i have a seller who has delinquent taxes on a .83 acre land lot of 4k
Lot look to sell for 13k to 16k based on a couple of other lots that have sold in the area within the last year.
I have yet to touch a piece of land with back taxes
How would you seasoned land investors acquire this deal?
@Gerald Harris , we meet again. The key word alert in BP works great! "Raw Land"
I've done thousands of these types of deals and I think I can help.
Sell it before you buy it.
Here is our 4 point check list:
1 Make sure the county eliminates the taxes AND FEEs that are accumulated on the property so when it's deeded to you, they reset to zero. Believe it or not, sometimes the taxes come with the land (seen it in FL)
2 Take a look at whether the property is governed by an HOA or LOA - an association. If so, get the full financial report on the back fee situation.
3 Call the county zoning person (not the recorder or assessor or mayor, etc.). Ask them about this deal. They will tell you the truth from their heart. There are areas in the county they love and they hate. They have been through every square inch.
4 Look at comps for the lot in four places: zilliow/trulia, Landwatch.com, Landandfarm.com and the MLS. Find the lowest comparison value that is listed. I mean a real comparison value in the same sub, if possible. This can be tricky if it's not comparable but simply close to the lot in question. Don't average the listing price out or justify in any way a higher comp than the lowest one. You should market the property for half of this value. Gerald, in this case it sounds like around $7K for the sales price.
Why so low? Don't we want to maximize price and get as much as we can out of this deal? No. This is a huge misconception in real estate.
While it works for houses and office buildings and other RE types in general, this is what works best in land:
You want to double your money ten times in the next few months, not wait around for a year to get top dollar for one property (like everyone else).
Month 1 $ 1,000 (seed capital)
Month 2 $ 2,000 (double seed $)
Month 3 $ 4,000 (double again...)
Month 4 $ 8,000
Month 5 $ 16,000
Month 6 $ 32,000
Month 7 $ 64,000
Month 8 $ 128,000
Month 9 $ 256,000
Month 10 $ 512,000
Month 11 $?,000,000
This is why you need your property to be the cheapest in the market by half price (not just the cheapest). All of our property is sold long before we buy it. Or we would not buy it at all.
Example: Cheapest comp: $10,000
Target Sale Price (half of cheapest comp): $5,000
Target Purchase Price (half of cheapest comp): $2,500
Make sure you intentionally leave money on the table. The person who buys it from you, will be your customer for life. They need to make more money than you do, for this to work.
This is how you set your purchase price long before you send out a direct mail campaign or whatever method of sourcing you choose.
In this situation you never ask yourself if you are doing the right thing or making a mistake.
-So Gerald, your "all in" purchase price should be half of $7K or $3,500.00 and it sounds like there are more accumulated taxes than that. I personally would look at more deals to find one that super works well.
You can accomplish a jam-packed-full acquisition pipeline with a well planned direct mail campaign for just a few hundred dollars and never look in the MLS again.
Hope this helps. You clearly have what it takes...
Please let me know how this deal goes.
Do they forgive back taxes in Georgia?
Does it depend on the county?
I had another deal like this and a guy wanted to quick claim me the property
Hi @Steven Butala,
I am blown away by your #1. I didn't know some counties eliminate the taxes accumulated. Are there counties that just do that automatically or do mean requesting that they eliminate the taxes and fees if you purchase? Any additional information you can provide on those counties that eliminate the taxes would be much appreciated!