Land Sale into 1031 Exchange
Investment Info:
Other other investment.
Purchase price: $1,000
Cash invested: $1,000
Sale price: $200,000
I bought a duplex in December of 2019. It was listed for $150k, but had some additional land (three separate TMS numbers) for an additional $75k. I restructured the deal and bought the duplex for $214k and the land for $1k. I had planned on developing the land at some point, but an apartment complex nearby contacted me to see if I'd be interested in selling. They offered $50k for one of the lots. I didn't want to just keep two of them so after some back and forth, we sold all three lots for $200k. I'm doing a 1031 exchange and am currently working on finding properties to purchase with the proceeds.
What made you interested in investing in this type of deal?
I was able to structure the deal to purchase the land for only $1k and the extra cost went into the duplex, which allowed me to finance a lot more of the cost than I would have otherwise.
How did you find this deal and how did you negotiate it?
It was on the MLS. I gave full asking price, just restructured to purchase the house for more money and the land for only $1k
How did you finance this deal?
Conventional mortgage for the duplex and cash for the land
How did you add value to the deal?
n/a
What was the outcome?
I still own the duplex and have sold the land for $200k. Doing a 1031 exchange with the proceeds into cashflowing multi-family properties
Lessons learned? Challenges?
Good lesson in being creative. My realtor is the one who suggested paying more for the duplex in order to get the land for only $1k. Challenges were keeping the land maintained. There are other duplexes and apartments nearby that dumped trash on the land and I had to pay to clean it up several times.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I would highly recommend my agent Rick Willis