Vacant Land . . . raw dirt. There isn’t too much “exciting” about buying dirt. But it has made up a significant amount of my tax sale investments and it’s worth you considering it. Learn all about it in this video!
Transcript:
Hi! Casey Denman here with TaxSaleAcademy.com. In this video, we’re talking about the pros and the cons of buying vacant land at tax sales.
A lot of people when they think real estate investor, they automatically assume you’re investing in some sort of structure; a house, a commercial structure or something along those lines. And they forget all about those investors out there that make a load of money investing in just vacant land. So that’s what we’re going to talk about in this video.
First, let’s talk about some of the pros or some of the advantages to buying vacant land. Number one, it is cheap. Sometimes at tax sales, you can get property as low as 50, 100 bucks, 200 bucks. I mean, it’s very, very cheap so the barrier to entry is very, very low. You don’t have to have a whole lot of capital compared to homes. You can get in it a lot easier.
The second thing is that condition is not an issue. When you’re looking at a house, you have to think to yourself, “What about the broken windows, the broken doors? Is there plumbing leaks? Is the roof leaking?” You have all these things to worry about. A vacant land, there’s not a whole lot to worry about because obviously, there’s no broken windows, there’s no broken doors or anything like that. So there’s no condition issues and no condition worries.
The third pro or the third advantage is there’s no maintenance issues. Just like the condition issues, when you own a house, you have to maintain it at the very least to the city or the county’s standards. Hopefully, your standards are probably a little bit higher than the city or the county. You have to make sure there’s no code violations. You have to make sure that the property is maintained up to standard because when you go to sell that piece of property, if the house has been sitting for two or three years and it has not been maintained, that’s going to kill your value. When it comes to vacant land, there’s not a whole lot to maintain, besides maybe an occasional mow and stuff along those lines.
The fourth thing is the low holding cost of vacant land. When you buy a house, some houses I’ve seen at tax sale auctions might have yearly taxes – $1,000, $5,000. I’ve even seen some at tax sales that are $6,000 per year in taxes. That is a load of money to be spending on taxes. When it comes to vacant land, your taxes are substantially cheaper. Sometimes, even as low as just four or five bucks a year. You can easily get away though with spending $100 or $200 on taxes for vacant land compared to houses that’s going to be a lot more money than that.
The fifth advantage is that the buyer can do what they want to with it. If you have a house, you’re trying to basically sell this house to somebody and they have to conform their standards and conform their mindset to purchase this house. It has to be a house they want. When it comes to vacant land, they can do just about anything they want to. Say they don’t want to build on it or say they want to build 10 or 15 years down the road. They can hold it if they want to do. Say they want to build this custom house. They can do that if they want to. They do not really have to be conforming to the property that you’re offering. Instead, as long as they like the area, they can buy the property and do what they want to with it.
Now, let’s talk about some of the disadvantages or the cons of buying vacant land at tax sale auctions. The first thing is that there are less interested buyers. It’s easy to sell a house a lot of times because you can find investors that will buy houses or buyers that will buy houses. There’s just more of an audience out there. When it comes to vacant land, there’s certainly less people interested in vacant land so it might take a little bit longer to sell. But with that said, obviously, it is still cheap, so it kind of weighs itself out here.
Another con or another disadvantage here is it is less valuable. It might take a bunch of these properties before you create any real wealth. Whereas if you have a lot of capital to start, you can buy houses, you can sell these houses and keep rolling over that money. Where vacant land, it is going to take more of these properties before you do create that same amount of wealth.
The third thing here is that there are some fee requirements and some taxes possibly with no benefit. Say you buy a piece of property in a homeowners association residence that might charge you 100 bucks a month, but it has pools, tennis courts, clubhouses and that kind of thing. If it’s a vacant lot, guess what? Unless you’re local to the area, you don’t get to enjoy those things, but you still have to pay those HOA dues. So really, those HOA dues are basically just money being thrown right down the toilet.
And the last disadvantage here is that there are still issues to worry about. It might not be as many issues as purchasing a house at a tax sale, but there are still issues. We’re talking about things like is it in a flood zone? All these researching you have to worry about. And then once you buy it, you have to worry about is somebody dumping trash on that property? What if somebody decides to park their motorhome there or decides to haul broken down cars there? You still have to worry about those stuff. There is still issues that you have to worry about even though it’s vacant land.
So there you are. There’s some pros and cons with buying vacant lands at tax sale auctions. I hope you’ve enjoyed this video. If you’d like to see similar videos, head on over to my website at TaxSaleAcademy.com, which you can do by clicking the blue link right here next to my head. Again, it will take you to TaxSaleAcademy.com. And once you get there, download your free copy of my e-book, The Tax Sale Investing Blueprint, and you’ll be on your way to a very successful tax sale investing career.
Have a wonderful day, folks! Bye-bye.