Transcript:
Welcome to the Tax Sale Podcast, where tax sale investing is made easy.
I’m Casey Denman, a tax sale veteran, the author of the tax sale playbook, founder of the tax sale academy, the leading tax sale expert and trainer and your host right here on the tax sale podcast.
Thanks for joining me on today’s podcast. This podcast is provided completely free to help teach you about tax sale investing and is made possible through The Tax Sale Academy. If you’re looking to learn about tax defaulted real estate, in a comprehensive, step by step basis then head to TaxSaleAacdemy.com and click on join. Again, taxsaleacademy.com and click join.
Over the years, I’ve talked many times about the profitability of vacant land. If you’ve listened to me for any period of time you know that I’ve had tremendous success with vacant land. Now, before I continue I don’t want you to think I am discounting homes, commercial properties or any other types of real estate. Every single sector or real estate has been extremely profitable for me . . . when it’s purchase strategically. So don’t think for a second that I would pass up a profitable home, because I don’t.
But when it comes to land, I have purchased a larger percentage and I’ve always had success with it. The issue is that every single time I mention vacant land, whether it’s a video, a post, podcast, whatever . . . I always get at least one person who says vacant land it too difficult to sell. So I wanted to do a podcast episode on this topic, because that’s an extremely common misconception.
First, let’s talk about the act of selling. Let’s say you have a home buyer and a land buyer that have both decided to make their purchase. The process of closing land is extremely easy when compared to a home. You might have a perk test for the soil and maybe a survey. Then we close. For a home, you’ll probably have a buyer that goes through the house with a fine tooth comb picking out every single flaw, including most which you didn’t notice or care about. Then an inspector will do the same thing at least once. He’ll tell the buyer that the house is falling down when everyone knows he’s probably exaggerating a bit just to cover himself. Then you have to worry about making required repairs, cleaning it out and all sorts of other fun stuff. And if you toss in a mortgage, you’ve got a whole bunch of other hurdles. I have sold many many homes in my career and I’ve sold many many lots in my career and I can tell you that when I sell a lot I usually don’t even have to leave my office. When I sell a home there’s quite a bit of effort involved.
So, the actual process is hands down much easier with vacant land.
But that’s usually not what people mean when they ask if vacant land is harder to sell.
The issue that most people have is the demand for that land. They believe it’s easier to find a buyer for a home than land. Because homes are more useful for most. You can rent them, live in them, fix them up and resell them. And that’s a valid point. But that doesn’t mean that land doesn’t have enough demand that where you’ll have trouble selling it.
When I invest in land I don’t just go buy a random piece of land in the middle of nowhere, put a sign out and HOPE it sells. That’s a very lousy strategy. But I think this is what many people envision when I or someone else say that they invest in land. Some random lot, a sign and waiting for the phone to ring. Whether you do that for a vacant lot or you do that for a house, you’re just not going to get good results.
Instead, vacant land should be purchased with a very specific strategy in mind. A strategy that allows you to turn it over quickly where you can easily get it sold. The truth is I can’t remember the last time I actually put a sign on a vacant lot. And the large majority of them don’t ever even get listed with a Realtor or go into MLS or anything like that.
I go into detail on a number of different strategies inside the tax sale academy, but the fact is that you must prearrange your buyer with vacant land. And really . . . you should actually prearrange your buyer with homes also as well if you intend to operate your business as efficiently and profitably as possible.
Now when I say prearrange your buyer, it might not be a specific person that will buy it from you the moment you get it from a tax sale – I’m not saying Mr. Smith from Jonesville will buy it. But instead it will be a type of person, one of a few different potential buyers – you’ll have 5 or 6 people that will buy something the moment you offer it to them, or maybe it’s 500 or 600 . . . whatever the case you’ll have a very captive audience ready to pull the trigger.
So, how do you do that?
I’m going to provide two options that you should master.
The first one is by using a buyer’s list. I’ve done episodes on this before, but you’ll essentially have a number of buyers that are waiting for your call, text or email so they can purchase whatever you’re selling. Typically, you’ll have captured their attention when you previously advertised a property somewhere. That property would’ve been priced so well that they missed their opportunity on that one, but can’t wait to get the opportunity on the next one. That’s it in a nutshell.
So an excuse is that you don’t have a buyer’s list because you’re just getting started. Here’s a simple suggestion. CREATE ONE. Be creative and figure out a way to start. The best way is to buy one property, market it like crazy and then leverage that marketing to build a list. If you can’t do that, then call every realtor in town asking if they have buyers for a certain subdivision at a certain price point. Then call every builder in town asking if they would be interested in buying land in a certain subdivision at a certain price point. Then call anyone who has purchased more than one lot in any particular area and ask if they want more. And boom, in an afternoon’s work you’ve lined up a number of potential buyers.
Sure, this requires effort. No doubt about it. This business takes effort and the more effort you put forth, the better your results will be.
Now, in more of a general sense, perhaps a less preferred but still incredibly effective method is to prearrange your TYPE of buyer. This would work well in a situation where you don’t have a buyers list, don’t want to put in the effort to create a buyers list and are ok with a strategy that has slightly more risk. What I talking about is cherry picking a property that has tremendous upside and is usually going to be a low dollar value transaction. These types of buyers are often speculators that have a few bucks to invest and are looking for cheap properties. You’re goal is to find those cheap properties, even cheaper through tax sales and then resell them. Maybe it’s that lot that’s only worth $1500 on the market, but you can acquire it for say $500. You know that while the returns are great when you look at percentages, the actual dollar amount returns aren’t all the stellar. But that’s ok, because there are plenty of speculators out there with a few thousand bucks.
Sell to those who want cheap properties that you can get even cheaper at tax sales. . . . . . and . . .of course, when you’re marketing those properties, you must do so to get as many potential buyers as possible to start your buyer’s list.
The argument could even be made that when you set everything up correctly, vacant land is actually much easier to find a buyer for. I’ve got a number of buyers that don’t want anything to do with the maintenance or liability issues with a home, but still want to park their money somewhere. There are also plenty of buyers that might be able to afford vacant land but can’t afford a structure, and again, they want to put that money somewhere.
At the end of the day you can make money with all types of real estate IF you strategize properly. I’ve seen people make money with abandoned schools and churches, I’ve made money with abaonded factories, and yes, plenty of people have made money with both homes and vacant land. So, if you find a profitable home, buy it – I’m definitely not against that. But don’t discount the opportunity that vacant land holds. And usually they’ll be less competition, more supply depending on the area, less capital outlay, and it just might be easier to sell and more profitable.
That’s it for today’s episode.
I really hope you’ve found this episode helpful and that you are enjoying my podcast. If you are, please consider taking just a few minutes out of your day to leave some positive feedback on whatever platform you’re listening to us on – we truly hope we’re able to play a small role in your tax sale success.
Thanks again for joining – if you’re looking to learn from us directly, just head to taxsaleacademy.com. Again that’s taxsaleacademy.com – there’s a link in the show notes.
Take care!