Seeking Advice on Flipping a Vacant Lot

[Shaneese Bailey]

Hello everyone,

I'm a new real estate investor and I recently came across a vacant lot that I believe has great potential for flipping. This opportunity fell in my lap as I know the motivated seller who is willing to sell, but I'm not sure if I can get the price that he wants for it.

I don't have the property under contract yet, and this is my first wholesale deal. I'm feeling a bit lost and would really appreciate any advice or guidance from experienced investors.

[Joshua A.]

In order for your seller to get the price they want, you have to get them to think outside the box. Land is not like the residential or commercial markets; creative financing is the rule rather than the exception in land deals. Banks won’t loan money to purchase land (usually); so any buyers will either have to be flush with cash up front (which severely limits your buyers pool) OR the seller has to make it easy for an interested party to purchase the land.

Seller-financing works great with land, as do land contracts. They also allow the seller to get a higher purchase price.

If they want $25k for the land if it's cash up front, they could easily get something like $12k down + $400 a month for 5 years at a 10% APR for an owner-financed sale. That's easier for a buyer to get into the deal, but for the seller it translates into them getting $38,400 for that same land instead of only $25k.

The seller could also do a land contract, with essentially the same type of terms as with the owner-financed deal, the difference really being that instead of the seller having just a mortgage lien on the property till it’s paid off, they actually retain full ownership of the land until the contract is paid in full.

I would have the seller tell you what they wanna get for it, then tell them you’ll add your fee to it and find a way to make it happen… and then come back a day or two later and tell them that you found a way for them to get their price, for you to get your fee, and for it to still be appealing to potential buyers… Then walk them through the deal, how it’ll work, explain to them how your way is more beneficial for them overall, explain how your way opens up the floodgates of potential buyers now, and most importantly explain to them that doing things deals this way is very common when buying and selling land, and how its really the only way for them to get what they want outta that land 👌

If you act like an expert on the subject (or at least more knowledgeable than they are) I promise they’ll most likely just follow your lead because they trust you to get it done.

And if they are truly motivated to sell, then they’ll welcome with open arms any creative thinking that will help them get what they want.

Good luck!