I have been buying and selling residential real estate as a real estate investor for almost 7 years now. I have looked at just about every avenue of real estate investing from Pre-construction, Assignments, Tax liens, Rehab, Probate, Bankruptcies, Pre-foreclosures and short sales, Foreclosures and REOs, Landlords and FSBO's. I have profited from and am a trainer and coach now for literally all of these strategies.
However, lately I have learned about a twist to an old strategy I had never done. Buying land and re-selling it via owner financing for a monthly profit and eventually a flip this property to another buyer. I think Jack Bosch, creator of the Land Profit System, who has closed over 5400 land deals himself, is on to something!
I have found the biggest stopping points for many of my Real Estate Investing Students are usually... #1 - The risk of getting into something they cannot find funding for and letting people down... #2 - Getting into a deal and finding out later something was missed causing financial loss. Many of my students are frozen stiff because of these fears. It is for this reason have listed some of the reasons a real estate investor might want to add land vs houses to their portfolio of investments following Jacks Land Profit System.
Why Land Flipping might be Better:
There is virtually no competition for land, especially rural land.
A lot of opportunity - There is an abundance of forgotten land out there
Cheap! You can purchase for literally pennies on the dollar.
With land you do not have to know as much about real estate like construction, termites, mold and all the other things of that nature that you must know when investing in houses.
Lower inspection requirements
Quicker closings
Less initial capital output (cheaper)
Buyers usually more savvy investors
Higher number of buyers are repeat buyers (Most house buyers are1 time buyers looking for a home to live in)
Good Potential for monthly residual income with your owner financing
Usually low to no upkeep
Usually low holding costs (No fire insurance, fix up, maintenance)
Very low, (or sometimes none), acquisition costs
Lower risk - no money down to lose
Why Houses Flipping might be Better: (May be a shorter list - but they are worth more $)
More potential to generate income while you hold it - owner financing OR renting
Everyone needs a house since shelter is a basic necessity of life.
(Not everyone needs vacant land - smaller # of potential buyers)
Potential to profit big doing just 1 good deal (For Land Profits following Jacks system, on average, you must do more deals to profit higher dollars)
Potential for higher monthly residual income per property
A lot more home owners in desperate situations than there is who own land (Land has lower costs to maintain and there are less vacant lots than there are houses generally)
Look for these Market positives when investing in land OR Housing:
Unemployment rate is low compared to the national unemployment rate
The general area and its population growing and expanding
And if it is, best if expanding in the direction of the property you are interested in
Talk to the city and county planning and zoning agencies where the land is located; they will be able to give you valuable information about area growth and building projections.
Be sure to keep your ears open for news of major business expansions.
Here is How to Lower Your Risks for Houses or Land before closing on any deal:
Make sure title is not "cloudy" and property is marketable. Remember IRS liens have to be paid! If you buy a property with those liens, that bill becomes yours. Do your due diligence in running a title report before closing.
Run necessary tests and inspections depending on specific area and property
Check with County to verify no complaints or notices for required repairs are filed
Make sure you work with escape clauses to assure you can walk away for any reason.
Avoid giving check or cash money down until you are positive you are going to close.
Make sure that your purchase contract is worded in such a way that it allows you to only transfer cash at the time of closing.
Land and House Flipping Similarities
In summary, you can follow a lot of the same strategies marketing to land owners as I always have buying from and selling to home owners. The best type of deal, whether land or houses, is when the seller, for one reason or another, wants a quick easy out of the obligation of owning their house or land - leaving you the opportunity to buy at a discount and profit in the short and/or long term depending on your goals!
Real estate investing, just like most things in life, has benefits and risks no matter how you look at it. There are always those unknown and unexpected circumstances. In the scheme of things, you need to decide... are you able to live a peaceful, joyful life as you are building your wealth through real estate investing in land and/or houses. Your personal risk tolerance is what only you can decide. I am doing both wholesale land and house flipping and holding, looking at each deal individually. Because most importantly, it is all about profitability and the bottom line!
Most Important!
Universally - having a system, a trainer and a coach to take you down the path of real estate investing is the key to your success. Someone who has already blazed the trail...and all you have to do is follow. You want to walk along side a real estate investor with the experience in doing it successfully - someone who has already figured out the "code". "Why re-invent the wheel?", as they say.
Knowing you have experience at your side alleviates those fears of the unknowns increasing the chances for a faster, easier and happier ride to the peak of real estate investing success. I would like to leave you with a quote: "Perhaps the very best question that you can memorize and repeat, over and over, is, 'what is the most valuable use of my time right now?'" - Brian Tracy: Author and speaker on personal and professional development
To Your Massive Passive Profits!
Tamera Aragon
REI Success Trainer, Author and Coach
http://www.blog.TameraREI.com
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