All Forum Posts by: Seth Williams

That's a great summary of lessons learned @Adam Harrison.

Every real success story I know of involved years of struggle and a bit of monotony until the details got ironed out (and honestly, I don't think anyone ever achieves perfection... even if that's what they'd like to project). It's good to see a down-to-earth reality check of what's involved with the process.

If you're looking at a property that has current or potential cash flow (farmland or any type of ground that is generating lease revenue or can be developed in a way that will generate revenue), you can usually find a lender somewhere, assuming you're creditworthy, the deal is substantial enough and the property's value is verifiable (many agricultural lenders are into this kind of thing).

Financing land gets much more difficult when you're dealing with smaller, vacant, residential lots - the type that isn't worth much and can't/won't generate revenue in any capacity. These properties are much more difficult to appraise because there are no improvements or income to base anything on... and even the comparables are often hard to find. That's a big part of the reason why lenders won't touch them - because the value is too difficult to verify with any accuracy.

Granted, this presents a big opportunity if you're already the owner a property like this and you're trying to sell it because you CAN finance it for your buyer in the form of owner financing (and since no other lenders will provide this, it's a big value-add for the buyer, and it usually warrants a higher interest rate and/or higher asking price)... so even when financing is a "problem" for the average buyer, it's also an opportunity for the seller make more money and cash flow, if they choose to go that route.

I would agree with @Greg Dickerson that land flipping (i.e. - the model that many land flippers follow) and development are two very different things.

They can work together if you go into a deal with that intent (and if you and your local professionals have a good understanding of what you’re doing), but I would still consider them two separate business models.

We actually had a conversation with someone who straddles both worlds (he buys land with the intent to flip it quickly, but not without doing value add improvements). You can hear it in episode 14 of our podcast if you’re interested l: https:// REtipster.com/14

@Rowen Burney - it depends on how low of a price you can buy a vacant lot for (as compared with its actual market value). If you're able to pay a very, very, very low price when you buy it (say, 10% - 30% of what most normal buyers would pay in this market)... then yeah, it'll probably be a great investment - because you can turn around and list it for 50% - 70% of market value and the average retail land buyer would still be getting a great deal AND you'd also make a nice profit along the way.

If you can buy a vacant lot at a huge discount like this, then the model works pretty well. However, if you pay everyone's full asking price (whatever they think the "fair market value" is), then you'll probably have a much harder time making a profit. Buying at a super-cheap price is what gives you a big competitive edge in the land business, and it's actually not difficult to find deals like this if you know where to look for motivated sellers (hint: send direct mail to a highly-targeted list of landowners).

I'm not sure how "motivated" these FSBO property owners are that you're dealing with, but if they aren't willing to sell at a super low price, don't sweat it. There are plenty of other ways to find them elsewhere - don't feel like these property listings are your only options for buying land in your market.

Hey @Anthony Shaw - I've done exactly what you're talking about MANY times in the state of Michigan.

As for the deed, you'll want to get educated about what is being implied with each type of deed. The only time I use a Warranty Deed when I'm selling is if I purchased title insurance on the property back when I first acquired it. If I'm not willing to guarantee that the title history is clear when I sell the property, another option is to use quit claim deed, because it doesn't make any promises about whether the title is clear. Note: title companies hate these... but if you're not using a title company to close and your buyer is willing to accept it, this would (in theory) keep you in the clear if any unseen historical title issues arise in the future.

Yes, you would need to get the deed notarized and then mail the original document to the county register of deeds to get it recorded (you'll also have to pay a recording fee when you do this, so call the county ahead of time to find out what the cost of this will be).

You'll also want to fill out a Property Transfer Affidavit once the deed is recorded, to notify the local municipality that the property has changed hands (this will help them re-assess the property and know where to send the future property tax bills).

Owner financing is an option, but it doesn't come without its complications. For example,

• You'll need to make sure you're using the right paperwork, with the correct language for the state of Michigan.
• You'll need a solid system for collecting payments (preferably one that works on autopilot).
• You'll need a system to keep track of the loan balance.
• You'll need to know how to deal with borrowers who pay late or stop paying altogether (because this definitely will happen if you do enough of these deals).

Seller financing is great if you decide to scale it and get the proper systems in place... but you're also signing up for a lot more complexity than just selling the property outright for cash.

There are a lot of details to keep track of when you're closing in-house. I can certainly be done, but be sure you're going slow and taking time to make sure all the i's are dotted and the t's are crossed.

Of course... this is pretty much why title companies exist - to mitigate all the issues and complications of self-closing, but I understand that some properties are so cheap that the added cost of a title company isn't always economical.

I've seen these situations come up from time to time, but in my experience, it's been more the exception than the rule. Even if you don't find any adjoining parcels like this, it's not hard to find out who the neighboring property owners are and send them a letter to ask if they'd be interested in selling their property to you (or alternatively, if they want to buy from you - that's usually the route I take). When I do this, I'm able to put together a deal about 20% of the time... so there's definitely no guarantee you'll be able to make it work - but still worth a try if you find yourself in that situation.

I've got a few templates I use for this. If you're interested, let me know.

@Scott K. - depending on what part of New Mexico you're looking in (and who you're buying it from), this number does sound on the cheap end, but I wouldn't say it's unreasonably cheap. I sold a parcel of New Mexico desert land last year and I had it priced a little higher than this - but still in a similar ballpark.

If you're buying it from a land flipper (someone who probably paid closer to $500 when they bought it from another motivated seller), $2,500 would be enough to give them a decent profit and you a great deal. There are a more than a few land flippers in New Mexico - and given the language you shared from their website, I have a feeling that's the kind of seller you're dealing with (and they can be a great source of below-market deals).

As for the pitfalls - it sounds like you already understand the limitations you'll be dealing with (no utilities, very remote, not near any kind of convenience). To some, this could be perceived as a negative, but to others, this is exactly what they want.

As @Wayne Brooks said, if you're really concerned about it, just make sure you're getting title insurance on the property to verify there are no title issues. 

Oh, that's great to hear @Mark Mattison - not all data services offer that kind of customer service (not even close) - so that's definitely a big mark in their favor.

Hi @Mark Mattison - I think it just depends on what list service you're using and which county you're trying to work with. I just checked the coverage map for AgentPro247 and this is what came up as of 12/28/18:

As you can see, most counties have data that's been refreshed within the past 30 days, but some of them are REALLY old. The point is - don't rely on old data. If you're looking for a list in a specific county and it's not current enough on one of these data services, your next bet is to try a different data service (like DataTree, for example) or try and get the list directly from the county (or just try a different county altogether).

The problem I've seen with ListSource is that they don't allow you to verify how old the data is (which is a major oversight, in my opinion), you just have to download and trust it (at least, that's how it worked last time I checked). 

Hope that helps!

Hi @Eric Gibbs - the timing of this depends on the way your state works. I'm not sure how Louisiana works, but in a lot of states, the county will allow taxes to remain delinquent for up to 2 years until they seize them in tax foreclosure (and after that, they'll auction them off to the highest bidder as a way of recouping the delinquent property taxes).

When I'm sending mail to a delinquent tax list, the goal is to obtain the list of delinquent tax property owners sometime AFTER they've become delinquent, but BEFORE the county has seized their property. This allows me to work directly with the property owner to put a deal together, rather than fighting with competition at the county tax sale auction.

I would say your first step is to find out how many years a property can go delinquent in your area before it is seized by the tax collector. This is essentially the window of time you have to work with.

Once you know what your deadline is, you can send out your mail during this timeframe. I'd say in most cases, you shouldn't start the process any more than 3 months before the deadline when the properties are seized by the municipality... preferably longer if you can. Sometimes people move slowly in responding to you, and you don't want to cut it too close, so it's good to give yourself some wiggle room.

If you find that your state simply doesn't allow enough time to put any deals together (and frankly, I'd be surprised if this was actually the case... most states will allow at least 1 year, and usually longer than that), you can look in any of the surrounding states (or honestly, any state in the country, if you're willing to work remotely) to see how their system works.

I hope that helps!