• Hey, I've been following RETipster via the blog and podcast after finding Seth's interview on BiggerPockets a couple months ago. This is my first post here, so hello everyone!

    I launched my first direct mail campaign a couple weeks ago and am starting to get leads and (much to my surprise) a couple acceptances to my automated email offers. I have only really studied up to the offer stage, and now I am starting to tell myself that I don't have enough information to say 100%
    that I will be able to sell these properties after buying them...

    I have a general understanding of how to go about marketing my properties for sale and potential selling strategies like offering to neighbors, but I don't really know how to tell for sure if something is sellable.

    So I thought that I would see what the forum thought about being able to sell this one property that I am thinking about buying. 

    The property is in an empty subdivision created 15 years ago in a mountainous county. Looking at the declaration of covenants and restrictions, there were plans for a bunch of common areas and things, but nothing was ever built, and the subdivision was sold to another company a few years ago.
    It is restricted to standard residential uses, and I am concerned that no one will want to live in a deserted subdivision. It is a huge subdivision with very few homes built on the parcels, while homes are built around it as you can see in the picture. It has road access via easement on the shared access road though (I confirmed with county).

    I have a verbally accepted offer of $1564, no taxes or anything owed, and would likely close with an attorney for (what looks like - still calling around for estimates) $1000 - $1300. Three comps sold within the year in a 1-mile radius from AgentPro247 report average at $17,000; however, two are in decently populated areas with paved road access. One was a large land owner buying out his neighbor's parcel. There are a number of comparable parcels sold within the last two years within the same subdivision by the new subdivision owner at around $10 - 12,000.

    My primary plan would be to market it for sale at $10,000. Secondary exit plan would be to offer to the family that owns a contiguous stretch of parcels touching the property in question. Final exit strategy would be to try and sell back to the new subdivision owner at around $5000 and
    convince them that they can resell at assessed land value of $12,000.

    This being my first deal though, I really don't know how to tell what should sell. I would love to hear from someone with some experience on whether or not my thinking and pricing makes sense. Has anyone had any success with these types of seemingly deserted, residential use only properties?

    https://imgur.com/a/OkuXP1D
  • LIM

    Hey Tyrone - welcome to the forum!

    It's smart of you to scrutinize how sellable the property is. This usually ends up being the bottleneck in most land flipping businesses, and oftentimes, it happens because of due diligence issues that were tricky to spot in the first place.

    Judging by the picture, the first thing I'm wondering about is - have you taken a look at the topography of this property? Is it on a steep slope, and if so, is it actually buildable? I can see it has road access, which is great... but in this part of the country, there can be a lot of hills and valleys that can hinder the usability of properties like this. If you're not sure how to investigate this, check out this video:

  • LIM

    Tyrone  In addition to Seth's response and the other due diligence items mentioned in the land investing masterclass, I ran into an issue recently that may be worth investigating on your end. I had an opportunity for a similar lot where some older homes were built on scattered lots in the area. During my due diligence, I discovered that the county created a requirement in more recent years to restrict septic systems on properties of less than 2 acres. They have some loop holes, but it would be extremely costly to design, permit and build a code compliant septic system. Basically any lot in that county less than 1 acre is not buildable, and any lot between 1 and 2 acres requires costly/unique septic systems. The older homes were grandfathered in, but this is why no new home was built in that area for the last 20 years or so. I cancelled closing on this lot for this reason. Not sure how big your lot is, but may be worth adding to your due diligence checklist. 


  • Seth Williams the property is pretty flat and shouldn't be a problem for building. It is under an HOA, but the HOA is currently inactive and not collecting fees at this time.

    Tyler Doughty the lot is just under an acre...hopefully that isn't the case here, but that is something I will check with the county to make sure that there aren't any special restrictions to building on a lot like this.

    Thank you both for the input! I will continue to do my due diligence on this one to make sure that the lot is usable and desirable.

  • LIM

    Tyrone - one note on that HOA situation, if this property is effectively under an HOA, but the HOA is defunct and not collecting any HOA fees, that could have some implications for the roads or other improvements that are supposed to be maintained by the HOA, but aren't anymore.

    This wouldn't necessarily make it a bad deal, but if there is severe damage to the road (like, if the entire road is washed out, for example) and if nobody is planning to fix it anytime soon, that could impact the value of the properties within the subdivision.


  • SO, a couple thoughts;

    First, unless this is an attorny close state, this would be a good candidate to do a self close on.  I do these all the time on properties under 4k.  I send the seller the deed to sign and notarize and send to me, then I send them payment through checkbook.io

    Second, you might need to sell it for less than 10k.  Maybe a 5499 cash price or sell on terms for 499 down ans 199 month for 48 months.  People love owner financing.

    If you really don't have confidence in the market, make a mock up post on marketplace and see how many people respond in a couple days.


  • I ultimately chose to pass on this one. In hindsight, my offer was too high and my expected ROI was not thoroughly calculated. It was also in an attorney close state, so I couldn't self-close.

    Jason Wollbrink - to your point about posting the property online to see if there was interest, I had thought about doing that, but I didn't know if that was a viable (legal) strategy. After hearing the double closing podcast with Luis and looking into it further, I will try this next time I am weary of overall market interest.

    Seth Williams - thank you for the heads up on the dirt road and HOA situation. That was another thing to consider and will in the future, but I never got to the point of sending someone to take photos.

    I am currently looking at a couple properties on a dirt road. It appears flat, pretty wide, but has some low grass growth over it. The road is also a short distance off of the main gravel road, and due to the power lines being ran to an adjacent property, it appears to be somewhat maintained.

    It seems pretty accessible to me, but would you consider this good condition?

    LL-33-50.jpg

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