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  • RE: How Wholesaling Vacant Land Works

    Jason Dykstra, sure. I'm currently working on doing my third property as a double-closing -- purchasing and then reselling to an already-identified buyer either on the same day or within a week or so from the date that I closed on my purchase. I had a fourth one under contract previously, intending to do the same, but didn't find a buyer so I canceled my purchase agreement with the seller.

    So far, I did all of those on the purchase side with a pretty straight forward, one-page purchase and sale agreement that identifies my LLC "and/or Assignee" as the Buyer; generally has a latest closing date that's a few months out into the future (to account for any unknowns with clearing title on the property, finding a buyer, etc.); and includes standard language that Buyer retains the right to cancel the sale agreement any time for any reason.

    I have not, so far, done a separate Option Agreement with the Seller; although, I have thought about doing so. It's been my general impression that a purchase and sale agreement structured with the elements referenced above essentially serves the same purpose for me, in that it allows me ample time to find a buyer; it should allow me to assign the contract if I wanted to (although, I haven't actually done an assignment yet, having double-closed each of them); and it allows me to cancel the contract if I choose to (which I did one time, so far).

    On the resale side, I've used a very similarly structured PSA, but with a $500 earnest money deposit added; the Buyer's right to cancel any time for any reason removed; and perhaps most importantly, a Contingency clause added, stating that, "This contract is contingent upon Seller successfully purchasing the property, which Buyer and Seller agree may not have occurred by the time this contract has been entered into." In other words, I can't sell the property to my end buyer if I ultimately am not able to acquire the property from my original seller; and my end buyer can't hold me accountable for anything other than returning their earnest money deposit if it comes to that.

    Other discussion on this topic which may be helpful were in this thread and another previous thread which was linked to from that one.

    posted in Real Estate Wholesaling
  • RE: Handling an Area with a TON of Land on Market

    Joshua Thompson, yeah I probably made it sound more complicated than it is, in terms of the quality of the county's online records. Really, a lot of counties have very good online records at this point, so those that don't almost seem to be the exception and not the rule, but I'm talking about fundamental things like, do they have an online GIS system that allows you to look up properties by parcel ID, owner's name, etc., and see the location and basic attributes of the subject property, such as size, shape, zoning, etc.

    Many people are very successful in states that don't publicize previous sales data for properties, but personally, up to this point, I prefer to work in states/counties where I can also see what at least the current owner of the property paid for it and when they bought it. Some counties' systems will show you the last several transactions' dates and prices.

    Other than that, I'd like to be able to look up on a county website: what the property taxes are, and whether the current owner is current on their property taxes, or how much they owe currently if they're not current.

    And yes, Seth's course has good content on all things related to selecting a market and doing research on properties (where some of the county tools come in).

    posted in Land Investing
  • RE: Handling an Area with a TON of Land on Market

    Joshua Thompson, I honestly haven't performed that level of analysis prior to sending my first mailing to any particular area. Not saying it's a bad idea or anything; just not something I've done personally. Instead of that kind of analysis, I've just started with markets where I've had some level of familiarity with the area, either because I've lived there at some point, know people who live there, or I've visited and thought it seemed like a place that some people would likely want to buy property.

    That's not to say that I've tried pursuing land in every area that checks the above (admittedly pretty loose) criteria. The key additional items that I've then filtered by were availability of good online property records, and some viable source of leads. The area where I lived the longest (so far) in my life actually has horrible online property records (GIS, etc.), as near as I can tell, so while I know it has a very active real estate market, I've skipped it so far.

    Not sure it answers your question, but that's essentially how I've (unscientifically) approached screening markets, pre-mailing.

    After I've sent mail (neutral letters, with no blind offer), and hopefully get some calls or emails, then I do try to assess the prospects of selling that particular owner's parcel, before I make them an offer. That's the point where I can spend more time researching pricing and days on market (when available) for the sold comps specific to that property.

    posted in Land Investing
  • RE: Anyone have experience with land that is zoned for Solar?

    Sempervirens Land, there are companies that specialize in sourcing and developing properties for utility-grade solar and wind generation projects. I actually know someone (not super well) that works for such a company, and travels around the country securing the local approvals for their development projects. Was just talking with their spouse about this last week, and while I might have misunderstood, it sounded like their company's approach on the land acquisition side was to secure a multi-year lease, with option to buy, that would get them through the period necessary to fully vet the property for the project and secure approvals. One would hope that the county's zoning change might be an indication, both, that the local govt supports such a use for the property, and that such use might actually be technically feasible (e.g. proximity and access to adequate, existing substation to tie into the grid), but who knows.

    To me, I think it'd be worth exploring. If you'd like to share any details that I could pass along to the person I know, feel free to message me.

    posted in Land Investing
  • RE: Handling an Area with a TON of Land on Market

    Joshua Thompson, it's an interesting question. Probably depends on a number of other factors, and one in particular that comes to mind is the data (prices, days on market, etc.) of the sold properties in the area.

    In other words, if you came across a market that was just very active, with a lot of properties for sale at any one time, with many of them being sold fairly quickly, that's not a bad thing at all. On the other hand, if no one seems to be finding buyers for their properties in a given market, that's obviously not good, unless you can find properties that are more desirable and/or priced lower than everyone else.

    posted in Land Investing
  • RE: Have You Ever Encountered a Seller Having a "Right of First Refusal" Restriction on their Property?

    Joe, wow, that would definitely be a worse situation, to only find out about the restriction after you've already bought the property. Glad it worked out okay for you because that certainly sounds like it could have turned into a very complicated, drawn out mess.

    Out of curiosity, did you have any conversations with the person that sold you the property, after you found this out, and if so, how did they explain not disclosing this to you?

    posted in Tax and Legal
  • RE: The Pros (and Cons) of Investing in Land

    Linda Hastings, I think that's a great summary, and regarding this item:

    • Buying process is generally simpler than houses - no home inspections, fewer docs to sign, usually buying with cash so no mortgage to deal with

    I agree and was just discussing with others a few days ago how every time I start to get a bug to maybe try my hand at fix-and-flip or wholesaling houses, I think about how I (or someone very reliable who represents my interests) would have to lay eyes on every house I put an offer on -- something you certainly don't have to do with land -- and I just come back to the conclusion that the land niche is a good fit for what I'm trying to do right now.

    posted in Land Investing
  • RE: Is real estate really the best way to finance your retirement?

    Matt Payne, I have one rental property, only because the idea of more landlording doesn't appeal to me personally at the moment, and have some money in notes / note fund, but obviously the value of those is correlated to real estate, too. Other than that (and my Beanie Babies collection, of course) most funds that I'm not using for land investing are in broad indexes in retirement accounts.

    To the question you asked about whether it's stupid to go all-in on real estate -- you mention that you've focused on cash flowing rentals, so without having to count on appreciation or flipping properties to another buyer before the music stops, it seems like there are only so many things that could go wrong. I suppose if all your properties were in a single market, and the economy there took a significant hit, you could possibly face falling rents and/or higher vacancies, but if you have some cushion on the cash flow numbers, and/or are maybe diversified on the locations, it's hard for me to see where your major risk exposure would be, so if the returns work for your needs, I'd probably resist any temptation to go chase the next Tesla stock or Dogecoin, etc., as those things will be far more volatile.

    You mention potentially funding an IRA. I wonder what your thoughts are on potentially investing in real estate through a self-directed retirement account? I suppose you effectively lose some tax advantage by holding real estate long-term in a retirement account (since there's no benefit from depreciation), but if the property does appreciate over time, it seems like holding it in a Roth account could be good -- i.e. no need to 1031 it when you sell, in order to avoid the tax hit, so the proceeds can be yours to do with as you like (in retirement, or up to the amount of your initial contributions to the Roth). Still trying to get a self-directed Roth 401k set up so I don't have direct personal experience here, but it seems appealing.

    posted in Residential Buy and Hold
  • RE: Have You Ever Encountered a Seller Having a "Right of First Refusal" Restriction on their Property?

    Thanks Matt Payne. Unfortunately, you pretty much nailed it, and I agree that it seems pretty unusual, but I haven't been at this long enough to know whether it's completely unheard of within the vacant land space or not. From what I've read in googling this topic, it sounds like this is not entirely uncommon in some city condo situations, like co-ops I guess, because it gives the condo/co-op board the ability to screen prospective buyers, and invoke the board's right to buy a seller's unit rather than letting them sell it to a buyer that the board finds undesirable in some way, I guess. Sounds pretty gross and another reason not to live in a big-city co-op, to me.

    Essentially, the original owner of the property in this scenario had subdivided the land that they live on, and sold a sizable vacant parcel from that property to the current owner. This was around 15 years ago, at the height of the bubble in the local area, so the current owner paid absolutely top dollar for this land.

    But still living next door to the land, the original owner convinced the buyer/current owner to agree to this right of first refusal, so that they (original owner) would always have first option (in perpetuity, according to what the current owner tells me) to buy the land back, should the current owner ever decide to sell it.

    I've offered to review the clause and/or help find a RE attorney to do so, on behalf of the current owner, but so far she hasn't taken me up on that.

    Edited to add: Original owner still lives next door to the property, or at least owns the house anyway, confirmed on county GIS records.

    posted in Tax and Legal