It depends where you live. My business partner develops land into lots for subdivisions. He’s about to make a 100% profit on the one he is finishing up now. It took about a year to get it from dirt to the stage where it’s ready for builders to step in. And the best part is he already has a great engineering company and good people he hires when he develops land so he barely has to spend any time on site. Sounds like a great way to make some easy money once you learn how things work.
I am probably going to do one with him soon to learn the ropes.
Profiting from empty lots in very nice areas - Posted by Joshua
Posted by Joshua on December 16, 2002 at 15:22:04:
I was out scouting for a good farm area and noticed several empty lots that were for sale. All the lots I saw were in a very nice area, actually the nicest area of town. So what are some ideas to think about so I could profit from empty lots? I know if there were houses built on these lots they would be upper end homes. Cus that’s what the surrounding area is.
But, I was just looking for ideas on how to profit from an empty lot.
I think you’re barking up the wrong trees on these vacant lots. If you noticed that they are for sale, that means that there are “for sale” signs on them, right? That means that they are exposed to the marketplace, so will be selling for market value. So, there is probably no profit on these properties.
However, it may be that those withou signs on them could be bought for below market value, if you know the market values before you approach the owners. And, maybe they too cannot be bought for a bargain price.
If you want to mess around with vacant land–which I do not advocate unless you are knowledgeable or just love the stuff–you had better talk to a lot of agents in the area and check the multiple listing service and the newspaper advertisements. You have have to know a lot about the speed at which the properties are selling–or not selling–and their selling prices.
I’d suggest you never build any new house. It is a lot of effort–my brother has built two for his family. If you are interested in real estate for profit, you are almost guaranteed to make more money by dealing with already built houses that you buy for less than market value. There are some people who just have to build things. My advice is unless you are one of the, put out of your mind the idea of building.
Posted by Joshua on December 16, 2002 at 19:14:49:
Thank you for the insight and help Mike. Perhaps if I had more experience I could just buy the land then have a house erected then sell at top dollar. “But if I had the experience and was able to come up with the money to do that I would probably just live there. Very nice area.”
Anyhow, are there any techniques or ideas I can learn about to buy the land and do all that’s necessary to get a house up then retail it? “This is an area that in the last two years there’s been many many houses built and they are now ALL occupied.” Any ideas or techniques I can learn about to put to use at a future date?
Josh, Having devloped a couple pieces of property, i know that selling raw land at a profit is hard to do. First off banks dont like to loan on raw land and second there is no guarantee that it can be built upon with out some engineering work, Plot mapping well & septic design (which you would have to front load the cost) Both pieces of property I bought formerly had BOH approvals I just had to get the health dept to sign off and give me an extension. Another reason that it is hard to profit from raw land is that usually the land is already priced at FMV as is and for some prospective buyers, its hard for them to picture their house amongst all the trees . You will have to clear the lot which can be expensive and get those approvals. Then maybe you could find a buyer that has CASH to buy it from you. Now, you may be able to purchase the land with some “builders terms” such as “Contingent upon BOHA” and have the owner finance with a loan subordination clause, but your buyer better have a good Builder lined up with with a good bank to get the deal financed to cash you out. Hope this helps. MIke S