Selling Raw Land to Non-Profits

[Chris Heinmiller]

Morning BP!

Does anyone have experience selling raw land to charities and/or non-profits like Habitat for Humanity? I'm exploring tax deed auctions and there is a ton of raw land that pops up at these auctions. Seems to me that selling to an organization like Habitat for Humanity might help you ensure you have a relatively consistent buyer, assuming the parcels you purchase are in desirable areas for them and meet their acquisition criteria. I'm assuming these organizations would pay far below market value for land, but there are obviously also some significant tax benefits that may potentially offset the "lower-than-market" valuation you may receive when selling to them. 

Thanks,
Chris

[Bryant Brislin]

I'm a land broker in Southen California who sells land to homebuilders of all types (for-profit, non profit, etc.). Groups like Habitat only buy so much. They don't buy a lot, and even when they or any affordable housing developer buy land, it often can take forever for them to consider the property and then the actual escrow can be long if they are building the capital stack to buy the property. I would say the key to buying tax defaulted parcels is really having a trained eye in looking for development constraints. What I find in California is that a lot of hobbyist investors buy these parcels assuming that the previous owner simply couldn't afford to pay the property taxes, but that's often not the case. If often more that they are abandanoning the property to the government because there is some type of constraint, i.e. there is a street light oddly placed in the middle front part of the parcel, there is a creek or wash (which means environmental permits would be needed), there is lack of true legal access, zoning problems, etc. So if you can find a parcel that doesn't seem to have multiple fatal flaws, or at least you think you can add value to fixing/figuring out their constraints, then I would do that and then just flip on the MLS, especially if you are able to let it "season" a bit, which the title companies in California require anyway...they won't insure a flip of a tax parcel until some time has passed.