Karl James Thanks, appreciate the advice.
Forming an LLC and other unexpected expenses in the land business
1. Do you need an LLC or any type of corporation just to buy and sell raw land or is it even recommended?
By the way, this is not legal or tax advice. You should consult with the proper authorities on this - essentially I'm saying don't listen to me. I don't know what I'm talking about !
It really depends on your personal circumstances.
Are you wealthy with a lot of assets you need to protect?
Then you should probably get an LLC right out of the gate.
If not, I wouldn't necessarily worry about an LLC until you've done a few deals and attained "proof of concept" - meaning you've successfully proven to yourself that this land thing is legit with profit in the bank to show forth!
Once you have "proof of concept" then you can invest in setting up a business entity and taking things to the next level.
2. Is anyone able to break down the expenses I should be aware of when campaigning, buying, and selling the property and what ROI you try to aim for?
There are a lot of variables that go into this.
For example, you may have a different response rate on your direct mail efforts than I do because you use more effective coloring, messaging, packaging, list, and so on.
Due to how varied they are, it's hard to provide an accurate rule of thumb for marketing expenses.
It's probably best to track your own metrics over time and then use that to gauge future marketing costs.
For me, I'm seeing about 1 deal per every 1,000 - 2,000 units of mail and right now I'm paying about $0.505 per unit through https://www.rocketprintandmail.com/.
You can't really base your business on this though - there is so much that can affect your results, even down to the acreage size and price range you're targeting!
Outside of direct mail, here is a list of common software and tools land investors use:
Total: $509.99 per month.
These can be cheaper if paid annually or on different tiers but I think roughly $500 is a good ballpark.
You may also consider hiring VAs which cost around $250 - $500 per month.
In terms of ROI, it depends on what kind of property you're targeting and what price range but I think generally land investors don't consider doing a deal unless they make at least 100% ROI or greater... unless they're doing a more expensive property that has profit margin with a high dollar amount.
(For example, 100% ROI on $1,000 is $2,000 whereas buying a property at $50,000 and selling it for $80,000 is only 60% ROI but $30,000 in dollar amount.)
I'd be interested in hearing from others in the community on what they target in terms of ROI - do you agree with me on the 100% ROI or higher?
Jaren Barnes Great info thank you for the advice!!
Seth Williams thanks for the help! Looking forward to getting this thing started
I've spent about $3k / month on average for Operating Expenses. Here's the detail. The ones I think are necessary for a start-up business are highlighted in green (note, you can decide how much data / mail you do so your #'s will vary immensely). These #'s / types of cost reflect my business that has generated between $15 and $20k / month profit as a side hustle for me and my son this year. Some of the items shown I've dropped.
Arturo Arturo last edited by Arturo
Karl James hi! I plan to have my 2 websites as soon as I will have a decent "moving" inventory.
I see you have 250$/year...are you with reiconversion? And is it that the price for both buying and selling websites?
Arturo I am with REI Conversions but I signed up quite a while ago and bought a lifetime license for those themes. Those cots are for other hosting services and domains registrations.
Great detail Karl James - thanks for sharing your numbers!
I see you said you make on average 15-20k profit per month. What quantity of direct mail are you sending out to reach these numbers?
Tyler Harris 4 to 5,000 per month.