Hey guys, how's it going?
This is Seth Williams from retipster.com.
I'm a professional land investor, blogger,
YouTuber, podcaster, and overthinker.
And in this video, we're going to talk about
some of the myths and myths conceptions
people have about vacant land as an investment.
So I still remember the first time I ever heard
about this idea of investing in vacant land.
And my reaction was probably the same as a lot of people.
It sure didn't seem that exciting to me.
And I couldn't understand why anybody would take
any significant amount of capital and intentionally park it in vacant land.
It just seems so boring, but I think that lack of excitement,
kind of comes from a lack of understanding
about how the land flipping business works
and the huge opportunity that's available here.
So first stuff, here's one common misconception
that land is a pointless investment because it just sits there.
It's not that useful. It doesn't make any money.
What's the point? Well, that can be true if you buy land
without any kind of a plan or goal in mind,
there's actually a lot of people that do this.
Every parcel of land is useful for something.
A lot of people buy land with some far fetched dream in mind
that probably isn't actually going to happen,
or maybe they buy it without doing their homework
about what the local governing body will actually allow them to do
Is the property even zoned right for the purpose that they want to use it for?
These are all things you have to understand before you go into a property
and actually invest your money in it.
Now sometimes we'll hear that land is a dumb investment
because it doesn't generate any income or cashflow of any kind.
That's not true.
Now I would liken this to a statement like
houses are a dumb investment because they don't make money,
which is also obviously not true.
It depends what you choose to do with that house.
If you choose to live in it or let it sit there and do nothing,
then no, it's not going to make any money.
But if you choose to use it as a rental property, then yes, it can make money.
It's that simple.
And land can actually make a lot of cash flow
and is actually far less of a pain than any other type of real estate
because of the fact that it's vacant.
Nobody's living on it and it just behaves itself.
How can land make money?
Well, just take your pick. There are lots of options to choose from.
Land can make money by leasing it out to a farmer, a billboard company,
a hunter, a mobile home owner.
If you own your own land, free and clear as most land owners do,
you can sell it to another person with seller financing.
And in doing this, you can sell your property at a higher price.
You can charge additional interest and because your buyer is the new owner,
they're not going to be calling you with all their problems
because in their minds, it's their property now.
They're not a tenant and you're not a landlord.
If you're a member of the Land Investing Masterclass,
you already know this is an incredible way to make money when you're selling vacant land.
However, you choose to do it, there's a lot of ingenious ways
to make a lot of money from vacant land.
If you go into it with the right planning and it's frankly, a lot easier than making money
from a lot of other types of real estate.
Another common misconception about investing in vacant land is that
you can only buy a property near where you live,
so you can like drive out and see it and inspect it yourself.
And this is one of the biggest limiting beliefs alot of people have about land.
Heck, I even felt this myself
for my first few years in the land business.
So I totally get it.
And from a due diligence standpoint,
I will say there is definitely some value in being able
to get up to the property and lay eyes on it yourself before you buy it.
But I'll also say it's not true to think that you need to do this
in order to invest in a property.
These days there are a ton of people and services and tools you can use to inspect,
evaluate and understand what kind of property you're buying before you buy it.
This is actually a lot easier to do for vacant land properties,
as opposed to houses and buildings and other improved properties.
So if it was ever feasible to do this, vacant land is the most feasible type to do it with.
I'll be the first to admit that every time I've ever personally visited and inspected
a property before I bought it, it's always been more informative and eye-opening.
So I don't mean to imply that it's not useful to do an in-person inspection,
but I also don't want people to think that they have no other choice
and that's the only way they can buy a property
is if they personally go out and look at it.
And a lot of times when you do go see these properties,
it may be kind of eye opening to see what it looks like on site
and see what the neighbors properties look like.
But I'll be honest, most of the time, it's kind of a boring experience.
You get to the property and there's not a whole lot to see
that you haven't already seen online.
The important thing is to just realize it doesn't have to be you personally,
who physically inspects, measures surveys and evaluates the property.
There are a ton of services and places online
where you can find this kind of help without spending a fortune.
So don't get caught in this mental trap of thinking that you can only buy properties
where you can see them with your own eyes
and that you somehow are critical to that process, because you're not.
It's just about finding the other professionals who can do this for you
and make the job a lot easier along the way.
So another common myth that I come across surprisingly often is
this idea that you can do whatever you want with the land that you own.
And this is also unfortunately not true.
So here's the thing, unless your property is out in the middle of absolutely nowhere
where nobody will ever see what you're doing
or care about what you're doing
there will almost always be some kind of loose guidelines
and restrictions that you have to follow from the local municipality.
To buy a property with this idea that you don't have to answer to anybody,
and you can do whatever you want
you're just going to be setting yourself up for disappointment
if you buy a property with that expectation, because it's just not true.
And the closer and closer you get to a city or a more densely populated area
its limitations and the policing of these restrictions is only going to go up.
So it, while some people have this idea that
they can do whatever they want with their land,
that's only true to the extent that it doesn't disagree
with the local planning and zoning ordinance.
So don't lose sight of the fact that you never really have absolute and total freedom
to do whatever you want to do with your property, because that's just not how it works.
So something I hear people say a lot about their land is "My property is worth X amount"
or this property was valued at this dollar amount
and I think we kind of need to unpack this a little bit.
So when you're dealing with a house or a building,
there usually is enough recent sales data,
and most markets are looking at similar properties that have recently sold
and how much they sold for,
and then actually is possible to accurately estimate the amount that it would cost
to rebuild a property or how much it would sell for
based on similar sales comps in the area,
or even how much it's worth based on how much rent income that property can generate.
So when you're dealing with improved properties
like apartment buildings or houses
is totally viable to come up with a pretty accurate dollar amount
for what that property is worth.
But vacant land is very, very different
because a lot of this data that you need simply doesn't exist.
And because of this, it makes it really, really hard to value vacant land,
even a lot of professional appraisers that I've talked with
when I asked them, how do you guys come up with a reliable value for vacant land?
Their honest answer is like, you don't really have a way to do it.
We can kind of guess at it with the very little data we have.
The bottom line is there's a lot of guesswork involved
and a huge margin of error when it comes to valuing vacant land.
Now, with all that said, there is always a way to come up
with a ballpark value for a vacant land property.
It's not like you can't have any wild guests about what the property is worth.
It's just a lot harder to zero in on a precise number.
The point is there is a lot of room for interpretation
when it comes to the value of a vacant land property.
So some people have this idea in their head that
if they want to buy a land,
what they've got to do is get on a website like Zillow or LandWatch,
and just start cruising around, looking for land that's listed for sale
and whatever price they see on that land
that is the price, and that's what they have to pay.
And there are no other properties out there that they can buy
other than the stuff that's publicly listed like this.
I got to tell you that could not be further from the truth.
As we just discussed here we already know that value is a very subjective thing
when it comes to vacant land.
All land has value to some degree but pinning down a precise number
that everybody agrees with is another thing entirely.
And in terms of which properties you're allowed to buy
a lot of first time land buyers are under this impression
that they're only allowed to buy properties
with a "for sale" sign on the front yard, but that it isn't just false.
It's a dangerous assumption that's going to lead you to overpay
for some of the worst deals out there.
If you want to find the best deals on land at the absolute lowest prices,
you need to know how to find reluctant landowners
who just don't want their property.
And you need a scalable way to find and contact a lot of these people
without wasting a whole lot of time or energy.
When you learn how to do this, you will be shocked
at how many opportunities there are to buy dirt cheap land.
It's not nearly as hard as you might think.
By the way, I'm going to have a couple of links beneath this video
that show you exactly how to do it.
The point I'm trying to make here is that
the value is very elastic with the vacant land properties
and the properties that are listed for sale
represent just a small fraction of all the properties
that are out there available for you to buy.
Sometimes you just need to find them and make the process easy for them.
And you can get a much, much better deal that way.
So sometimes you'll hear people say that land is a simple type of property
and this is true, but that word "simple", I think needs a little bit of context.
So vacant land is just a parcel of dirt.
There's nothing that can fall apart,
break, get stolen, burned down, or otherwise
and this alone makes land a much simpler type of property
than anything else out there.
But land isn't without its issues.
When you're buying a parcel of vacant land, there's a lot of things you need to think about,
and evaluate depending on what you plan to use that property for.
This is why it's so important to have a plan in mind for vacant land
so you know what to to look for in the first place,
for example, is there road access to the property?
Don't take that for granted,
there's a lot of landlocked vacant land properties out there, believe it or not.
Does it have access to all the basic utilities?
You know, like electricity and water and sewer and gas and that kind of stuff.
Are there any usability issues with the property?
For example, is it in a flood zone?
Is it affected by wetlands?
Is it on a cliff?
Is that on a really steep slope or anything like that?
Will the local planning and zoning department
actually allow you to use the property for what you want to use it for.
A lot of these questions you don't even need to think about when you're buying a house
because these questions have already been answered.
That's why there's actually a house there because obviously
you can build a house and that doesn't disagree with the zoning and planning uses.
And with the vacant land, a lot of these questions haven't been answered.
So it's up to you to verify this stuff and make sure you can actually do
what you want to do with it.
And granted houses have a whole host of other things issues
you have to deal with and answer, which is frankly, a lot more than vacant land,
but still to simply sit back and say that land is simple without acknowledging
some of the other hard things you do have to overcome,
I think is a little misleading.
So another thing that people don't really understand about vacant land
is all around the financing aspect of it.
So some people think that they can just go out and get a mortgage
and buy a piece of vacant land.
And that's an interesting thing about vacant land is that
unless you have an immediate plan to develop that property,
you know, like build a house or subdivide it
or make money from it in some way, in the case of farmland,
that you might be leasing out to a farmer or working the ground yourself
if you are a farmer or leasing the property out to hunters or anything like that,
if you just palnned to buy a vacant lot
and just keep it as a vacant lot and not do anything to it,
most banks want absolutely nothing to do with that.
And unless it's a very unique situation with a unique type of lender,
you're going to have a really hard time getting financing for that property.
Part of the reason for this is that from a collateral standpoint,
it's very hard for a lender to know what that property is actually worth.
And if it's not making money or serving some other kind of valuable purpose,
it's just a risky type of collateral for them to get involved with
because of how much conventional lenders look at vacant land like this
most of the people out there who do own vacant lots that
just aren't serving a purpose on their properties free and clear
because they have no other choice.
And when you're talking and negotiating with a landowner
who owns their property free and clear,
it gives you a little bit more leverage to negotiate a lower offer
because that seller doesn't have any mortgage balance
that they have to pay off when they sell the property to you,
they have a lot more free equity to work with.
And if they just want to unload the thing fast, they're free to do that
because they're not tied up with any existing financing.
And this also means that if you own vacant land and you're trying to sell it,
you can provide a huge value to your end buyer
if you're willing to offer seller financing,
because for most buyers out there
given the fact that they can't get financing from a bank,
if you don't finance it, and if they don't just have all the cash in their bank account
ready to pay you and they can't buy the property.
So if you are able to offer that kind of seller financing
and become the bank and agree on whatever terms,
make sense for both you and them,
that's just a huge value that they're not going to have
if you don't offer it to them.
Now, selling land with a seller financing isn't always the right answer for everyone.
But if you are willing to accept payment
for your property over a longer stretch of time,
it's going to make it a lot easier to sell your property for a higher price
and sell the thing faster
simply because you're offering a financing option
where there was no financing option before.
Don't forget you can also make a lot more money in the form of interest payments
and closing fees and servicing fees for the life of the loan.
So there's a lot of money-making opportunity here
if you're willing to deal with the complexities that come with seller financing.
So at the very least it's worth thinking about.
I'm Seth Williams and I hope this video helped answer
some of those common misconceptions
that are floating around out there about land.
Now, I can tell you a vacant land is a great real estate investment.
It really is, but it's very easy to misunderstand the opportunity
and what is and isn't available here.
If you want to learn more about what this business has to offer,
go check out the library of land investing content that
we've been building for years over at retipster.com.
I'm going to have a link to it right beneath this video.
And if you actually want to build a serious money-making business as a land investor,
be sure to check out the Land Investing Masterclass.
This community is filled with hundreds of people
who have forever changed their financial future
because they understood and took advantage of the opportunity
in the land investing business.
And if you want to, you can too.
And if you've made it all the way to the end of this video,
first of all, congratulations, I'm proud of you.
Second of all, check out a couple of these other land investing videos
that'll take you through more of the specifics of
how this land flipping business model works
and why it's so advantageous compared to other types of real estate.
Thanks again for watching.
Hopefully, I'll talk to you again soon.