Wholesaling land?

Question

Hi everybody!

Well i got a lead today about buying land. She said she has 9.7 acres with a pole barn and a garage.

Would it be possible to wholesale this? She hasnt told me how much she wants for it, but she has sent me the address to go take a look at it.

I have no idea what or how i should go about this! Should i just walk away?

How should this be handled?

Thanks in advance!!!

Bill Gulley · Answer

That is a topic for a book, in fact several. It sounds like a small farm to me as well. Without getting into traffic counts, population and market issues, let's assume it's a nice home site. Get comps in the area and find the sales of small acreages and keep in mind that as you have excess land, that excess becomes less valuable in many cases and how the land can be used is an issue. 10 acres is a popular residential mini-farm plot, or is in many areas so you may have comp sales. Some folks don't want another 5 acres to care for, land needs maintenance too to keep it from getting out of control. I'd suggest you begin, option wise, at one year, not months. See what they want for it, that's a good start. Land is difficult to finance so seller financing is customary with farmers. This property might be exempt from regulatory issues with seller fiancing, but could be. If you see it's a good deal with a small payment, just buy it, if it's a decent homesite, shouldn't be hard to unload. Get comps! :)

Mike LaCava · Answer

Great Nicasio T. Take action! That's how it is done. Love to hear how you make out. Google REIA and find a local one in your area to visit. You may be allowed to give a 30 second elevator pitch so just say your are new and looking to find deals for investors (bird dog). You can be specific if you looking for land only. Ask for a show of hands on who fits this profile then you can speak with them.

Nicasio T. · Answer

Okay, will do Mike LaCava ! Thanks again for the advice everyone!

Ned Carey · Answer

Let me add something I should have mentioned in the prior post. You have two basic options. 1) sell it to someone who will use it as it is used today (a farm?) 2) Sell it to someone who will develop it to it's "Highest and best use" In the case of #2 there will need to be a LOT of due diligence. Heck I get SFHs under contract for a few months if I can. Land can take years to sell. That is why an option which is more commonly done for longer terms was suggested. This is why simply giving the lead to someone who knows land may be your best choice. Land takes a lot of specialized knowledge. If someone is going to buy it for its current use as in #1 above get comps from an agent that deals in land. In a situation like number 2 above, that is what Bills and my previous posts explained. What could it be worth when fully developed, what will it cost to get there. I couldn't tell you even if I knew the details. This takes a lot of specialized knowledge. good luck - Ned

Mike LaCava · Answer

Ned Carey and Bill Gulley give you good advice Nicasio T. I will add you may want to find some land developers in your area and meet with them & you can work something out to bring them in on any potential deals you bring them. I have done very little in land developing but just started a few projects and have learned a lot from a few land specialists I met at REIA meetings. Tell them you want to find deals for them but you want to learn more. Take them out to lunch and tell them your plan. You will be amazed how many people are willing to help & if they can make money on deals you bring them then everyone wins. Good luck.

Nicasio T. · Answer

Ned Carey So what your saying is that i would have to get it under contract for a few months. How would i find out how much the land is worth?

Ned Carey · Answer

Bill Gulley answered it perfectly but since it can be a difficult concept I will say it in a different way. Yes you can wholesale it just like any other property. The key is knowing what it is worth. The value of land comes from what can you do with it. As the saying goes "Highest and best use". So a key question is, "what is it zoned for?" A little more speculative is "What could it be zoned for?" Land can be complicated ans there are often all kinds of restrictions like zoning or environmental as to what you can do with the land. Then you need to know is there demand in that location for that zoning. Being zoned for a 50 story skyscraper won't do much good if it is 75 miles from the nearest paved road. Once you know what it could be worth, then you work backwards subtracting the cost to get it there to figure what it is worth today. Now it sounds like a farm and that may be it's highest and best use. That will eliminate a lot of calculations. You just need to know what farmland is worth. Land often takes a long time to sell, so you may need to tie it up for a long time to make a deal. It might be worth doing it as an option contract. Perhaps the easiest option is to simply offer the lead to someone else for a referral fee if it works out. If anyone does land in the greater DC Baltimore area, I would love to have someone to forward leads to. good luck - Ned

Bill Gulley · Answer

Largely depends on the highest and best use of the land, its location or said another way, the current under utilization of the property. Identify a better use, for example along a highway is it a good location for a motel? If so, contract at its current lower valuation, and then sell to a motel owner. That is simply said, not easy to do, but basically that's what you are doing. If you buy and own it, you will likely be speculating, not investing so much, if you have a buyer, know of interested parties for any property first and then locate the right property, you can pull of a much quicker transaction. You need to be able to assess the highest and best use, it could be ag land, residential, commercial, industrial, recreational or a combination of uses. Selling to a developer who would in turn sell to an end user would be wholesaling it. :)