Bought vacant land in Michigan Hesperia , having a rough time selling it
Member since 2020 · 6 posts · 1 vote
Back in 2021 I bought vacant land from seller that promised me that cannabis permits could be transferred to me and sold it to me for 136.5k , however later on city council said cannabis permits can not be transferred. I put up almost 100k for a fence , 45k for landscaping and got a well put on 35k since city council refused cannabis permit , property is currently residential zoned. I am looking to sell this but having rough time. Real estate agent can’t help sell it (been on market for 4 months). Please give me advice as what to do to get it sold or get equity out . (I can’t get loans as non citizen) . I would love to sell it for as close as I can to break even (not looking likely) or do a 100k secured collateral loan with the property . I put in total of 310k of my hard money back in 2021.
**** can I sue the seller for essentially “selling” me a permit that can’t be transferred through selling me property , causing Me to loose my total investment ???
Let's start with the last question about suing the seller: No. As the buyer, you have the duty of due diligence and under Michigan law: "Each license is exclusive to the licensee, and a licensee or any other person must apply for and receive the board's approval before a license is transferred, sold, or purchased." (Source: https://www.legislature.mi.gov/(S(vpmdcwmtfl2ilehvtou3vlar))/mileg.aspx?page=GetObject&objectname=mcl-333-27406#:~:text=Each%20license%20is%20exclusive%20to,transferred%2C%20sold%2C%20or%20purchased)
And, I bet the seller didn't include any guarantee of transferability in the sales contract either. Simply, put - it never was an option.
As for selling it, I don't know how you're marketing the property but it appear there are several vacant lots/acreage for sale there with most being unsold for almost a year and at prices less than what you're seeking. My recommendation would be not to market it as another lot for sale but for a specific purpose and to a specific buyer. For example, would this be a better location for an area business to build a larger facility or for an expansion? Reach out to businesses that are expanding or considering moving into the area (Chamber of Commerce would be a source). Would an out-of-market builder be interested in it? And, use a Commercial Realtor - not residential; that lane is already taken.
The lesson here is vet everything. What happened to you is that the seller sold you his problem. Intentionally - and you have no recourse because the responsibility for due diligence is/was on you as the buyer. The best way out is to sell what you have to a targeted buyer; and let the fear go. Buyers can smell it...the reason for the sale is that your plans have changed, when asked. Don't sell your problem - sell someone a real opportunity based on the land and its improvements.
Hang in there.
Let's start with the last question about suing the seller: No. As the buyer, you have the duty of due diligence and under Michigan law: "Each license is exclusive to the licensee, and a licensee or any other person must apply for and receive the board's approval before a license is transferred, sold, or purchased." (Source: https://www.legislature.mi.gov/(S(vpmdcwmtfl2ilehvtou3vlar))/mileg.aspx?page=GetObject&objectname=mcl-333-27406#:~:text=Each%20license%20is%20exclusive%20to,transferred%2C%20sold%2C%20or%20purchased)
And, I bet the seller didn't include any guarantee of transferability in the sales contract either. Simply, put - it never was an option.
As for selling it, I don't know how you're marketing the property but it appear there are several vacant lots/acreage for sale there with most being unsold for almost a year and at prices less than what you're seeking. My recommendation would be not to market it as another lot for sale but for a specific purpose and to a specific buyer. For example, would this be a better location for an area business to build a larger facility or for an expansion? Reach out to businesses that are expanding or considering moving into the area (Chamber of Commerce would be a source). Would an out-of-market builder be interested in it? And, use a Commercial Realtor - not residential; that lane is already taken.
The lesson here is vet everything. What happened to you is that the seller sold you his problem. Intentionally - and you have no recourse because the responsibility for due diligence is/was on you as the buyer. The best way out is to sell what you have to a targeted buyer; and let the fear go. Buyers can smell it...the reason for the sale is that your plans have changed, when asked. Don't sell your problem - sell someone a real opportunity based on the land and its improvements.
Hang in there.
@Zenish Mahaseth If you can't sell it and get cashed out, another option would be to offer owner financing on the land. You may want to bring up the deal at your local real estate investment club to see if there are any investors who may be interested.
If you still need help in this area, feel free to send me a DM. I can send you some resources that may be helpful.
Hope that helps!
Let's start with the last question about suing the seller: No. As the buyer, you have the duty of due diligence and under Michigan law: "Each license is exclusive to the licensee, and a licensee or any other person must apply for and receive the board's approval before a license is transferred, sold, or purchased." (Source: https://www.legislature.mi.gov/(S(vpmdcwmtfl2ilehvtou3vlar))/mileg.aspx?page=GetObject&objectname=mcl-333-27406#:~:text=Each%20license%20is%20exclusive%20to,transferred%2C%20sold%2C%20or%20purchased)
And, I bet the seller didn't include any guarantee of transferability in the sales contract either. Simply, put - it never was an option.
***** looks like I won your little bet @Patricia Stiener (I live in Tampa too ) , I’ll put it towards recouping my losses of over $325k cash alone. the seller sold me the property , the licenses and permits as a package by selling me the holding llc (as stated in purchase agreement) And yes I was promised , garunteed by the seller that the permits would be transferred to me . The seller and her office also stated the same claim to my attorney at the time .Hence in the purchase contracts all the permits and licenses are included. The seller also knew the only reason I’m buying her property is because of the permits and licenses, if she had told me that she can sell me the property but permits and licenses woudnt be transferred I would have never bought it, the fact is that she told me the opposite promising me and garunteeing me that the permits will “transferred” to me through allocating 100% of shares in the holding llc. I do have valid witnesses such as my attorney at the time and the township office themselves as they were aware of the seller and what my problem was before I could even finish her name.
@Zenish Mahaseth If you can't sell it and get cashed out, another option would be to offer owner financing on the land. You may want to bring up the deal at your local real estate investment club to see if there are any investors who may be interested.
If you still need help in this area, feel free to send me a DM. I can send you some resources that may be helpful.
Hope that helps!
https://www.zillow.com/homedetails/0-E-Pierce-Rd-Hesperia-MI...
The link above is my property, I would love to get your help on this. Me and the current realtor tried and we aren’t getting anywhere. If we can get this moving quick I’ll save a lot of headache and time (I already wasted 2 years) , I can put in a little “gift” for u from the proceeds for your very kind help if we can get this moving quickly through u.
Another thing, on Zillow it has wrong price history. I bought the property March 2021 (the 4th month of 2021) for 135k, did a lot of work on it as mentioned on post.
Zillow says property was listed for sale on 09/06/2021 for 16k 🤣😂. I owned the property at time and I did not list it for 16k. That’s a bad look in my opinion and is definitely hurting me finding a buyer.
The fault is yours for not doing proper due diligence.
However, it sounds like the seller misrepresented the transferability of the license and you relied on that promise to your detriment. If I understand the situation correctly, he sold you a license that cannot be sold.
@Patricia Steiner may well be right, but I'd at least talk with an attorney about it (and I'm not one).
You clearly have damages and that may be worth pursuing. Maybe the best possible outcome is that you unwind the deal and get your money returned. You'll have to eat some expenses if that works out, but you can minimize your losses.
Side note: When I sell a business that has licenses that are hard to transfer or contracts that we don't want to open to renegotiation, we do a stock sale instead if the usual asset sale. I don't know how your local regulations are written, so I don't know if that strategy would work.
You need to develop a business model, checklist, financial analysis tool. Get out of this property and take the loss.
There was no point investing the rest of the money unless you had a business purpose identified or your market analysis said you could make a profit doing these additions and selling the land.
Do not answer the following question. How did you get the money?
You spent this money to easily. Assume no bank loan because they would have rejected your model.
Do five deal analysis and have someone vet each one. Learn your mistakes on paper.
I highly appreciate the help and input from everyone here. My attorney says we have a case however he will be witness and can’t represent me , hence I need to find another attorney, potentially more money. And definitely a lot of time.
Yes I was transferred all the Stock of the LLC by seller. Township refused to transfer permits and said seller lied to u just like the couple of other people that fell for it (they bought properties from the seller and had same case). Township is willing to testify as they were aware of it without me raising the issue.
I agree that selling the property and getting out is the best case scenario, however I have failed at selling it so far, I would greatly appreciate it if anyone can help with getting it sold. It’s been on market for almost 4 months with a 50k price reduction.
I am a vacant land investor same as you at present, though I want to go the commercial route via a scaled approach as @Henry Clark has helped me consider through his insightful posts.
It sounds to me as though you were perhaps too ambitous with this business plan and didn't do due diligence on the permitting process. I would have started smaller with this strategy, and gone through the permitting process before spending on improvements to the land.
But, without knowing much about the property it sounds like you have perfectly servicable ag land with a well, fencing, etc. You can stay wrapped up in a legal case, losing money and time or you can pivot. There are plenty of other high yield agricultural commodities that can be grown in MI. Contact your local ag extension and learn more about what you CAN grow on your land without permits. Or, consider raising livestock. Obviously, you will need to hire on help, but you would have had to do that anyways. Your only other option imo is to drop your price for the land and take a loss.
Start small, know your ordinances and zoning codes, and build up with a coordinated and calculated approach.
Edit: Also, if you really want to sell quick I would call up a local auctioneer. Also, there is a trade magazine in IN/MI/OH called "The Peoples Exchange", this magazine is oriented towards farmers and Amish. Advertise in that, and you may reach a more targeted audience.