413: Real Estate Investing Without Tenants, Toilets and Trash

May 12, 2020bmanasseroUncategorizedNo comments

SHOW NOTES FOR EPISODE 413: REAL ESTATE INVESTING WITHOUT TENANTS, TOILETS AND TRASH

Do you want to invest in real estate but are a bit strapped for cash and also not too fond of going into debt? No worries. In this podcast episode, blogger and real estate investor Seth Williams shares insider tricks on how you can buy vacant land for as little as a few hundred dollars and flip it with returns in the thousands.

What You Will Learn

Why buying vacant land has 90% less of the headaches associated with buying rental properties
How a $500 land purchase flipped at $25,000
How you can create monthly cashflow with raw land
About a situation where Seth bought a piece of vacant land for $500 that he turned around and sold for $25,000
How to make 5-figure profits from properties without doing anything to them.
A way you can automate 80% of your workload with software and get your time back.
How to find and buy off-market properties for 10% – 30% of their market value.
Tricks on how to find out which are the best markets to flip land

About Our Guest

Seth Williams

Seth Williams is a professional real estate investor and the founder of REtipster.com – a real estate investing community that teaches self-motivated people how to make great money from real estate while minimizing risk and creating more time for the things that matter.

More About Seth

He’s 36 (a millennial)
Youngest child in his family
Grew up in Grand Rapids, MI
Nearing the end of his college years, he realized he didn’t want to do the “get a job for life, retire, etc.”
He wasn’t excited about what was ahead
Reading books to see what the next phase of his life would be
Came across Rich Dad Poor Dad by Robert Kiyosaki and it changed his life – opened his mind to this new paradigm that he never knew about
He learned how you could build wealth by buying assets, things that produce cashflow and put money in your pocket
Kiyosaki talks about real estate in his book but he didn’t get into the “hows” of making it with real estate

Becoming a Real Estate Investor

Seth spent hundreds of hours researching and trying to find good real estate deals in his market that he could either buy to flip or to hold as rental properties for his portfolio
It was around 2005, 2006 and real estate prices were pretty high nationwide
Having a hard time finding good deals
He soon realized that the difficulty he was having was because of the fact that he was only looking at publicly listen properties on the MLS. He thought those were the only options
A few years later, he realized there were other ways to find good properties
He found out about “delinquent tax lists” – a list of properties that every county in America, of property owners in each county that is currently delinquent on their property taxes. This is not a list of people who lost their properties for delinquent taxes. They still own the property but are late and, it they don’t pay their taxes, they could lose their property

Focusing on Raw Land

Seth decided to go after “vacant land” properties because there’s no one living on the property, there’s no house on the property that’s falling apart, no tenants to deal with, there’s noting people can steal or destroy and you can buy the property for almost nothing – 10% of actual value.
And because he could buy the land so cheap, he had “instant equity.” Also, he didn’t have to do anything to the land – just buy it and sell it! Plus, it was so cheap that he didn’t have to borrow or go into debt to acquire the land
He obtained the delinquent tax lists in his area and mailed postcards to the people on the lists saying, “I see you own property in ________ county and I’m looking to buy properties in that county. If you want to sell, give me a call back.”
Lots of people responded. He had up to an 18% response rate
He bought his first property for only $331
It was an hour away from where Seth lived
It was a half acre vacant buildable lot
The owner was on the other side of the country and hadn’t seen it for 20 years. To the owner, the land was just a tax bill, a nuisance and Seth relieved the owner of the problem and gave them a little money too
Seth listed the property on Craig’s List and sold it for $1,900
It was a “light bulb moment” for Seth
He thought that if he could do more of these transactions that he could start to make some serious cash

Expanding his Land Buying Business

Seth started looking at higher priced properties
As the years went by, he was investing a few thousand dollars in a property and would sell it for $20,000 to $30,000
He also realized that he didn’t have to do this in his own backyard. He could do this all over the country
He found that you could collect the info you needed – due diligence – either for a small fee or hire someone to drive by the land for you
It’s not like a house where you have to get inside it and inspect everything. It’s just dirt

Seller Financing

Because the properties are relatively inexpensive, you can also provide seller financing
You can sell the property faster
Most banks don’t finance vacant land (unless you have an immediate plan to develop the land)
Opens it up to more potential buyers
You can ask for a down payment, which means you can get all the money you invested right back, right away
- Every payment after that, for the next 5 years, is pure profit
It does take a little bid of management to set up the systems for the payments
People can pay late or stop paying altogether
But overall, it is effective and can generate a steady cashflow for you

Due Diligence

Because it’s relatively inexpensive, people don’t want to spend a lot of time researching the land
However, if you don’t do your due diligence you can have big issues later on
Seth has a blog post on his website where he sites 15 things that need to be evaluated before purchasing a parcel of vacant land
Things like
- Is it in a flood zone
- What can actually be done to the property
  - Appraisers have something they refer to as the “highest and best” use for a piece of vacant land
    - You could build a house on it, a commercial building, a car wash but only one of those things will make it worth the most
  - You have to know what a property can actually be used for and what the local zoning will allow me to do with the land
  - You may find that you can’t do anything with it
    - It’s too small to build upon but maybe you can rent out the space for someone to park their RV
    - If there are wetlands on the property, it may be protected and you can’t build on it
    - If there’s no road access – land locked
      - However, he did buy a land locked property for $500 that he ended up selling for $25,000
        
        The person who owned the land found no value
        
        But the neighboring land owner saw the land as very valuable and that’s who bought it

Finding Good land

If you don’t have a lot of money, a delinquent tax list is a good place to start looking for good vacant land deals
Seth also uses outside real estate data research services like:
- Datatree
- AgentPro247
- Seth has video tutorials on his website to teach people how to use these services
- You can select the data you want for a list:
  - State
  - County or counties
  - Property type
  - Property size
  - Where the owners live
- You can download the list in various formats
He usually does direct mail to find properties
Now he has a buyers website where people can list their land for sale
- Has a form on the website that asks lots of questions
- One question he asks is “What do you think your property is worth?”
  - One hour after they submit the form, he has an automated response go out to the seller with an offer for 9% of their property “worth” price
    - It’s just a way to flush out if people are willing to accept his price
    - Has saved him a lot of time and hassle
    - People who want a faster quote, are asked to go call
- He does a lot of SEO that also attracts a lot of traffic

Finding Buyers

Biggest bottleneck for success is selling the land quickly
- Sometimes you get luck and can sell the land immediately
- What happens if you have to wait a week, a month or several months
The trick is finding a market where properties sell quicker. These are markets where there is
- Lots of tourism
- Job growth
- Population growth
- More desirable area
Seth likes to spend as little money marketing as possible. He tends to find websites where it is free to market:
- Facebook Marketplace
- Buy and sell groups
- Craig’s List – Not as good as it used to be but still works
- Zillow “For Sale by Owner” Listings
You also need to make the listing look “irresistible” – an “offer they can’t refuse”
- Get beautiful pictures of the property
- Make it a “no brainer” for someone looking for land in that area – “This is the one you need”
Most people buy land for emotional reasons, not for logical reasons. They are “buying a dream”
- I want to own this property so that, one day, I’ll…
  - Retire there
  - Build a cabin to take the kids
- Many people buy land with the dream but few ever follow-through
- Make sure you take good pictures of the land. Hire a professional photographer, if necessary

How do You Know What a Piece of Land is Worth?

This is one of the biggest challenges
Most professional appraisers don’t even know
Appraisers look at:
- The Cost Approach
  - What would it cost to replace the land?
  - Doesn’t apply to raw land
- Sales Comparables
  - What is other similar land in the area selling for?
  - This is difficult because there may not have been land sold in the area
- Income Basis
  - How much is the property making?
  - Doesn’t apply to land
What it really comes down to is that the property is only worth “what someone is willing to pay for it”
The longest he ever held on to a piece of land was 15 months
Average hold is under 9 months – 80% sold within first 9 months

Biggest Mistake

Most of Seth’s biggest mistakes usually came from lack of good due diligence
He once paid $324 for a weird triangular lot
- Too small to do anything with it
- Odd property
- He just contacted the owner of an adjacent property and asked if the guy wanted it for free and he quick claimed it to the guy

Biggest Success

Now he has a buyers website where people can list their land for sale
- Has a form on the website that asks lots of questions
- One question he asks is “What do you think your property is worth?”
  - One hour after they submit the form, he has an automated response go out to the seller with an offer for 9% of their property “worth” price
    - It’s just a way to flush out if people are willing to accept his price
    - Has saved him a lot of time and hassle
    - People who want a faster quote, are asked to go call
- He also does SEO that attracts people to the website

Advice for Old Dawg’s Considering Real Estate Investing to Help With Their Retirement

The appeal of land investing is something that could appeal to seniors or retirees
- Seth likes the land business because it’s lower risk and there’s no debt involved
- He also looked at land as supplemental income (he tries to do 10-12 bigger deals a year)
- It’s not passive. It does require time but more like a hobby requires time

His Business

Seth has multiple businesses that produces income besides land investing
He is interested in expanding more into passive types of investing (hard money lending, self storage, Triple Net leases, etc.)

Rap-It-Up

Favorite real estate book: The ABCs of Real Estate Investing by Ken McElroy
Favorite business book: Thou Shalt Prosper by Rabbi Daniel Lapin
Most valuable web site for success (other than your own): YouTube and Reddit
Favorite app: Slack
Favorite quote: “I never lose. I either win or I learn.” – Nelson Mandela
If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? He would get a hold of delinquent property tax land holders and do what he did to grow by investing in land.

How to Reach Seth

Website: RETipster.com
Free Mini Land Flipping Course: The Land Flipping Lifecycle

DISCLAIMER: Many of the above strategies take knowledge and have a higher degree of risk. You need to do your research and/or work with someone who is experienced to reduce your risk.

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com

bmanassero

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