Due Diligence Checklist - Is there one?
Due Diligence checklist? I'm new to investing in land. Sorry if this is a silly question but I have this land parcel below I'm evaluating. What type of due diligence would you do on something like this? Per the picture it obviously looks land locked? Do people have a due diligence checklist they use on every deal? The best logical buyer is the neighbor who owns the surrounding parcels. If he isn't interested... then what?
Hi Mikk Sachar - the question of due diligence is a good one, especially with land. This is usually where people get into trouble because there can be a lot of things hiding beneath the surface and it's very easy to get lazy and not look into the issues until it's too late (after you've already bought the thing).
It's also possible to spend a small fortune investigating every possible issue under the sun, and sometimes that's useful if the property is huge, expensive and you're planning to develop it, but when you're flipping small lots like this, that usually isn't necessary.
You can find a pretty general list of issues to look for in this blog post. Keep in mind though, depending on what part of the world your property is in, some of these things can be ignored completely (for example, you aren't going to find wetland issues if you're buying land in New Mexico)
To your point about the neighbors, I would absolutely start by sending out some neighbor letters and if that doesn't work, I would start listing it for sale the same way you would for any other property. Get some good 3D parcel maps from different angles, like this:
The key with landlocked properties is to know they're landlocked before you buy it AND to pay a very, very, very low price for it. When you list it for sale, your asking price will have to be even lower than usual because it's landlocked, and if you don't have an extra amount of margin built it, you'll have less wiggle room to make your profit.
Seth Williams thank you so much for your thoughtful response and further information to investigate. thank you.
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