Real estate investing offers many opportunities, and one of the most intriguing facets is land flipping. While most investors think of houses when it comes to real estate, land flipping can be a simpler and less capital-intensive alternative.
Our Experts
Ryan Haywood
Ryan Haywood began his real estate journey with a 30-day wholesaling challenge back in 2019. Within 14 days, he had already secured his first deal. Today, he boasts over 400 transactions under his belt.
David Lecko
David Lecko, the creator of DealMachine, invented the platform eight years ago to help people close their first wholesale deals. DealMachine has facilitated over 10,000 deals since its inception.
Michael's Journey
Michael, another real estate investor, shared his experiences in land flipping. His first wholesale deal was quite unorthodox—a piece of land he bought for $1 and sold for $1,000 three hours later. This initial success set the stage for his career in real estate.
Diving into the First Deal
Michael's first transaction was a piece of land that he acquired for practically nothing and sold it within hours for a substantial profit. The lot was landlocked, meaning it had no direct access except through another property. This absentee-owned, landlocked property was seen as a risk but also a potential goldmine.
Key Takeaways
- Landlocked Properties: Though less desirable due to their lack of access, landlocked properties can still be valuable to specific buyers.
- Absentee Owners: These owners often lack ties to the property and may be highly motivated to sell.
"I got my first deal for $1 and sold it within three hours for $1,000, a ten-to-one ratio that tested the concept wonderfully." - Michael
Why Land Flipping?
Easier Process
Switching from appraising and flipping homes to just doing land transactions offers several advantages:
- Motivated Sellers: Landowners are often more motivated to sell.
- No Renovations: No need to deal with repairs or renovations.
- Lower Capital: Land deals are generally less capital-intensive.
Less Competition
Unlike houses, land deals tend to face less competition. The simplicity and lower barriers to entry make it an appealing option for new investors and seasoned professionals alike.
Financial Stability
Land flipping offers a cleaner, more straightforward process because there are generally no mortgages involved. This lack of complications can speed up transactions and reduce legal hurdles.
Finding Sellers and Buyers
Pulling a List
Michael shares his strategy for finding landowners:
- Absentee Owners: Identifying absentee owners who have held vacant land for an extended period.
- Direct Mail: Sending postcards to these owners has proven to be very effective.
Building a Buyer’s Network
Having a ready list of potential buyers can speed up the process. Michael mentions having about 600 individuals ready to purchase from a targeted list of 3,000 properties.
"I focus a lot on identifying my end buyer and building a robust buyer’s list. It’s crucial to know who will buy before even securing a deal." - Michael
Partnering with Local Entities
Habitat for Humanity
One interesting relationship Michael has nurtured is with Habitat for Humanity. These partnerships not only provide a steady buyer but also make for a streamlined transaction process.
"Sometimes, it’s just one call to Habitat for Humanity, and they’re ready to purchase." - Michael
Marketing and Selling Techniques
Timing is Key
One of the most successful marketing campaigns Michael executed involved sending out mailers the same day potential sellers received their property tax bills. This strategic timing significantly boosted his response rate.
"We sent out 3,000 letters timed with property tax bills and bought eleven properties, an impressive one out of every 272 pieces of mail." - Michael
Utilizing Modern Tools
Michael and his team employ several modern tools like DataTree to refine their marketing strategy, pulling lists of investors and identifying patterns in previous transactions.
Neighbor Letters and Realtor Listings
Sometimes, the properties are sold directly through listing on realtor platforms or even social media, showing the versatility in marketing approaches.
Scaling and Delegating
Michael's team comprises just him, his wife, and two VAs based in the Philippines. This setup allows him to maintain a comfortable yet efficient operation without the complications of managing a large team.
"We could scale if we wanted to, but I’ve had 65 employees before and have no interest in that again." - Michael
Comfortable Earnings
Operating in a specific market, Michael’s average deal involves buying properties for significantly below market value and selling them for a substantial profit within the same month.
Exploring New Territories
Creative Financing
While Michael has primarily focused on straightforward transactions, he is also exploring creative financing options. This can open up opportunities for buying more expensive properties without immediate capital investment.
"I haven’t done much seller financing but am continuously learning through courses like those offered by Eddie Speed." - Michael
Continuous Learning
Michael recommends that new investors educate themselves, either through online resources like YouTube and podcasts or by enrolling in comprehensive courses to accelerate their learning curve.
Conclusion
Land flipping presents a compelling alternative to house flipping, with its lower capital requirements, motivated sellers, and less competition. The simplicity and streamlined processes make it an attractive venture for both newcomers and seasoned investors.
For further insights and practical tips on real estate investing, consider joining Facebook groups like "Land Flipping for Real Estate Professionals" or exploring detailed courses to guide you through each step of the process. Whether you're already immersed in real estate or just starting, land flipping could be the opportunity you’ve been looking for.
For more innovative real estate tools and resources, stay tuned with DealMachine’s latest updates and features.
About Benjy Nichols
Benjy has been a media specialist at DealMachine for the last 2.5 years. He produces, writes, shoots, and edits our media content for our member's DealMachine and Real Estate education.