Land Sale into 1031 Exchange

[Andrew Merritt]

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 additional 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.

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. For the land sale, a nearby apartment complex contacted me about one of the lots. They offered $50k but I wanted to sell all three if I'm going to sell one. I countered w/ $215k for all three, they countered w/ $190, and we met in the middle (ish) at $200k

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