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In this lesson, you will discover 5 tips to wholesale vacant land opportunities and tear down properties without wasting time.
This topic was inspired by the algorithm, which you can help more by punching that like button in the face… of course but…
I also got a DM from one of our students on instagram.
Follow me @iTuxB
“Ola, I talked to another client today.
And they wanted to sell 3.32 acres of land and there was a lot of motivation.
They want $250,000 per acre.
What should I do?
Should we just pass up on this or should we also wholesale land?”
So my name is OLA and I am the author of 2 books:
Smart Real Estate Wholesaling and…
Real Estate Money Secrets
Which you can download absolutely for free at: www.SmartRealEstateWholesaling.com
I am also the creator of myEmpirePRO and the 11 days challenge quick start guide which you can access at:
Tip #5 – Non-Functioning
PREVIOUS POST: 📍 Small Town vs Virtual Wholesale Real Estate
When you are dealing with a vacant land, lot or a property that has been deemed a tear down, it’s important to keep it at the back of your mind that these are non-functioning properties.
Why is that important?
If the property is presently useless and not performing at least with respect to usability or utility, the owners should be willing to understand the trade-off that comes with that.
If they can afford to put the property to use, they would be doing that because they also get to make more money.
If the property is useful, there would be automatically more demand to buy or lease.
And More Demand = High Price.
Unfortunately for the seller, vacant lands and tear downs fall in that category; non-functioning properties or non-performing assets.
So when a seller reaches out about non-functioning properties, it’s usually because they can’t afford to hold on to it.
That’s a negotiating point for you and you shouldn’t be afraid of leveraging that in your confidence, posture and negotiation stamina.
Tip #4 – From ARV to ACV
On regular deals with functioning properties which can still be a non-performing asset, we have the ARV which stands for after repair value.
The after repair value is exactly what it sounds like; what is the property worth in today’s market if it was fully repaired and upgraded?
But with vacant lands and tear downs, the investor fixer and flipper will not be repairing the property.
On vacant land, a new construction will be an ideal way to make the property function and perform.
For a tear-down, the existing improvement on the land has to be demolished and torn-down which is an additional cost before the new construction.
So the value needed to be determined is the after construction value (ACV) and not the after repair or rehab value.
The same method used to create the ARV is the same method you will use to come up with an ACV… at least to start with.
But in addition, you may need to have the square footage of the proposed new improvement or building on the land.
Ideally, the proposed square footage should be within the range of the average in the area and it’s not a bad idea to talk to investors in that area.
Try out a free tool I’ve created for you at:
To calculate and estimate ARVs and ACVs.
Tip #3 – Property Zoning Type
During your consulting phone session, I want you to ask the seller what type of property the area or land parcel is zoned for.
Is the property zoned for residential, commercial, mixed-use or industrial use?
If you don’t have this information, you might as well be wasting time doing anything else.
Tip #2 – Sub-Division
For big parcels of land (I consider anything bigger than one acre to be a big parcel of land), I want you to ask the seller if sub-division would be necessary.
Subdivision is the process of dividing a big parcel of land into smaller but usable plots for optimal and economical use.
A cash buyer would want to know this information.
Speaking of cash buyers….
Tip #1 – Cash & Land Buyers
HAVE YOU SEEN THIS: More Video on our YouTube Channel
Even though he claimed that there was lots of motivation, I don’t understand what that means.
More importantly, it doesn’t matter if I understood or not. Here is what matters.
The seller is either motivated or not and we won’t be able to tell until an offer has been presented.
A seller who has motivation is different from a motivated seller and here is more explanation.
With regular functioning properties, I want you to simply multiply the after repair value (ARV) with 65% and adjust the product with the estimated cost of repair.
That will create a maximum allowable offer; the MAO.
But with vacant lands and tear downs, it’s best to reach out to all the cash and land buyers within the area of the subject property first.
I want you to go to www.EmpireBIGData.com, set up an account and pull up everything you find under the quicklist cash buyer in that zip code.
You will also be able to create contact campaigns for them within the software.
Ask them directly how much they would pay for that land.
Let’s say, 2 to 3 cash buyers say they would pay $70,000 for the property immediately, use that to reverse engineer your desired profit.
I want you to present an offer of $40,000 and be open to accept up to $65,000.
You can then potentially make $5K-$30,000.
I will be honest with you.
There have been times over the years that I feel that wholesaling vacant land wasn’t worth my time because I had a lot more going on.
In the next lesson, I will share more on presenting offers and offer-reports that markets and follow up even further for you.
The Main Lesson
If you can’t find sold land comparable on Propstream (www.EmpireBIGData.com) by selecting category “lands” stacked against the quicklist cash buyers, check Zillow.
But before doing all of that, make sure that you have collected as much data from the seller so that you can avoid unnecessary back and forth.
If they are not willing to give you all of the information in detail including zoning and subdivision information, they are simply not a motivated seller.
Check out the video on this screen for more info.