Buying/Selling Rural Land Out of State

28 Replies

Hi @Geoffrey W.

Glad we are connected and happy to answer any questions!

------------------------------------------

Love sharing tips and advice about buying and selling out of state. Sure, there are many details but as you are finding out - it is not hard to be successful in this business. 

Trying to imagine where we would be today if we had this kind of resource available. 

Thanks! Jill

Medium real landinvestors logo master  with words Jill DeWit, Land Investors | [email protected] | 480‑467‑0359 | https://landinvestors.com

Hi @Jill DeWit ,

I know I will probably find better deals via direct mail campaigns, but do you think there are some decent deals to be had directly from county over-the-counter (OTC) sales (i.e. post auction) for rural vacant land?  If they even sell that way...

I have 1 property to sell thanks to you and LandAcademy, but I know I'll need more soon of course so just thought I'd ask now while reading up on sell-side marketing.  Seth Williams has some good info on RETipster.com, too, and it seems a bit different from the LandAcademy strategies.

Hi Geoff,

Yes - we recommend using multiple sources to buy land. We still visit occasional county auctions and find some wonderful deals.

As far as selling & marketing, we recommend developing a "system" and using a variety of places to advertise. (Hey, after so MANY years and so MANY transactions - we learned the right way and dropped the wrong ones.) Let me know if you have any more question after getting through all our material!

Thanks!

Jill

Medium real landinvestors logo master  with words Jill DeWit, Land Investors | [email protected] | 480‑467‑0359 | https://landinvestors.com

Sell on craigslist - its free and it works!

Got this great question and want to share for all:

@John Becker

@Jack Butala

I was referring to those routine legal issues you come up against working in multiple states such as contract wording, foreclosure law, LLC registration and even taxation. For instance, I recently bought a property in Cochise county AZ with seller financing and the seller used a deed of trust and promissory note rather than a contract for deed which is what I would have used. Pioneer Title told me that in AZ it's more favorable that way for the seller in case you have to foreclose. Things like that. What do you do for legal, and maybe even tax advice in the various states you work in?

Medium real landinvestors logo master  with words Jill DeWit, Land Investors | [email protected] | 480‑467‑0359 | https://landinvestors.com

@Jill DeWit

@Robert Johnson

@Claire H.

@Mike T.

@Geoffrey W.

@Jay Hinrichs

Note vs Deed of Trust

Hey, John. There are two basic ways to sell land on terms / payments. Deed of Trust (DOT) (the way you did it on the Cochise deal) and a Promissory Note (Note).

My experience is that Promissory Notes don't vary much from state to state if at all, while Deeds of Trust can be regulated by law or by custom.

Here is my two cents (I'm sure there will be widely differing opinions on this post). Use a Promissory Note almost always (99.9% of the time) over a DOT.

DOT are usually completed by title agencies. In the event of default, they usually cost thousands to "undo." A Note is simply an agreement to buy and sell property under certain terms. In the event of default, both parties look to the terms of the agreement to see what to do. In our case, we all shake hands and go our merry way.

Very early on in this business I did several DOTs all of which were defaulted on by the buyers (they stopped paying). To get the properties back in my name, I wrote a 20K check to FATCO (First American Title). And never did another DOT again.

Here is the key difference: DOT get recorded at the beginning of the transaction at the county like when you buy a house and sign a mortgage. A Note is recorded after the last payment is made (usually years from the first payment).

When you look at mailer data from a county tax roll, you will see tons and tons of properties owned by title companies.

This is because the properties were sold with a DOT or equivalent then the deal fell apart (buyer stopped paying) and when the seller found out how much it costs to undo the DOT, he walked away. The cost to undo a DOT can be greater than the value of the land.

The property reverted back the title company as deemed by the agreement.

Just my opinion: If you stick with a Promissory Note and a contact like we do, you will most likely be in great shape in any state.

Hope this helps…

Medium offers2owners logoJack Butala, Offers2Owners | [email protected] | 480‑467‑0359 | https://landacademy.com

@Jack Butala    check out the above post by the owner of the land academy and let me know if you read it the way I do... being the owner finance expert... would be curious on your take.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Bill Gulley

@Dion DePaoli

@Marc Faulkner

@Dawn Rickabaugh

Would you please comment?

Note vs Deed of Trust

Hey, John. There are two basic ways to sell land on terms / payments. Deed of Trust (DOT) (the way you did it on the Cochise deal) and a Promissory Note (Note).

My experience is that Promissory Notes don't vary much from state to state if at all, while Deeds of Trust can be regulated by law or by custom.

Here is my two cents (I'm sure there will be widely differing opinions on this post). Use a Promissory Note almost always (99.9% of the time) over a DOT.

DOT are usually completed by title agencies. In the event of default, they usually cost thousands to "undo." A Note is simply an agreement to buy and sell property under certain terms. In the event of default, both parties look to the terms of the agreement to see what to do. In our case, we all shake hands and go our merry way.

Very early on in this business I did several DOTs all of which were defaulted on by the buyers (they stopped paying). To get the properties back in my name, I wrote a 20K check to FATCO (First American Title). And never did another DOT again.

Here is the key difference: DOT get recorded at the beginning of the transaction at the county like when you buy a house and sign a mortgage. A Note is recorded after the last payment is made (usually years from the first payment).

When you look at mailer data from a county tax roll, you will see tons and tons of properties owned by title companies.

This is because the properties were sold with a DOT or equivalent then the deal fell apart (buyer stopped paying) and when the seller found out how much it costs to undo the DOT, he walked away. The cost to undo a DOT can be greater than the value of the land.

The property reverted back the title company as deemed by the agreement.

Just my opinion: If you stick with a Promissory Note and a contact like we do, you will most likely be in great shape in any state.

by @Steve But

@Steven Butala 

Medium banner reiskills 997   copyBrian Gibbons, REISkills | [email protected] | 818‑400‑3046 | http://MyREISkills.com

Originally posted by @Jay Hinrichs :

OH the land game... near and dear to my heart.

I've done great with the few land deals I've done, probably about 1/2 dozen.  Some from tax sale auctions years ago. Some from working directly with sellers.  The thing that makes it attractive to me is how drama free my land deals have been.  No tenants, no structures.  Sometimes code compliance in urban areas.  The buyers are usually less emotional.....they either want it or they don't.  They usually have cash or big downs to make a seller carry backs worthwhile.  Must do more!

K.marie P. my first 10 years in real estate I ONLY sold land.. I never sold one house.

It was my specialty I worked Sonoma  Lake Mendo and Napa counties.. I liked the big commissions in the day 10%  and I double ended virtually everything I sold because most realtors can't even find bare land... And we bought 100 plus properties each year at the lake county tax sale then sold them on terms through out the year... I love the land game.

And some really remote parcels back up in the national forest that took an hour on a dirt road and some serious map work to find ( pre google earth) we used topo's. I charged 20 to 25% commission to sell those...you will find in many areas good brokers who specialize in land... I also really enjoyed selling some of the very large ranch's .. these were cool they took a year or more.. I always took 24 month listings. but they would cook off at 1 to 5 million and my 10% was a nice payday.. and the people buying them most I can still call friends.. you get a much deeper relationship with a ranch buyer.. you could work with them literally for years until the right property came up...

most of what these guys are talking about is sending mailers to old land subdivisions that never took off.... and most of the property has little to no real value on the open market.. so you always have someone who will do the 100 dollar down 50 a month program.. and or pay 5k cash for 5 acres.

My dad used to sell 100 properties in a day at airport hotels in LA and SF... lots costing 1k to 5k.  people cut checks for them sight unseen...

In Riverside and San Berdo counties there are millions of platted lots.. and each little area around CA will have antiquated subdivisions of legal lots of record which now a days are not buildable because of utl issues IE septic or water.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Brian Gibbons :

@Bill Gulley

@Dion DePaoli

@Marc Faulkner

@Dawn Rickabaugh

Would you please comment?

Note vs Deed of Trust

Hey, John. There are two basic ways to sell land on terms / payments. Deed of Trust (DOT) (the way you did it on the Cochise deal) and a Promissory Note (Note).

My experience is that Promissory Notes don't vary much from state to state if at all, while Deeds of Trust can be regulated by law or by custom.

Here is my two cents (I'm sure there will be widely differing opinions on this post). Use a Promissory Note almost always (99.9% of the time) over a DOT.

DOT are usually completed by title agencies. In the event of default, they usually cost thousands to "undo." A Note is simply an agreement to buy and sell property under certain terms. In the event of default, both parties look to the terms of the agreement to see what to do. In our case, we all shake hands and go our merry way.

Very early on in this business I did several DOTs all of which were defaulted on by the buyers (they stopped paying). To get the properties back in my name, I wrote a 20K check to FATCO (First American Title). And never did another DOT again.

Here is the key difference: DOT get recorded at the beginning of the transaction at the county like when you buy a house and sign a mortgage. A Note is recorded after the last payment is made (usually years from the first payment).

When you look at mailer data from a county tax roll, you will see tons and tons of properties owned by title companies.

This is because the properties were sold with a DOT or equivalent then the deal fell apart (buyer stopped paying) and when the seller found out how much it costs to undo the DOT, he walked away. The cost to undo a DOT can be greater than the value of the land.

The property reverted back the title company as deemed by the agreement.

Just my opinion: If you stick with a Promissory Note and a contact like we do, you will most likely be in great shape in any state.

by @Steve But

@Jack Butala  

Hey Dawn  long time no talk  lets reconnect !!  I have some interesting things going on in my post TWH life.. !!

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

I was pinged once or twice and stopped by to see what it is all about.  I don't see who John is in the Note vs Deed of Trust paragraphs nor do I fully understand who wrote with the various copy and pastes.  

That said, there is no accurate information in that set of paragraphs. In many cases, the statements made almost could not be more wrong. A Note is a Note (Promissary Note) and a Deed of Trust is a Deed of Trust. They are NOT comparable. A Deed of Trust is a security instrument, like a mortgage. A DOT vs Mortgage is comparable and has to do with the title laws of the state (lien theory vs title theory). A note has nothing to do with any of that.

A Note is simply a promise to pay.  The security instruments (DOT/Mortgage) are pledges of the property as collateral for the note.  A Note with no security instrument is not secured.  Two different things that do two different things.

There is no difference of opinion as the ideas expressed in that paragraph are simply wrong.  Title companies do not originate loans they handle real property escrows, closings and issue title insurance.  They do not make, write or fund loans.  

The Note vs Contract idea has the term Note being misused again.  The instrument that is being referred to there is an installment contract such as a Land Contract or Contract for Deed or Bond for Deed.  Those are more like lease to own in spirit and more like a security instrument in legality.  

A Note (which is a specific thing) is not a contract to do anything other than pay a debt back.  It describes the terms and conditions.  Notes can vary in language and thus have some degree of variance in legal enforcement but there are uniform state and federal bodies of law surrounding those ideas.  Where the federal idea of note enforcement are found in the UCC.  

Notes are not recorded.  A security instrument is recorded.  At the conclusion of an installment contract (Land Contract or Contract for Deed) the obligations of the buyer have been met, they paid X so the deed transfers to them.  The executed deed is filed to perfect the conveyance from Seller to Buyer.  The installment contract is not recorded as its utility is expired it is of no more use. 

That whole garbage about title companies owning...well anything is just flat out wrong.  Title companies do not own loans, they are title companies, they issue title insurance and perform real estate transactions as an objective third party.  

In regards to "unwinding" a DOT or any other security instrument.  All garbage information.  A security instrument can be satisfied or released by filing a form.  It costs about $35.  Less the $100 to have the form drawn up if not on hand.  The security instrument can be satisfied and the note which it secured can live on.  If the equity is returned because it was seller financing then no tax event will likely take place onto the buyer since both buyer and seller are as they were.  Out side of a loan made in equity the buyer may realize a taxable event since debt was given and then forgiven.  That is treated like income.

What is being attempted to be described is I think installment contracts. Search BP for Contract for Deeds look for commentary from Bill Guelly or myself in a couple of the longer threads.  We covered much of this instrument's pitfalls.

@Dion DePaoli   the original post is by @Jack Butala   he teach's others how to buy tax sale and defunct properties in rural counties in the US and then re sell them on contract.

Its the land game.. been played a hundred years.. I grew up in it.. LOL.

And I agree the information he presented is well for lack of better words pretty nonsensical as it relates to the industry.

My Dad did use Holding agreements with Title companies in the 60's  were the title company would actually take title.. these are not done any more.. what it allowed for was  high volume sales programs so that all one had to do is send  escrow instructions signed by buyer and seller and title company deeded out.  But they do not as you pointed out take title vis a vi a trustee's deed.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Brian Gibbons :

@Bill Gulley

@Dion DePaoli

@Marc Faulkner

@Dawn Rickabaugh

Would you please comment?

Note vs Deed of Trust

Hey, John. There are two basic ways to sell land on terms / payments. Deed of Trust (DOT) (the way you did it on the Cochise deal) and a Promissory Note (Note).

My experience is that Promissory Notes don't vary much from state to state if at all, while Deeds of Trust can be regulated by law or by custom.

Here is my two cents (I'm sure there will be widely differing opinions on this post). Use a Promissory Note almost always (99.9% of the time) over a DOT.

DOT are usually completed by title agencies. In the event of default, they usually cost thousands to "undo." A Note is simply an agreement to buy and sell property under certain terms. In the event of default, both parties look to the terms of the agreement to see what to do. In our case, we all shake hands and go our merry way.

Very early on in this business I did several DOTs all of which were defaulted on by the buyers (they stopped paying). To get the properties back in my name, I wrote a 20K check to FATCO (First American Title). And never did another DOT again.

Here is the key difference: DOT get recorded at the beginning of the transaction at the county like when you buy a house and sign a mortgage. A Note is recorded after the last payment is made (usually years from the first payment).

When you look at mailer data from a county tax roll, you will see tons and tons of properties owned by title companies.

This is because the properties were sold with a DOT or equivalent then the deal fell apart (buyer stopped paying) and when the seller found out how much it costs to undo the DOT, he walked away. The cost to undo a DOT can be greater than the value of the land.

The property reverted back the title company as deemed by the agreement.

Just my opinion: If you stick with a Promissory Note and a contact like we do, you will most likely be in great shape in any state.

by @Steve But

@Steven Butala 

There's a lot of stuff here that's confusing and just not quite right. A DOT is executed with a promissory note. The note is secured by the DOT. The DOT is recorded (not the note). Without a DOT you're looking at a judicial foreclosure if your borrower defaults or dies and doesn't give you the property back and/or cancel the note. A judicial foreclosure in CA is a court case to get the judgment and then a sheriff's sale. Lots of steps, lots of time, lots of money. Why would anyone chose that over a promissory note secured by a DOT?

Originally posted by :

When you look at mailer data from a county tax roll, you will see tons and tons of properties owned by title companies.

This is because the properties were sold with a DOT or equivalent then the deal fell apart (buyer stopped paying) and when the seller found out how much it costs to undo the DOT, he walked away. The cost to undo a DOT can be greater than the value of the land.

The property reverted back the title company as deemed by the agreement.

Just my opinion: If you stick with a Promissory Note and a contact like we do, you will most likely be in great shape in any state.

Hope this helps…? 

Can you point to any such example in California?  I look at a lot of data here, including some of the big desert land resale schemes where I've bought and sold (California City, Bear Valley Springs, Stallion Springs).  I've never seen a property revert to a title company as owner.  Title doesn't transfer per agreement but rather deeds.  Are you saying that deeds are held in escrow in case of default by the borrower?  Even if they were, why would the deed grant title to the title company, who is usually the trustee, and not the seller/lender?

Your name if familiar.  You're not one of the land bank guys from one of the properties mentioned above are you?

Originally posted by @Jay Hinrichs :

@Dion DePaoli   the original post is by @Jack Butala   he teach's others how to buy tax sale and defunct properties in rural counties in the US and then re sell them on contract.

Its the land game.. been played a hundred years.. I grew up in it.. LOL.

And I agree the information he presented is well for lack of better words pretty nonsensical as it relates to the industry.

My Dad did use Holding agreements with Title companies in the 60's  were the title company would actually take title.. these are not done any more.. what it allowed for was  high volume sales programs so that all one had to do is send  escrow instructions signed by buyer and seller and title company deeded out.  But they do not as you pointed out take title vis a vi a trustee's deed.

Damn.  I knew his name looked familiar.  I wish I had seen your post first.  He's one of the CA land resale guys out in the desert.  Or used to be.  I have no idea what he is talking about when it comes to promissory notes v. DOTs.  Thanks for explaining that title companies used to take title on these land deals.

Dion is in Florida.  There is no way he hasn't seen this same game there. 

K. M.  Florida was late to the land game  but just look at Lehigh Acres and Coral Gables land plays in the day as well. but these actually have homes on them

When I fly myself to Palm springs I go over the Tehachapi pass at the end of the San Joaquin valley and jump over to the Palmdale area and from 8 to 10k feet you can see all the roads going to nowhere along with the isolated desert dweller in their MH..

Lake co were we lived and worked had about 30k antiquated lots IE platted in the 20's and no roads ever built... I could write a book on it. But the county has just now started a land trust to buy these odd lots by the hundreds and thousands... Also the tax collector stopped putting them on the tax sale.. but that still does not preclude folks from buying them and selling them as they are legal lots of record.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@K. marie P.  Florida was late to the land game  but just look at Lehigh Acres and Coral Gables land plays in the day as well. but these actually have homes on them

When I fly myself to Palm springs I go over the Tehachapi pass at the end of the San Joaquin valley and jump over to the Palmdale area and from 8 to 10k feet you can see all the roads going to nowhere along with the isolated desert dweller in their MH..

Lake co were we lived and worked had about 30k antiquated lots IE platted in the 20's and no roads ever built... I could write a book on it. But the county has just now started a land trust to buy these odd lots by the hundreds and thousands... Also the tax collector stopped putting them on the tax sale.. but that still does not preclude folks from buying them and selling them as they are legal lots of record.

I know at least one investor that cleaned up in Coral Gables prior to the Bubble.  He was really busy buying and reselling between 2003-20/07.  Those deals were multiple lot purchases with double closes.  There was a wee bit of building going on that created a frenzy so he was able to immediately resell at a mark up for cash. He was well aware that it was like musical chairs and the music could stop at any time.  

So your Dad was one of the airport land sale guys?  Did he do bus tours too?  :)  

@Jay Hinrichs I used to tag along with my aerobatic pilot friend to California City.  Our version of Lehigh Acres.....Maybe next century it might fill in.:)

@K. marie P.  yup he did it all... we had a fly buy program from LA...

our top year we sold 800 lots... ergo why the title company would give us title insurance on our tax sale properties as soon as we recorded the tax collectors deed.

we also did larger developments  buy 2k acres bust it into 10 and 40's.... but thousands of lots over the years...

I remember Lehigh well.. you could buy lots for 5k some builders from Bama came down and started building next thing you know the lots are trading at 90k  bubble burst and the lots are right back down to 5k  LOL.

Boise Cascade was were my dad first got started in the business in the early 60's then went on his own.  it was very Glenn Garry Glen Ross  a good land man in the day made well over 100k a year even in those years.. they were high flyers and high lifestyles as well. everyone had a jeep wagoner with wood paneling   LOL

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@K. marie P.  yup he did it all... we had a fly buy program from LA...

our top year we sold 800 lots... ergo why the title company would give us title insurance on our tax sale properties as soon as we recorded the tax collectors deed.

we also did larger developments  buy 2k acres bust it into 10 and 40's.... but thousands of lots over the years...

I remember Lehigh well.. you could buy lots for 5k some builders from Bama came down and started building next thing you know the lots are trading at 90k  bubble burst and the lots are right back down to 5k  LOL.

Boise Cascade was were my dad first got started in the business in the early 60's then went on his own.  it was very Glenn Garry Glen Ross  a good land man in the day made well over 100k a year even in those years.. they were high flyers and high lifestyles as well. everyone had a jeep wagoner with wood paneling   LOL

High rollers driving Wagoneers with wood paneling.There's a TV series in there somewhere.  And David Mamet could write it.  Good stuff.