Note business model

5 Replies

I would appreciate some collective thoughts concerning my proposed business model.  At times it help me to get clarification if I feel I'm getting too close to the trees not to see the forest properly so to speak.  So I am open to some thoughts and guidance.

I am considering an overall strategy for real estate investing as follows:  I live in Florida and there are vacant lots available to be purchased at tax sale.   My approach would be to acquire the lots, clear title and as my exit strategy:

1. sell them outright;

2. take back paper;

3. develop the lot; or

4. accumulate a few and exchange them or use them as a down for another parcel. 

I like paper, but with the recent dodd-frank and other issues I am concerned.  I know i am papering lots but I'm not sure if it exempt.  Am I looking to take on too much with the possible development?  I would do the development as a turnkey operation.  I may  know which side of the hammer to use , but I know i still bend a lot of nails in the process.

You're thoughts and guidance would be most appreciated.

Hi Russ,

I personally don't have any experience with vacant lots, but I can tell you they are much more speculative than homes. Of course the right lot in the right place could be worth millions.

Unless the lots are highly desirable, I would think it may be difficult to find buyers and create paper on them. This is said of course with the understanding I don't know how desirable the lots are. If they are on a golf course, well then you might be onto something.

If the goal is simply to flip them and make a chunk of cash, I think you may be sitting on the lots much longer than you anticipate.

- Josh

The issue with paper here is that these lots have already been taken over at a tax sale, meaning payments were not made. This implies that current market may not be ready for profit. How would you enforce missed payments by a new owner? Through the threat of foreclosure, which in FL may wipe the entire value of the lot through FC costs and time (remember, it's not like someone may lose their house...) 

Bottom line: if the prices and market in your area are good for the hard property, then by all means go for it. Just take the prospect of papering the lots out of the exit strategies!