All Forum Posts by: Seth Williams

That's a great question, but it's a loaded one.

What aspects of the process are you most interested in?

Due diligence (what you should evaluate before you buy)? This is a huge topic for land investors.

Choosing a market (knowing where there's likely to be demand for what you're trying to build and what type of vacant lot you're buying)? This is also a big thing to figure out early on in the process.

Appraising the property (determining its value before and after construction)? Land can be tricky to appraise, and the accuracy of your estimates has a lot to do with how much profit you will or won't make.

If there's a specific issue you're stuck on, let us know and maybe we can help!

When you say "the price," what are you referring to? Do you mean the cost of buying a property? The cost of the marketing to find the motivated seller? The cost of a course? Something else, perhaps?

If you can clarify what you're talking about there, that will help us offer some alternatives to consider.

@Tommy Esparza Why not Google a few local builders, call them up, and present your deal to see what they think? We can theorize about it all day, but the only way to know for sure is to find them and get their thoughts.

I've sold to builders before, and I think they're worth the effort to contact.

It doesn't hurt to have a conversation and understand exactly what they want, even if they say no to the first property you bring to them.

Once you know what kind of product they need and what they consider a 'deal,' you'll be much better educated about what you should be searching for if you hope to do business with them down the road.

I had a similar experience to @Chris Seveney when I got into the land business in 2009. From an acquisition standpoint, it was awesome. It was common to buy land for 10-20% of what it had been selling for just a year prior, sometimes even less. It was the easiest I've ever seen to buy land at a discount in any market I tried. There were a lot of motivated sellers for every property type, especially vacant land.

On the selling side, as you might expect, it took much longer to move inventory. Everything would sell eventually, but I usually had to list it at 50%-60% of 'market value' (what it had been worth before the crash), which meant it was very important to buy it at a huge discount in the first place.

Even when listing most vacant lots at a discount, the average time on the market was 6 - 9 months. If it was an amazing piece of property and/or if I offered seller financing with great terms and I marketed it well, it could sell in 1 - 3 months.

I'm not sure if we're heading into another 2009, because that was a very extreme downturn, but over the past few years, most people I know have been offering a minimum of 40% of market value for land right, with many of them going even higher. This is fine when values and demand are rising, and things are selling quickly. It can also work if you're planning to do an option, assignment, or double closing, because you're not taking on the risk of holding the property for an extended period, but if things continue slowing down (thank you, high interest rates), you'll want to be very careful about how much you're offering, especially if you stick to the straight flipping model, where you take title to the property and don't make any improvements to force appreciation.

That's amazing, @Annie Smith! Thanks for sharing your story!

Hi @Daniel Colamartino; what have you learned so far, and what would you still like to know? What makes you interested in land in the first place?

If we can understand where you're stuck or what your biggest questions are, perhaps some of us can offer up some helpful answers and ideas.

The word "contract" is kind of a catch-all word. What kind of contract are you referring to? Purchase Agreement? Land Contract? Something else?

As for approaching the title company, are you just looking for help closing? If it's just a cash transaction, there's no trick to it. Just call a local title company and ask what they need to get started, what it will cost and how long it will take. Assuming the title history is clear, a cash land transaction is about as easy as it gets... but again, if there's something else you're trying to do, feel free to clarify.

@Eric Drum I've been using DataTree for this. If you search YouTube for DataTree tutorials, you can find some videos I've made that explain how it works with regard to pulling lists and doing research on vacant land.

PropStream can work well, too (and it could actually be cheaper in some respects, depending on how many leads you need to pull each month), but similar to a lot of data services, it seems to have been designed more with house investors in mind, which make sense... there are a lot more house investors out there. You can still make PropStream work for land, but you may have to work around some things that weren't designed for land people.

I'm glad the video was helpful to you @Katherine Wiltse!

The words "creative financing" have a lot of different implications. Even when you figure out what type of deal you're trying to structure, there are still a lot of state-specific issues you'll need to address to ensure you're using the best type of documentation with the right language for the state you're working in.

Whenever I'm working in a new state, I'll hire an attorney and pay their full price for that first deal. Once I know it was done right the first time, I'll have more confidence in re-using the same type of docs on future deals. Grabbing any old template I can find online without any input from a legal professional who understands the specifics of my deal can be a risky move.

Commercial land is subject to more environmental scrutiny than residential land. This will be an extra hoop to jump through for each deal. A Phase I ESA (typically the first step) usually costs a couple thousand dollars, and the cost could go WAY higher if they find any contamination on the property and cleanup is required. You wouldn't have to think much about this for residential lots.

In most situations, you'll also likely find a smaller pool of buyers for commercial lots because it takes a certain type of person with a certain amount of money to buy and develop it. If it's a great lot in a great location, you'll probably do just fine, but many commercial lots aren't in great locations, so you'd have to weigh that risk too. Location always matters, but it matters a lot more for commercial lots than residential ones because the location of a commercial lot directly correlates with money-making potential. This isn't a big concern for someone buying land for their second home out in the country.

Property taxes are another thing. When I've rezoned land from residential to commercial, the property taxes jump up by about 800% (the original tax amount was around $300 per year originally, so it wasn't a crippling amount... but still, that's a big change when nothing changed other than the zoning).

There may be other things, but those are the first issues that come to mind.

On the plus side, when you consider these "disadvantages," they're also pretty compelling negotiation points when buying from a motivated seller. If the owner of a commercial lot needs to liquidate their property quickly, they probably won't have many other buyers to work with because of the inherent risks in the deal.