Land Investing 101 — Land Investing For Beginners And What Makes It Passive Income
Land investing is a simple, low-risk way to build passive income while avoiding the headaches of traditional real estate investing models. Discover how this overlooked and undervalued passive income opportunity works.
I’m Mark Podolsky AKA “The Land Geek” and I’ve been a professional land investor for 20 years and owner of Frontier Properties. Since 2001, I have completed over 5,500 land deals with an average ROI of over 300% on cash flips, and over 1,000% on the deals with financing terms.
Now, I teach others how to invest in raw land. I have helped thousands of people to replace their income, retire their spouses, and focus on what really matters.
What is land Investing?
Before we dive into how the model works in detail, let me give you a simple overview of what land investing is.
Land investing is where we buy raw land for $.25 on the dollar, then we turn around and sell it at retail price.
Essentially, we’re land flipping.
So where does passive income come into play?
Rather than doing a straight land flip, we offer owner financing to make the dream of land ownership easy and affordable.
We see a typical ROI of over 300% to 1000% per deal.
Land Investing 101
So now let’s break the model down step by step.
Buy Land For Pennies On The Dollar
We buy land for $.25 on a dollar from those who are no longer emotionally attached to the property and are eager to sell.
Common reasons people are willing to sell their land are…
- They’ve moved and can no longer access the property as frequently as they once did.
- They inherited the property from a family member and have no emotional attachment to it.
- They no longer want to pay the taxes on it.
- Their priorities have changed and they no longer have the time to use the land as they previously did.
So the first thing we do is determine what area we want to work in and then find someone who owes back taxes on a property.
Let’s say, for example, we find Eric who has a 10-acre parcel of land in Texas and he owes $200 in back taxes.
Now we take a look at comparable sales in the area.
We will take the lowest comparable sale and divide it by four so we have a comfortable margin of safety. This will be our offer price to buy the property.
So in Eric’s case, let’s say the lowest comparable sale is $10,000. Divide that by four and we get $2,500.
Then we send an offer letter to Eric saying we’d like to buy the land for $2500 and take care of the back taxes on the property.
And he accepts!
Generally, we see a 3–5% acceptance rate on our offer.
The offer is also contingent on passing due diligence, which we’ll cover next.
Due Diligence is one of the most important steps of this model. Do your due diligence correctly and you’ll never be stuck with a “bad” deal.
We just want to make sure that we are receiving full disclosure of the facts and conditions of the property prior to buying the property.
We’ll check to make sure…
- They actually own the property
- There are no liens on the property
- There are no breaks in the chain of title
- We are aware of all back taxes on the property
- Confirm if there are any roads leading to the property
- What amenities and services are near the property
- If there are any restrictions on the property.
Everything under due diligence can easily be passed off to a virtual assistant so you do not have to do any heavy lifting.
Sell Property And Create Cash Flow
One of the most frequent questions I get asked is who is going to buy the property?
The first place to look for a buyer is by going to the neighbors.
Oftentimes, the neighbors will be interested in buying that property. This might be for more privacy, unobstructed views, or simply to have as a short-term or long-term investment.
If they pass on your offer, the next thing to do is to resort to your buyers’ list.
A buyers’ list is a list containing the contact information of people who have expressed interest in our properties.
If your buyers’ list passes on your offer, the next step is to market on the following websites.
- And more!
Let’s look at some deals done by members of our community so you can see just how little money you need to invest upfront to see some big returns!
This is what I am talking about! Land investing gives you the opportunity to do the things you love and live out your dreams.
How You Can Get To Total Freedom
Once you have created enough land notes, where your passive income exceeds your fixed expenses, you’ll only be working because you want to and not because you have to.
For all the additional information you’ll need on the best passive income model, get our FREE Wholetailing course.
Get our FREE Passive Income Launch Kit. I will share with you some of the secret Land Investment Strategies you probably have never heard of.
Learn more at thelandgeek.com.