Land investing is like any business. You'll need to cover some basic costs to start and continue making money.

The importance of understanding startup costs is common sense, but if you've never actually run this kind of business before, it can be difficult to grasp what it takes to start finding deals and making money.

Here's the good news.

Comparatively speaking, the cost of starting a land flipping business is MUCH less than most other real estate investing models, but the costs need to be dealt with.

It would be shortsighted to put one penny into this venture without clearly understanding what it takes to start the engine and keep it running. In this blog post, I'll give you a rundown of what you'll need to pay for as you start.

It's also important to note that many are helpful but not essential. With this in mind, I've broken these costs into a few categories.

• Basics: These are the costs you simply cannot escape. It's like food, water, and shelter. If you can't pay for these things, you don't have a business.

• Enrichments: These are the software, products, and services that are almost basic needs, but it's technically possible to operate without them. I wouldn't want to work without them, but exceptions can be made if you're willing to do much more heavy lifting to make it work.

• Luxuries: These things are a great idea to invest in at some point, but you don't need them immediately. These are great tools and resources for the long-term health of your business, but they aren't a prerequisite to making money, and some people never pay for them, and it doesn't have a noticeable negative impact on their business.

Basics

Just as humans need air, water, food, and shelter to live, land investors will need these things to start and continue operating their businesses.

As we go through this list, I'll include some of the corresponding costs I pay for these things (this doesn't mean you can't find better deals out there, but these numbers are the costs I pay for mine).

Education

Without getting educated, there is simply no knowledge of what to do or how to do it.

If you have no idea where to start, some resources on the internet can help you figure out the basics without a big financial investment.

I may be biased, but I'd like to think the single biggest free source of education is on REtipster, specifically in the land investing section of the blog. You can also see a very detailed video and blog post that summarizes all the steps of the land-flipping lifecycle.

It is enough to get started if you're determined to scour this website and digest everything. Several people have done 5-figure and 6-figure deals simply by learning from the free content on this blog.

With that said, if you're looking for a tailored, step-by-step guide that cuts to the chase and gets to the heart of how to run a land investing business (so you don't have to search high and low or re-create the wheel), you can simply pay for a course like the Land Investing Masterclass, which will significantly shorten the learning curve and put you on the right path immediately.

I've been through several of the courses on the market today, and I can verify that they all bring some value to the table, and each one has its strengths and weaknesses.

Regardless of which way you learn the basics, one thing is certain; some education is better than no education. I've seen people charge into this business (usually after hearing one podcast episode or reading one blog post), without a clear vision of what they're doing, and it usually doesn't end well for them.

Don't underestimate the power of knowledge. It pays to get educated, and the information you put in your head can be the most valuable asset you'll ever own because it has the potential to help you create limitless wealth.

There are different pricing models for education right now, just like variations in the quality and depth of the information.

Cost of a Course: If you want to make a one-time payment for a course, the price range for most courses is $1,500 to $2,500. Some courses will occasionally be priced lower, but that's usually because there's a “gotcha” after you buy the course. They'll give you some of the information and then make you pay even more for the REAL information after you're in the course Be aware of this ploy when you see a course at a ‘huge discount.'

Cost of Coaching: If you want group or one-on-one coaching (the most expensive option) in addition to a course, I've seen prices that range from $8,500 to $50,000. Unfortunately, the price is not always indicative of value. I've learned this first-hand after paying for various coaches in my career. Pick a coach based on who you trust. If you're looking for a few coaches I trust, you can find a short list of them here.

Keep in mind… all of these options are worthless if you don't implement what you learn. Likewise, all these options are worth hundreds of times more than they cost if you put the knowledge into action.

RELATED: Land Investing Masterclass Review

Business Mailbox

Unless you want to display your home address on all the mailers you'll be sending out (I wouldn't recommend it), you'll want to rent yourself a private mailbox from a storefront shipping service like the UPS Store, Pakmail, or a P.O. Box at your local post office or better yet, a digital mailbox service like Traveling Mailbox or Earth Class Mail.

While it's technically possible to get started without this, I still consider it one of those “must” items (and if you ever get an angry seller who shows up at your address with no warning, you'll understand why). This is an important element of your business infrastructure to help maintain your personal privacy, safety, and organization. Trust me, this one is absolutely worth the cost, and it will pay for itself many times over.

Cost: I pay $144 per year to rent a mailbox at a Pakmail location near me, and it works great. I've seen other prices ranging from $100 per year to $300 per year, depending on the area and the mailbox size (among other things). It can get even more expensive, but for what a land flipper does, the more expensive plans usually aren't necessary.

If you use a “virtual mailbox” service like Traveling Mailbox (be sure to check out this review that shows exactly how it works), you can get everything scanned to you electronically without ever leaving your computer. You can set your mailing address to be in practically any state in the country, which is useful if you want to appear like a local buyer in a certain region of the country.

I would certainly use a virtual mailbox if I were starting over today.

Phone System

Something I strongly recommend (preferably before you do your first direct mail campaign) is to get a solid, reliable, cloud-based phone system. This will give you a separate business number (so you don't have to give out your personal phone number to the world), it will allow you to create a customized greeting, set up extensions for the different functions of your business, and the ability to send and receive fax messages when needed.

I currently use OpenPhone because of its lower pricing and easy integration with other software, and I've been happy with their service.

Cost: Most cloud-based phone systems range from $20 to $40 per month, depending on what features you decide to use (e.g., toll-free and/or vanity numbers) and how often you use them.

It is possible to get a FREE phone number through Google Voice. However, this option doesn't allow pre-recorded voicemail greetings longer than 1 minute, it doesn't allow any faxing capabilities, and it doesn't allow any extensions. Nevertheless, if your primary goal is to get a separate phone number without paying a dime, it's probably the best alternative to a paid phone service.

Direct Mail

When starting from scratch, direct mail is a prerequisite to finding motivated sellers.

There are other ways to start looking for motivated sellers (namely, SMS marketing, ringless voicemail, and cold calling, among others). Still, direct mail is probably the easiest concept for a beginner to learn, grasp and manage.

In today's world, when you're starting with no pre-existing pipeline, direct mail is what 98% of land investors start with to get sellers to contact them.

Cost: The cost of direct mail can vary widely, depending on whether you choose to send out postcards or letters, along with the types of materials you use for your mail piece, the postage, which service you work with, and how much volume you send. I've seen prices as low as 0.48 cents per unit, and at the highest end, I've seen prices of over $1.00 per unit… though most letter campaigns I've done have ranged in cost from 0.62 cents per unit to 0.80 cents per unit.

When you run the numbers on a site like Rocket Print or ITI Direct Mail, you can get an idea of what the cost will be with each service based on what type of mailer options you choose and how many units you decide to send out.

When using a delinquent tax list, I usually send out around 1,000 mailers to see real results. When I'm using a more general list of landowners from a service like DataTree or PropStream, I have to send out closer to 2,000 mailers to get a worthwhile close rate, so the type of list you're using can have a big effect on how much mail you'll have to send out. For some quick numbers, 1,000 postcards at 0.48 cents each would cost $480, and 2,000 letters at 0.80 cents each would be $1,600, so the cost can fluctuate a lot based on those variables.

Lists

To start utilizing direct mail, an even more critical part of the equation is to obtain a list of motivated sellers, and there are different ideologies on how to do this.

Method 1: Contact the county treasurer's office and request their delinquent tax list. This was the strategy I started with, and while this approach has its challenges, it was an undeniably effective way to find many sellers with a strong motivation to sell now and sell cheap.

Method 2: With a data service (like DataTree or PropStream), you can generate a list of property owners tailored specifically for the properties you're trying to acquire. These services work in most (but not all) markets around the U.S. In most cases, it's impossible to filter these property owners by their delinquent tax status. However, delinquent taxes are just one way to filter a list. If you don't filter by delinquent taxes, you'll reach a larger number of people who may still be motivated to sell, even though they aren't necessarily “tax delinquent.”

Cost: If you decide to pursue a delinquent tax list from a county, you can find prices all over the board (assuming the county will even comply with your request in the first place). Some counties charge per parcel, and others charge a flat price for their list. I've usually paid between $100 – $300 for a good county list. If you're lucky, you may find some counties that will provide the list for less (or free in some cases), but I wouldn't plan to get lucky.

Alternatively, if you're getting your list from a data service, you can expect to pay a wide range of prices.

• PropStream changes a monthly subscription of $97/mo if you use our discounted affiliate link, with no commitment for 10,000 records per month (which is a very good deal if you use it).
• DataTree charges $47-$147 per month if you use our discounted affiliate link, which requires a 12-month commitment plus additional charges per record.
• The Land Portal charges $30/mo or $254.50/yr and offers some unique filters and mapping features that aren't available from most other data services.

RELATED: Real Estate Data Services Compared: Which One Is the Best?

Property Acquisition

When you've gone through all the motions above, it will eventually be time to buy your first property. Again, the acquisition cost will depend entirely on the property and how much you're willing to invest upfront.

When I first started, my funds were very limited, so I went after as many tiny deals as possible (properties I could buy for less than $1,000 and then resell for 3x—4x that amount).

The first property I bought was $331, and within two weeks, I sold it for $1,900… if that gives you an idea.

If you decide to go after bigger fish, you can pay infinitely more for a property if you have the funds to do so. If your purchase price is around 10%—40 % of the property's true market value, you should be able to justify most deals.

Cost: For the typical, cheap lot (plus all closing costs), I've bought many properties for $500 or less. However, this number can increase a lot if you pursue some of the more valuable properties in your market.

Holding Costs

The cost of holding most vacant lots isn't much, but it can get expensive if the property is situated in an HOA or has an unusually high property tax bill.

Cost: Most of the cheaper properties I've owned have had an annual tax bill of less than $100, but on occasion, the cost has been higher… so it's important to investigate the property tax situation BEFORE you buy a vacant lot.

Also, realize that you'll only have to pay this bill if you hold the property for a longer period (12+ months). If you buy a property and sell it within a few months, it's entirely possible you won't even have to pay the property taxes.

Selling Costs

The cost of selling vacant land is usually nominal, but in some cases, additional costs can come into the picture before you finally get paid.

I've sold many properties through Craigslist, which didn't cost me a dime. Facebook Marketplace and Zillow FSBO are free and effective ways to sell your properties.

If you use a paid selling site like LandWatch or enlist a land agent, you'll have to pay a few more bills before you can pay yourself.

Cost: If you're working with a real estate agent who specializes in land, most of them will charge a flat fee of $1,000 – $2,000, or anywhere from 6% – 10% of the property's sale price, which can take a sizeable bite out of your profit. Most “normal” real estate agents aren't great at selling land, but if you can find one who specializes in vacant land, they can be worth their weight in gold.

RELATED: How Land Investors Can Leverage the Power of Real Estate Agents

Closing Costs

If you use a title company or attorney for the closing, the costs will be higher (usually around $500 – $1,000 and up, depending on the state and the closing agent), but also keep in mind, it is possible to structure your purchase agreement so that the BUYER pays all closing costs… so these costs don't necessarily have to come out of your pocket in every scenario.

If you don't use a realtor AND choose to close the transaction yourself (which I only recommend on ultra-cheap deals), you can save a lot of money this way. However, there will still be some costs to cover in the closing process (like recording the deed at the county and/or paying property transfer taxes, which should be less than $50 for most cheap lots).

Keep in mind, if you do close in-house, you can always charge your buyer a “document preparation fee” to cover your incidental costs in the transaction, so you don't necessarily have to foot the bill.

Enrichments

I recommend several things most new land investors pay for, but I have to acknowledge that it is possible to survive without them (if you have absolutely no extra room in your startup budget). Let's cover those here.

Website

A good website can be an extremely valuable asset for any real estate business.

This powerful online tool can build credibility and help answer questions around-the-clock for people doing their homework to see if you're a legit business. It can also be a marketing tool that finds new motivated sellers on autopilot and gets your properties sold. It's a great way to keep your “virtual business doors” open to the public 24/7.

Given how easy it is to set up a website today with options like Pebble or Carrot, I can't think of many good reasons NOT to get this established as you're getting started.

At the same time, you don't NEED a website like this to buy and sell properties. I know of a few land investors who have run their businesses for several years and still don't have one. They probably work harder than they need to (because a good website can do a lot of heavy lifting behind the scenes), but my point is, you don't need to put your business on hold until your website is up and running.

If you are adamant about not spending money on a website, it is possible to survive without one.

Cost: If you're looking for the cheapest possible website option, you can set up a WordPress website with a high-quality theme like Winning Agent Pro 2 ($79), hosted through Bluehost ($3.95/mo), and it will make your site look very sharp and professional. However, if you have no experience with WordPress, building your website like this isn't the most user-friendly option. You may also need to hire some outside help from a freelance site like Fiverr or Upwork to make your site look just right (which can run you an additional $200 – $300, depending on the help you need).

Alternatively, if you're looking for a much easier (and more expensive), turn-key system designed specifically for real estate professionals, both Pebble and Carrot have some great options to work with, starting at $69/mo for Carrot and $258/mo for Pebble.

Document Templates

When making offers and closing deals on your own, you will need some basic forms and templates to get the job done.

It is possible to find some free (and janky) versions of these forms on the internet, but I wouldn't recommend this. For a small investment, you can get more reliable templates for completing your deeds, notes, land contracts, deeds of trust, and more from websites like US Legal or Rocket Lawyer.

Neither of these websites will provide the same quality as hiring an attorney (which will run you several hundred dollars per hour). Still, they will give you some great options to work with if you want a good ratio of higher quality to lower cost.

Cost: Most document templates can be purchased from US Legal or Rocket Lawyer for a one-time fee of $40 or less.

Accounting Software

Many people forget that when running a business, apart from their personal finances, they'll also have to do basic bookkeeping to ensure they're staying on top of their current financial situation and direction. It will also help you avoid a lot of stress come tax time.

The complexity of this accounting work is relatively simple in the beginning, and there are some free software options out there that can help, but when business picks up. You start doing more deals, you'll want to have a good working system at your disposal.

Cost: I currently use QuickBooks in my business. Some other popular alternatives FreshBooks and Xero. These options are all available on a subscription basis for less than $30/mo.

RELATED: Banking With Mercury: A Hands-On Review for Startups

Luxuries

Some things are great long-term tools to have in place, but it's certainly possible to get by for an extended time without them. Here are a few things I would recommend paying for if and when you have the money… but these are NOT prerequisites to getting started.

Register Your Business Entity

Most legal professionals strongly recommend running your business under a corporation or LLC. However, practically speaking, this isn't something that NEEDS to happen to start doing deals and making money.

The benefit of using a business entity is that it will help shelter you from legal liability. In the unlikely event that someone tries to sue you for something your business did, they wouldn't be able to reach past your business assets and touch your personal holdings (assuming you kept a clear separation between your personal and business finances).

Using a corporate entity requires more sophistication and understanding in handling the accounting, using a separate business bank account, keeping up with annual filing requirements, and the like, so this is another thing to keep in mind.

In addition to registering your business entity, you may also want to consider filing for an assumed name if you're running two or more “arms” of your business (e.g., one name for buying and another for selling). You can use both names under the same entity, but you would need to register that assumed name (aka – trade name, dba, fictitious name) accordingly.

Furthermore, you may also want to register as a foreign business entity if you're doing business in multiple states.

Cost: Registering a new business entity can vary greatly from state to state. Some states cost as little as $50, whereas others cost as much as $800. If you're looking for a third-party service to help make this easier, services like Northwest Registered Agent and Rocket Lawyer are also available. These will typically add another $150 (approximately) to the registration cost.

Logo & Business Identity

This one can be a lot of fun to think and dream about, but when it comes down to the “needs” of a startup real estate business, a fancy logo and business identity (e.g., letterhead, business cards, etc.) is NOT something you need to make lots of money.

When I started, this was one of the first things I spent money on, but it should have been one of the last.

A strong business identity can add value to your operation by building credibility and making your company look legitimate. I wouldn't invest too much time or emotional energy into this until you've made your first buck.

Cost: The cost of a good logo can range anywhere from FREE (if you're creating something more generic from Canva) to a cost of $299 (if you're using a site like 99Designs)… and everywhere in between.

RELATED: 99Designs Review: Is This the Right Place to Get Your Logo?

Total Cost

After outlining all the costs that come into play when getting started, here's the rundown of what you can expect to pay.

If your goal is to cut costs at every turn, AND if the results turn out in your favor, you could feasibly pay for all of your essentials and get your first deal done for as little as $1,680. Here's how I got that number:

Basics (Low End)

• Education: REtipster Blog ($0.00)
• Mailbox: USPS P.O. Box (~$200 per year)
• Phone System: Google Voice (~$0.00)
• Direct Mail: 1,000 Postcards at .56 cents each ($560)
• List: DataTree, PropStream, The Land Portal, or a Delinquent Tax List (~$300)
• Property Acquisition: Cheap lot, plus all closing costs (~$500)
• Holding Costs: Annual Property Taxes (~$100)
• Selling Costs: Recording Fees and Transfer Taxes (~$100)
• TOTAL: ~$1,760

Note: In the scenario above, I assume no errors were made and everything was done perfectly. This is possible but not a reasonable expectation for most people. I would probably add a contingency of $1,000 to give yourself room to make some normal, beginner mistakes.

Enrichments (Low End)

• Website: Basic WordPress Site (~$150 per year)
• Document Templates: Forms from US Legal or Rocket Lawyer (~$150 or less)
• Accounting Software: Free Software ($0.00)
• TOTAL: ~$600

Luxuries (Low End)

• Register a Business Entity: Do-It-Yourself (~$100)
• Logo & Business Identity: Do-It-Yourself ($0.00)
• TOTAL: ~$100

To get started, we're looking at approximately $1,680 to cover the basics (best-case scenario). Furthermore, if we do ALL of the suggested items (and use the cheapest options available), the total cost could easily go up to $2,380.

Remember, this is assuming everything goes according to plan (i.e., you can get a good list, filter it correctly, buy a good property, advertise it effectively, find a buyer, and no other unexpected challenges come up). In the real world, things rarely go perfectly according to plan. I would think it's only prudent to give yourself an extra contingency to cover unexpected hiccups in the process. As a good rule of thumb, I would have at least $5,000 to work with.

Let's look at how much these things could cost if you're willing to pay for some of the available luxuries and conveniences.

Basics (High End)

• Education: Land Investing Masterclass (~$2,000 or less) and/or Coaching (~$8,500 or more)
• Mailbox: Traveling Mailbox (~$300 per year)
• Phone System: OpenPhone (~$240 per year)
• Direct Mail: 5,000 Letters at .80 cents each ($4,000)
• List: DataTree ($1,764 for the most expensive plan + $300 cost of each record exported)
• Property Acquisition: Larger property valued at $20,000+ (~$8,000)
• Holding Costs: Annual Property Taxes (~$500)
• Selling Costs: Title Company or Attorney (~$1,000)
• TOTAL: ~$18,104 (or $26,604 with coaching)

Enrichments (High End)

• Website: Carrot or Pebble ($1,188 – $3,096 per year)
• Document Templates: Basic forms from USLegal or Rocket Lawyer (~$100 or less)
• Accounting Software: Quickbooks, Freshbooks, or Xero (~$252 per year)
• TOTAL: ~$2,020 – $3,928

Luxuries (High End)

• Register a Business Entity: Northwest Registered Agent or Rocket Lawyer (~$1,000 or less)
• Logo & Business Identity: 99Designs ($299)
• TOTAL: ~$1,299

As you can see, there are plenty more options (and expenses) if you're willing/able to spend more money.

Spending more doesn't automatically mean you'll be more successful, but it can help make the path a bit easier in some cases.

If you are flush with cash and you want to pay for some powerful tools and conveniences, you could easily cough up $20K – $30K (and even far beyond this) just to do your first deal… and in many cases, the profits from your first deal may not be enough to cover all your startup costs. This isn't necessarily bad, as long as you plan to continue doing more deals to pay for the initial investment of your business infrastructure.

Startup Working Capital Calculator

Depending on your current financial situation, you may have more than enough cash to get started, or you may have a ways to go.

If you don't already have access to the startup cash you need, this calculator below is a simple tool that can help you visualize what it will take to save up sufficient working capital to get started.

My Experience

When I got started, I had about $3,000 to work with, and I burned through a good chunk of it to find and close my first deal.

It was also a different time. In 2009, direct mail was cheaper, and deals were easier to find.

Even though the purchase price of my first property was $331, I probably spent about $1,800(ish) before I finally got paid. Even though it's possible (on paper) to make it happen with less, it's a good idea to have more money saved up to cover any cost overages. I needed it, and you probably will too.

In the business world, things rarely get to the finish line without some surprises. Sometimes those surprises are small and inconsequential, and sometimes huge and inconvenient, but it's always better to have a cushion to fall back on rather than no cushion.

Lastly, Remember This…

Whether you decide to spend a little or a lot on starting a land investing business, please recognize that these costs pale in comparison to the vast majority of start-up opportunities today.

Case in Point: When I worked in the commercial banking industry, I dealt with countless start-ups needing financing.

The smallest of these new businesses required anywhere from $250,000 – $500,000 just to open their doors. The owner would have to put down at least $50,000 – $100,000 of their cash AND go into $200,000 – $400,000 of debt before making their first dollar of revenue.

Even when these companies (e.g., restaurants, manufacturers, retailers, convenience stores, etc.) were open for business and operating at full capacity, most lenders still considered them “high risk.” Most of them were less profitable than a thriving land business would be.

When you're new to the entrepreneurial world, it's easy to fixate on the WHOPPING few thousand bucks it will take to get started. And to be fair… I understand the thought process. The average person doesn't have thousands lying around for a rainy day.

If you jump into a land-flipping business, you should save for however long it takes to have those cash reserves. If you can't save up at least $5,000, you should wait until you have it.

If this sounds like a lot, just remember, every “conventional” business model out there is FAR more expensive to start than a land investing business.

I was a lot more comfortable pursuing a business that offered such huge profit potential, scalability, low competition, options for automation, and the ability to work from home in my spare time, all while getting started for such a small upfront investment…

…but that's just me.