How This Financial Advisor Makes Big Money with Raw Land

One aspect of real estate we haven’t devoted a lot of coverage to is undeveloped land. It turns out some in our audience are quite adept at turning raw land into residual income.

In this guest post, we’ll look at how to make a variety of investments in raw land and convert those investments into cash in your pocket every month.

What Is Land Flipping?

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The basic concept of land flipping is just like any investment where ideally you buy low and sell high. For example, I am acquiring property through mailing the owners, texting the owners, buying at a tax deed auction, subdividing larger tracts, doing minor splits, or foreclosing through tax lien auctions.

If I am doing it right, I should be buying land at 10% to 40% of its market value. In raw returns, not including business expenses, this can lead to very attractive ROI. It’s definitely as much art as it is science!

One of the most attractive characteristics I found with raw land was the ability to be highly diversified very quickly. I’ve bought plenty of properties for $500 or $1,000 or $2,000 or $4,000. This has allowed me to spread out my investment over dozens and dozens of properties.

How I’ve Made Money on Raw Land

As we turned around and sold those lots, we’ve often done so through owner financing. As the owner, I act like the bank where I charge a markup as well as interest. For example, let’s say I buy a property for $1,000. Then, I mark it up by 300% to $4,000.

On top of the $3,000 markup, if I sell on owner financing, let’s say that I ask for a $600 downpayment ($349 document fee and $251 of equity). This means I am financing $3,751. Let’s say I do it over 4 years and charge 10% interest. They would pay me $95.14 of principal and interest over 48 months.

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