57 vacant lots, a "bulk deal" and I "sold-em" in two months!

Real Estate Deal Analysis & Advice
14yFollow

57 vacant lots, a "bulk deal" and I "sold-em" in two months!

Robert Dobbs
Residential Real Estate Agent · Delray Beach, FL · Member since 2010 · 115 posts · 83 votes

Whew! I did it!

I put under contract, a "bulk deal, 48 vacant Florida homesite lots on April 26. I was given until the end of the "bank quarter" (June 28th, 2012), or about two months to complete this transaction:

This deal was called a "step-down contract".

I was allowed to close on a minimum of 12 lots at a time. The original "vacant land contract" was for 48 vacant lots, and was ammended to add another 9 lots to the deal, bringing the total to 57 lots I closed on!

The seller (a bank) suggested this "step-down" technique to me, as they did not want to do the deal my way, via "option to purchase".

The first batch was to be 12 lots (I put 10% down on those 12 lots).

I instead closed on 28 lots on the first batch of lots (as I had these 28 lots sold within two weeks!).

I closed on 12 lots for the second batch.

I closed 17 lots for the 3rd and final batch!

All went smoothly!

The key to this type of transaction is having a way to market all properties within the alloted time frame, per the agreement (the "contract")...

The second key to my success is pricing.

I portray myself as a "land liquidator".

So I make offers, what I call, "well below wholesale bulk deals". And then I sell them wholesale ("below market") to others, working on "thin margins", so I can move them fast!

My monetary risk was an initial 10% "hard deposit" on 12 lots. And my bigger risk was not completing the original deal (48 lots) and losing the trust and confidence of the seller (the bank)...

I was able to sell 26 lots (11 lots, and then 15 lots) to an investment group (they "warehouse" these properties for a "future rainy day-real estate boom"), and 7 lots to another investor of mine (thru his self-directed IRA) and the balance (24 lots) were sold as "singles" or as "doubles" (i.e., 2 adjoining lots) on eBay (as I am a long-time "power seller" and "top-rated" seller there!)...

All-in-all, it was a pretty cool deal, for a few months of hard work.

I "patted myself on the back". Now what?

I need to DO IT ALL OVER AGAIN!!!

Bob
Land Rescue League LLC

0Reply
33 views

Most Popular Reply

Joshua D.Pro Member
BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
14y

Robert -
Perhaps you could share with everyone how you put the front end of the deal together? How did you negotiate the deal with the 48 lots in the first place?

Podcast Guest on Show #100
1Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    14y

    Great job. Sounds like you have developed a system that is working for you and that may be repeatable.

    0Reply
  • Joshua D.Pro Member
    BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
    14y

    Robert -
    Perhaps you could share with everyone how you put the front end of the deal together? How did you negotiate the deal with the 48 lots in the first place?

    Podcast Guest on Show #100
    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Robert you say thin margins.

    How much total did you make in profit from all these lots combined and how much time did you have into the deal (weeks,months,etc.) from contact,to offer purchase, to close and resale??

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    I see 2 months now in your headline but how much time did the whole deal take??

    From first contact with the seller of the lots to closing out your purchase to reselling the lots.

    So if you made 200 per lot at 57 lots that is 11,400 minus your other costs.

    Let's say you cleared 9,000.

    Say it took 4 months start to finish. 2,250 per month and if you had 10 hours in the deal that is 225 per hour which isn't bad.

    I always look at the time invested for the return.

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Robert I am also curious on the average carrying costs of these land parcels.

    We have a ton of lots dirt cheap but I do not like the annual carrying costs.The profit won't be realized for years in my area and until then you have money non performing.

    I do know some developers who buy these in bulk and will see later for a profit to builders or developer themselves and they don't mind holding for years.

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
  • Ed L.
    Residential Real Estate Agent · Hattiesburg, MS · Member since 2011 · 475 posts · 141 votes
    14y

    Congrats in the land deal!

    I generally wouldn't touch developed lots, but I've sen some very tempting deals in Florida especially. When the fully developed stuff gets down to raw land prices it's time to hop in and benefit from the last developers forfeited equity.

    @joel Owens. Carry cost on raw land tends to be pretty cheap. Subdivision lots will be higher due to mowing, busted street lights,lamdscape maint etc etc. Raw land tends to run about $4-6 per acre annually for taxes. That can be offset by leasing the hunting rights.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free