Hey guys, what's up? This is Seth Williams from retipster.com In this video we're going to talk about
the land flipping life cycle. I know a lot of times I hear from
other real estate investors or people who are thinking about
getting into real estate and they hear this idea of land investing and they just kind of go blank, like they don't get it, they don't understand it. They don't get how you can make money
from just buying and selling dirt like this. So my goal in this video is to address that
and really give you a high level overview of what this whole process looks like. By the time we get to the end of this,
you may be in a spot where you're like, "Man, this is exactly what I've been looking for.
This is awesome". Or you might also be in a spot where you're like, "Okay, this is not at all what I thought it was.
This is not the right fit for me. No thanks". So however, you end up, my goal is just to
make you understand what this entails. When it comes to flipping land through this
particular business model, it's all about finding a highly motivated seller who is basically apathetic, doesn't want their property, and they're willing to sell it to you
at a price that is far below market value. Most land investors who are following this
business model might make an offer anywhere from like 5% to 30% of market value and then immediately turn around
and resell that property at a price anywhere from like 50% to 80% of market value. So the end buyer who ends up purchasing this property from you is walking away with a great deal. You're making some really good money in the process because you've got a pretty nice
profit margin built into that. And the person you're buying it from they're also winning because in many cases
they've lost interest in the property. They can't afford it, they don't want it. And if you're talking to a motivated seller who is not willing to sell their property that low of a price, then it's probably not the right person
for you to be talking to anyway. So it really does set up a win-win-win scenario
through every land deal you do, which is a pretty cool
and kind of fun thing about this business. This land flipping business model
is really pretty simple. There's not a whole lot of complexity to it, and that's part of why I've always loved it so much. But it's also important not to confuse
simplicity with ease. There's going to be problems to solve.
An issue you have to navigate through. But believe me, you can totally do it. So without further ado, let's get into it. All right. So the first thing to talk about,
if you're brand new to this business or if you've never done a land deal before,
it all starts with market research. This is all about understanding which markets
around the country are going to make it easiest for you to sell these properties. So when you've been in this business long enough, you're inevitably going to find that
not all markets are created equal. For the most part, it's not that hard to find land deals no matter where you're looking at the
country, if you're pulling the right kinds of lists and following the right process and your marketing. But what can be more of a bottleneck is
getting properties sold. Some markets are going to make the selling process much easier than others and the reason it's easier in some markets is because these areas are just frankly more desirable for one reason or another or maybe several reasons. There are a lot of land buyers out there that
want to buy the properties in these markets. It could be reasons such as tourism. Say if you're talking about a place where
a lot of people like to go on vacation, maybe they come from all over the world just because this area is known as a really cool, fun,
beautiful place to be. Or it could it be that the population is growing or there isn't job growth with
a very low unemployment rates. There could be low crime and a lot of other attributes that just make this area a really nice place to be. It's important to distinguish, we're not just
talking about the places that you find that are desirable. We're talking about the areas
where your target customers or the other land buyers
in the United States find desirable. So while that's really easy to do, it's important not to mistake your wants and desires with the wants and desires of your actual customers who are going to end up buying it from you. So that obviously begs the question, how do you find out which areas are actually desirable and how do you quantify that? How do you find credible sources of data to prove
that you're looking at a market where people actually want to be? Well, the good news is there's lots of free
websites out there that have this information and you can find it pretty easily. Some of the websites you might want to check out are bestplaces.net citidata.com niche.com You can use websites like this to find information like the job growth in that market. You can also check out things like the crime rate, population growth over the past 10 years, population growth over the past 20 years
and a lot more. And it's not just about looking at each one
of these isolated pieces of data. It's about taking this information on the
market that you're considering working in and comparing it to the national averages. Is your market doing better than the national average or is it doing worse or is it just kind of on par with everybody else? And obviously you want the areas that are
doing better than the national average. And you want to do this at both the state and the county level of the markets you're considering working in. So once you figure out
what markets you want to work in, it's all about starting your marketing process
to find highly motivated sellers. People who own vacant land properties that they do not want and they're willing to sell
at a crazy low price. And pretty much the universally agreed upon method
for doing this is through direct mail. It's definitely not the only way to do it. But in terms of scalability and efficiency
of your time for what we're trying to do, direct mail just works undeniably well. But even within the realm of direct mail,
there's still a lot of different directions you can go in terms of how you pull your list,
where you pull it from, how you filter the recipients on that list, what kind of mail piece you send out, what service you use to send out that mail piece. There's a lot of different variables to this. It's not just about direct mail,
it's about how you do direct mail. So one of the most common and
least time consuming ways to do this is with something called the "Blind Offers". And this is kind of a jargon term in
the land investing business, but at a high level, "Blind Offers"
are exactly what they sound like. You send out a bonafide purchase agreement as your first piece of mail that you send out
to your recipients. And obviously you can't research every single
property in meticulous detail before you send out thousands
of these blind offers to people. So you need to learn some best practices in terms of how to make sense
of the data that's out there and how to come up with an offer price that makes sense based on the market in which you're working. And there's a lot that goes into this strategy
in order to make it work. A lot more than I can cover in this video alone. So below this video I'm going to link to
a few of the resources that can help you along the way if you're interested in pursuing this
particular approach. If you really want to evaluate each deal
one by one and send out an offer that makes a lot more sense on a case by case basis there are definitely better ways to accomplish this, but the drawback is it's going to require
a lot more of your time. So if you're somebody who doesn't have a whole lot of time, but you do have the budget to send a lot more mail, then blind offers probably are your best bet
simply because it's a lot more scalable and you don't have to play games
with the seller leading them on or making them think you're going to pay
a much higher price than you actually are. So pretty much I get three types of responses
when I send out a blind offer to people. I get acceptances, I get people who reject or just
don't respond to the blind offer, or I get people who will respond and try to
renegotiate for a higher offer price. Obviously, many, many people are not going
to accept your offer. That's just something you should expect. But the nice thing about blind offers is that
you don't have to have a lot of this back and forth where they think you're going to
make an offer that you're not actually going to make. All right, so after you've sent out
your direct mail campaign, whether that's in the form of blind offers or some kind of neutral message on a postcard
or something like that, the next step is lead processing. You have to pay attention to
and respond to the people who are doing what you told them
to do in your mail piece. Follow-up is key to every type of real estate investing
and land is no exception. Be prepared to respond to emails, letters,
and voicemails from people who basically just want to confirm
that your offer is legitimate and how they can move forward
with closing and get paid. If people want to negotiate with you for a
better price than what you offered them, it's totally up to you as to whether or not you want to pursue those conversations. You can if you really hungry for deals and
you want to get things closed or you can just say no. If people do accept your offers, it's up to
you to keep the ball rolling and move forward to your due diligence process to make sure
you actually understand what you're about to buy. All right, so when you've got a lead
who has said a yes and they're willing to move forward with selling
their property to you at the crazy low-ball price you offered them. The next stage is to do your homework and
make sure you totally understand the full scope of what you're about to purchase. And the reason this is important is
because vacant land, well, for the most part it's pretty simple. There can be some squirly things with these types of properties that don't come up with houses and improved properties with buildings on them. And the whole idea here is to make sure that
the offer price you sent them still make sense with any inherent risks that come to light. And if it doesn't, you might have to go back
to them and say, “Hey seller, we found this issue with your property
that we just learned about. We need to adjust our offer price”. And at that point you can either go your separate ways and not do the deal or if the seller is still motivated,
they can agree to that lower offer price and buy it even cheaper than your original offer was. So what exactly are you looking for in this process? Well, I've got a really detailed blog post
that goes over 15 of the most common things
that are known to derail land deals. These are things that a lot of times they're
a hiding beneath the surface and are not easy to see, but they're still really important
to know about them before you move forward with buying a property. I'm going to link to that blog post beneath
this video if you want to check it out. And I will say that in some parts of the country, some of these issues are not a very common thing. So it's not like you need to have an anxiety
attack every time you're doing due diligence, but just be aware that in
certain geographic locations, certain issues are going to be much more important
to look for it than others. Due diligence is really one of the most important
parts of the acquisition process and it's also one of the easiest things to overlook
and get lazy about. I know firsthand that can be kind of tedious
to go through each one of these steps and make sure you understand what you're buying. But believe me, if there's going to be an
issue with a property you're going to buy, you definitely want to know about that
before you take title to the property and you send your money to that seller. The last thing you want to do is wake up tomorrow
and realize you own a property that you just paid way more for it than you should have because there's a giant glaring issue that's going to make it a lot harder for you to sell. It's not a fun place to be. So do yourself a huge favor on every deal you do. Make sure you're doing your homework
before you take title to that property. So after your due diligence checks out and you have a full understanding of what kind of property you're actually purchasing, the next step is to move forward with closing the deal. The easiest way by far to handle this process is
to simply take your signed purchase agreement between yourself and the seller and give it
to a local title company or closing attorney depending on what state you're in. And title companies and closing attorneys are definitely not the fastest or cheapest way to get this job done, but they bring a huge value to the table, especially when they do their job well
and do it reasonably quickly. They handle all the title work,
which is a really big part of your due diligence. They facilitate the signing of documents, they make sure everybody's schedules
are coordinated and lineup and they also disperse the funds, which is another huge part of the value
that they bring to the table because if you don't have a title company
or a closing agent in place to do this, it creates kind of an understandable
trust issue between yourself and the other party. And you can certainly get over that, but it's a lot harder to do when you don't have this
third party closing agent involved in the process. So a good closing agent adds a ton of value. However, under certain circumstances, like
for example, if you're buying a property that only costs a few hundred dollars, the idea of paying a closing agent
more than the cost of the property itself, just to close the deal kind of starts to throw
the economics of the deal out of whack. It doesn't mean you can't or shouldn't do it, but I mean understandably you might start
to question - Is that really makes sense? Is there a cheaper, faster way for me to do
this on my own? And the answer is yes, there is. It is going to require a bit of learning
for you to understand how title work works, how to understand these documents,
how to put them together. And also there are some states where
you legally cannot do this on your own. You have to hire an attorney to do that. And I've actually got a separate blog post
that discusses how all that works. So be sure to check out that
beneath this video as well. But assuming you are working in a state
where you are legally allowed to complete these documents on your own, it is possible to conduct a self-closing
and do all this stuff in house And I think the big obstacles you'll have to work, they were first of all just understanding
and completing the documentation correctly, which is kind of a big deal. Aside from that, you also have to figure out
how to exchange funds with the other party in a way that they're going to trust you and
you're going to trust them to perform. And even with that, there are some third party services you can get involved to kind of be a mediator in this process that's slightly
less expensive than a title company, but still it's one of those obstacles
you'll have to work through if you don't work with a professional closing agent. But just keep in mind you can go either way. It's just a matter of how much profit is on
the bone with the deal you're working on. If there's a huge profit margin,
then it's kind of a no brainer. A title company or closing attorney is going
to take a ton of work off your hands. They're probably going to do a better job
than you can anyway and they'll solve a lot of problems and make things a lot easier as you go through the process. So once all the closing documentation has
been signed, notarized and recorded, you are the new official owner of the property. And now it's time to turn around and resell this thing at a significant markup and make your
money and you want to do it as quickly as possible. So when it comes to selling land, there's
really three major things to think about. Possibly four depending on your situation. And we'll get into that in just a minute. So the first thing to think about
in the selling process is marketing to find buyers for your property. As soon as you take title to that property, your number one goal is to let the world know that you have an amazing property
for sale at a great price and the opportunity is not going to last long. This is the message you want to get out as
many places as you can. And personally, I like free things,
so I like to list my properties on websites like Facebook Marketplace
and Craigslist and Zillow for sale by owner. Now these websites certainly have their quirks, but still there are a lot of people
on these websites every single day. It's a great way to get a lot of exposure. Another option is to try to find a good real
estate agent who specializes in selling vacant land. And in my experience, these aren't actually
that easy to find in some markets. They are kind of few and far between. And of course, any agent you talk to is
probably going to say that they're amazing at their job
regardless of whether they actually are. So this can be kind of tricky to find one, but if you can find one, it can be very effective at almost totally outsourcing the selling process and just putting the job on somebody else's plate so that they can spend their time dealing with this instead of you. If you can find a great agent
who knows how to sell land quickly and they have a big buyers list it can be an awesome way to really kick
your selling process in the high gear. We've actually got a blog post about how to
find these types of land specialized agents. I'm going to go ahead and link to
that beneath this video as well. Now the next important component of the selling process is lead processing. Just like when you're doing your marketing
to find motivated sellers, when you're listing your property for sale, people are going to be responding to your listing
and sending you emails and phone calls and other messages
from other mediums and it's up to you or some kind of
a hired assistant to stay in touch with these people and respond to them,
answer their questions, and don't just stop answering their questions,
but asking them "If this isn't the right property for you,
what kind of property are you looking for?" And then adding them to your buyers list
because who knows, they may be the perfect buyer to snatch up your next property in a matter of days if not hours. And remember the more of a connection
you're able to build with somebody, the higher likelihood they may actually end up doing a transaction with you at some future date. So there's always potential value in every
conversation you have. And then the final step in the selling process is just like in the acquisition process - Closing. Depending on how big the deal is and how complicated you want to make it, you can either close the thing yourself or you can find a good local closing agent
to handle all this for you. And like we talked about earlier, there are
definitely benefits and drawbacks to both approaches. So it's up to you to decide what makes the
most sense for the deal that you're working on. And then once the paperwork is signed,
notarized and recorded, you can take your money and move on to the next deal and keep going through
the land flipping life cycle all over again. So another really important thing that
can have a huge positive impact on your land investing business is seller financing. You remember that possible fourth thing
I mentioned earlier? That's what we're going to talk about here. So seller financing is an incredible tool, especially when you use it in
the land investing business. It can help you make a lot more money. It can help you sell your properties faster
and create a lot of streams of income that just bring a lot more financial predictability
to your business. And even though seller financing is pretty
cool for a lot of reasons, it's not without its headaches. So the idea with seller financing is essentially
you're going to become the bank and the transaction. And the reason this is important is because,
especially with vacant land, a lot of land buyers are
going to have a really hard time finding a bank to finance
their purchase of vacant land unless they have an immediate
plan to improve that property. If they just want to buy the land and own
it and not do anything with it. A lot of banks want nothing to do with that because vacant land is
kind of a difficult asset to value and it just throws a huge wrench
into their underwriting process. So if you're willing to step in and actually
be the lender in the form of seller financing, it provides a huge solution to your buyers. It allows a lot more potential buyers to purchase
the property from you because if they don't have all the cash in their bank account, they can't buy the thing. But if you're willing to finance it for them,
that just allows a deal to be done when it otherwise wouldn't be able to happen. And when you set up a seller finance deal like this, it's up to you to dictate whatever
terms you're willing to accept so you can determine what kind of
interest you're going to charge. If any, you can determine how much of a down payment
you want to collect upfront. If any, you can collect payments over 12 months,
36 months, 60 months. It's kind of up to you and there's a lot of
things you can do to play with it and make the deal viable for both
you and your end buyer. And of course, the beautiful thing is,
remember you bought this thing free and clear so you don't have any loans on it. And yet all the money you're making from this
buyer who you're extending seller financing to is making payments for months and months
and months and you don't have any other loans that you have to pay off in the process. So a lot of this is pure profit. And you can even set this up so that the initial down payment you get from this buyer completely pays off all the money
you have invested into the deal. So right out of the gate you're already made
whole and a lot of these payments are just funneling profit into your bank account on autopilot. Now I'll be the first to tell you, you absolutely
do not need to offer seller financing in order to make it in the land business. But for those land investors who are willing
to jump into this realm with both feet, it can be pretty instrumental at adding a lot
of stability and just predictable cash flow to their ongoing business operation. And it can also play a big role in helping
them sell their properties faster and for more money. But keep in mind when you create these streams
of income from seller finance land deals, it is sort of like passive income but it is
going to pay off at some point, usually within one year to three years to five years, however long you set the term of your loan. So if you want this income to keep coming in
indefinitely you'll have to keep buying more properties and selling them
with seller financing. This is not like permanent sources of cash flow. So that's a really important thing to distinguish and just keep in mind if you want to do this seller financing thing in the land business. And for those out there who do want to work a land flipping business full time, this kind of seller financing thing
can be a pretty big deal because when you need to live on
the income from your land business, it's a little bit harder to do that when you're just relying on these big spikes of income
when you have a cash sale. But when you have a whole lot of buyers who are making consistent monthly payments to you in the form of seller financing, you could easily build up a base of these types of deals
to cover a lot of your overhead. Just to know that no matter what, you're most likely going to have
this source of income for this month. Now that doesn't mean this income is guarantee. You will definitely come across
some borrowers who will pay late. Some people will stop paying,
so it's not a totally trouble-free ride. But still, if you can get like dozens of these
kinds of deals paying you on a monthly basis, even when you do have people who drop off,
you can always repossess those properties, keep all the money that you made from the
first defaulting borrower, resell them and start the cash flowing process all over again. And they can even be more profitable
when people do default because it allows you to do that. And there you have it guys. Those are all the steps included in
the land flipping life cycle. Of course, there's a lot of nuances and details buried within each one of these steps I just mentioned. There's a ton of other stuff I can talk about
and I actually do talk about it in the Land Investing Master class that we
offer inside the REtipster Club. This is a full blown 12 module course
with a lot of bonuses, a lot of free coaching calls we do every month and a members only forum where you can get
a lot of your questions answered and I've laid up pretty much everything I know and have ever learned about the land business. It's seriously a treasure trove of information. So if you've ever wanted that kind of A to Z course,
that just lays it all out there, that's where you can go to check it out. But even if you're not interested in that, I really hope you were able to learn a lot
of the high-level concepts about how this land flipping life cycle works
when we're following this kind of business model. As you can see, it's pretty simple, but that doesn't mean there's not wrinkles
tied into each step along the way. So it's just about understanding
how to overcome some of those obstacles. If you want to take a deep dive and learn
everything there is to know about this business model, head over to retipster.club
and check out the land investing masterclass. Thanks again for watching. I hope this was helpful. I'll talk to you next time.
