Ethical issues with land flipping

[Miriam B.]

Hi everyone,

So I have been learning about vacant land flipping recently. The main strategy is to find lists of property owners with delinquent taxes, target them, and buy land for huge discounts.

I can't help but feel like this takes advantage of people. Obviously you are helping them avoid having the property seized, but at the same time, it feels a little weird.

Maybe I'm just a bleeding heart. But especially since the land is not improved in any measurable way, the only thing earning you the profit is the other person's bad situation. 

Any thoughts? 

[Tim Bishop]

In my experience (TX and CO), most of the properties that end up on delinquent lists are worth under 20k, most have title issues and most are small acreage homesites, often without access to some public utitlities.  These parcels have very a very small group of buyers, most realtors won't touch them unless they ask a very large (by percentage) flat fee..  These property owners are left either selling them by owner... which requires some combination of good pictures/description/salemanship/market knowledge... or a really really low price.  You are looking for the ones that are left with the low price option.  These people typically do not live nearby, have owned the property for a long time, and may have serious title issues (minor ones are very common).  If you are willing to work with the sellers who haven't found a realtor or are unwilling to look for one and don't want to go through the trouble of fsbo... Then often you will literally be giving them money for nothing if they would later lose it at the tax sale and the state doesn't allow collection of overages.  To make your money you can improve it (clean it up and have it surveyed... or have title issues resolved during closing) or list it fsbo at a still super low price but more than you paid.

Taking advantage of people would look something like.... mailing to that same list and telling them that they are very close to losing the property whether they are or not, lying to them... like telling them that you are offering market value, telling them that you can close in seven days and then stretching it out to 45 days because you don't have the money, offering less to a seller that can't make rational decisions, telling them that they get nothing if it sells at a tax sale when the state has a clear system for overage collection etc...  Just be honest about yourself, the property, your intent, and do what you say you will do.