcel.  I am still studying this, so I can't really speak on it yet.

I am kicking off my first direct-marketing campaign after the holidays. That being said, I have no personal experience in this area yet, just the knowledge I picked up from Seth and here on BP. This seems to be a pretty decent way to get started investing with low money out of pocket. You may not make tens of thousands of dollars off most deals, but I will settle for a few hundred or thousand dollars for the opportunity to start with low capital and gain investing experience. Also, positive cash flow is possible if you sell the land on a land contract/owner-financing.

I hope this helps and I wish you the best!

Thanks for the information. I will be sure to check out Seths blog,  I will check in after the holidays and see how you are making out.  Good luck.

Hi @Stephen Dominick   - I think you'll find that there is opportunity just about everywhere in the U.S. I've never worked in your area before, but from what little I know about it, I would think that the Pocono Mountains is an awesome place to test the waters. 

If you want to give it a go, there are a number of things you'll need to understand moderately well in order to make some headway. For starters:

  • Learn how to execute a direct mail campaign (i.e. - finding the right list, sorting it adequately, sending out the right message and handling the responses as they come in).
  • Learn how to do proper due diligence (figure out all the relevant details about each property, learn how to establish a ballpark value for each parcel and make appropriate offers that will actually allow you to make money in the end).
  • Learn how to list and sell properties (understand where to list them, how to attract the most attention, how to offer a value proposition that buyers actually want, all while acknowledging that some properties will inherently sell a lot faster than others... and this is okay).

There's a lot more to be said about the process as a whole - but this is the "10,000 foot high" overview of what you'd need to figure out in order to operate a feasible land investing business. Each of these things will present their own unique set of challenges and there is a lot of stuff that lives inside each one of them. I wouldn't expect to master these things overnight, but if you're determined to make it work and you have patience with yourself along the way, you can definitely get there.

I appreciate the guidance Seth.  I recently began going over your website, and will continue to learn from it.  I do believe I am going to give it a try, I have already contacted my county tax office to begin to building my list.  I will be joining your site and will definitely be needing some help. Thanks so much.

Another question I have is, once you purchase a parcel, you can do whatever is legal with it while you own it, correct? Now I'm not talking anything illegal but if you have acres with nothing but trees would you consider timbering the property.  Could be a lot of money in those trees (especially the hardwood species in the Northeast).  Would selective timbering be considered a land improvement?   

@Stephen Dominick  If you are getting into land I am also trying to work that niche due to a busy life with work and kids. If you want to connect with another new land guy send me a colleague request. I have been actively trying for about 8 months now. I think @Seth Williams  Seths blog has been outstanding. The guy works hard to deliver a great site and he does not hold back. The interface is very user friendly and  not overwhelming. I am still waiting for that first payday but I am a bit short on cash for mailings and marketing. I do plan to ramp that up come the first of the year.

Hi @Stephen Dominick   - sorry for my delayed response. 

You'd have to follow whatever zoning rules are in place on the property in question (and there can be a lot of different rules restrictions based on where the property is located)...   but to answer your question, yes - harvesting the timber could certainly be a feasible way to make some extra money from a vacant land property. 

You'd have to find a timber company that is willing to pay for the trees on the property (they'll usually just take the largest trees and leave the smaller stuff behind - as most of it isn't going to be large enough for production). In order to make any substantial money from this kind of thing, you'd have to have a significant amount of land/trees to offer...   but it's certainly possible, depending largely on what your property has to offer.

And thanks for the kind words @Greg Braun  - I'm really glad you've been able to extract some value from the blog! Keep at it man, you'll get to that first pay day in due time.

@Stephen Dominick  As builder/developers I can tell you that when we are looking for land, we usually find it ourselves, though, we are in a very populated area of southern California. The problem with buying land that is listed, is that most agents have no clue what needs to be done to a piece of property to make it buildable, and end up pricing it too high to make development feasible. Therefore; I highly recommend getting to know your market, understanding the zoning of the area, what exactly is allowed in each zoning designation; and any long term growth plans your Planning Department has in place so that you know what will and will not be allowed. 

As to logging trees off property, that is highly regulated in most areas, so you will want to check with the Planning Department, and State Forestry, etc. You don't want to cut down trees that will get you fines! 

In checking on land, you want to know the topography, if utilities are available and the costs of bringing them to the property, etc. You also want to know what the building codes are, set backs from neighboring houses, what is needed for landscaping and sidewalks if those are issues, etc. 

You might want to narrow down only buying land that has a specific designation while you get to know the market, etc. 

Good luck! 

These are interesting posts with useful information since I too am thinking that lot flipping might be a good place to start my own REI because of the lower initial investment. I plan on connecting and following Seth as well as you and Greg to see how y'all progress and learn from what is working for y'all.

All, just to add to this discussion, I have found some lots in a neighborhood that for sale on the MLS that are around $700. The county values the lots at $4900. That being said, there are many lots in the subdivision that haven't sold in a while. From what I can tell the sub never was developed fully so there is a large inventory. Even though the money looks good on this deal, would this make a good flip?

Thanks for the help,

Joe

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Originally posted by @Stephen Dominick :

Another question I have is, once you purchase a parcel, you can do whatever is legal with it while you own it, correct? Now I'm not talking anything illegal but if you have acres with nothing but trees would you consider timbering the property.  Could be a lot of money in those trees (especially the hardwood species in the Northeast).  Would selective timbering be considered a land improvement?   

That depends on what kind of land you are talking about.   

If you are flipping lots- probably a no go.  

If it's a undeveloped parcel of raw land than you should be able to.  The question then arises whether the parcel of land is economically feasible to harvest timber.  

How big is the parcels you are considering? Logging requires a tremendous amount of machinery which takes time and money to relocate to a new job.  Most logging operations in my area will not bother with small acreage parcels less than 20 acres or so.  

Then there's the question of what kind of timber is on the property. If it's fairly young hardwood timber 15-20 years old it will likey be classified as pulpwood which brings little in my area.  (About $10 per ton max).   Older mature timber has more uses and brings more $$. Mature hardwood timber can bring  close to $40 per ton last I checked.  

Prices and your ability to sell the timber also depends on the distance from the property to the nearest mill as trucking eats into profit.  

Also consider the value of the timber removed and its proportion to the value of the land and also the asthetic consequences of harvesting.  

@Stephen Dominick

I too like to flip dirt so my Bio says. Been doing it a long time. I like to carry paper and get the stream of interest income, it seems like you end up selling the same property over again as people stop paying, not good for them, I always try do do everything possible so they do not loose it if they get behind, not like some of the banks I know. You finding any deals out there. What kind of work do you do in your real life?

I'm just getting into land myself - seems to have a lot of potential.  RE the timber aspect of this conversation, Jay Hinrichs was also a podcast guest like Seth Williams, and transitioned from land into timber.  Interesting stuff.  His podcast was one of my favorites all-time.  Don't know the number off the top of my head, but definitely worth a listen.  My $0.02.

great idea Seth is a great mentor. I have been flipping dirt my whole life, like to create notes with high interest. Profits are better in the land game as well. what you do now?

Have not listened to the podcast, so, I don't know if this is similar. 

I used to flip vacant, developed lots in the neighborhood I'm investing in. 

I worked in backwards. Builders in that neighborhood were hungry for vacants. I got a list of the builders that were building there and also had recently built and sold there.  I found out what they paid for those lots, so, I knew what range I had to be in. 

I got the lots under contract and send a mass email to all of those builders (had contacted them all to get their email addresses) and gave a firm price (lower than standard prices there), would not negotiate, and first builder would get it. Had a feeding frenzy and always did double closings.

@Stephen Dominick , you can't go wrong flipping land if you use the resources online to utilize direct mail before you leap into the business.

@Seth Williams provides a ton of high quality information to get you started.

The basic concept is this: Identify a market, compose a list of property owners using good fresh quality data, and send them blind offers to purchase. 

This yields very predictable and equity results. For every 300 or so offers we send, we purchase a parcel and resell it for 2x purchase price. We also do this with houses. It takes about 3000 offers to yield a net $30K wholesale flip (no rehab).


This concept works with every kind of real estate in every market: long term care facilities, NNN single tenant property, rural vacant land, mobile home flips and just about everything in between.

The real estate itself is secondary to the seller's immediate social situation which leads them to the decision to sell even before they receive your offer.

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