3 STEPS to buy 2.55 Acre Commercial Lot for $500 (Total Price)

I’ll cut to the chase so you don’t have to read this whole post (unless you really want to know how we do this every week):

The owner did not want this property any longer.

Here’s the steps:

  1.  Send a ton of letters to landowners who don’t want their property any longer.
  2.  Sift through the ones you get back and pick the best.
  3.  Buy the properties.

I chose this blog topic today because we just completed the acquisition of this property in South Eastern California. Before I wrote the post, I checked our acquisition file and there are more than 500 properties under review that are very similar to this one.

For fifteen years I’ve been answering these two most frequent questions when this business model comes up:

  1. What’s the catch? I don’t believe this is possible. Please explain how you do this because I really don’t believe you.
  2.  If this is true (or even half true), then why are you sharing it with everyone? Why wouldn’t you keep this to yourself and take it to the bank?

Answer 1)

Rural vacant land is very difficult for land owners who are not in the real estate business to sell (or so they think). You can’t put a for-sale sign on it. Every MLS I’ve seen in the county has tens or hundreds of thousands of vacant land parcels available for purchase that have been on the market for years –literally.

Every year about once a year (sometimes way more often) landowners get a tax bill from the county where the property is located. If we do our job, they open the tax bill and hold it in one hand and in the other hand they are holding our offer for $500.00.

They have a choice: “Write” a check or “get” a check. That’s write a check to the county for taxes owed or get a check from us to buy the property and stop the county from asking for money forever.

Lots of land owners choose to get a check.

If you had a car in your garage that you are sure you are never going to use again and you were being charged $300 a year to keep it there, you would probably sell it to the first person who would make the whole “problem” disappear.  That is how most of our sellers see this situation.  They see liability.  We see opportunity.

This is how you buy land for super cheap.

Answer 2)

The people we share this information with, end up being our business partners and we do more transactions.

I kept this to myself for the first 12 years of my land career. I realized that the opportunity in this area is just about limitless. So I decided to publicly share all the details of buying and selling unwanted rural land. In the end it has created at least ten times the acquisition opportunity we experienced on our own.

The key to success is sending the right mailers out to the right landowners at the right time of the year.

  • Send a purchase agreement, not a yellow letter or a post card.
  • Send the mailer to vacant land owners who show signs of not wanting the property any longer (back taxes, out of state ownership, etc)..
  • Send the mailer out at the same time the county sends the tax bills out.

Believe me, we have made every mistake in the book when it comes to mailers over the years.

After fifteen years what still amazes me is how grateful the sellers are to us for solving their perceived problem. We regularly get hand written thank you notes. I keep them on a board in our offices.

So that leaves us with “Sales.”  How to sell all this land?

My moto has been something like this: “when you buy a property for $500, you don’t have a sales problem. Double your money and keep moving forward.”

Let’s take a look at that math:

Each property costs $500 and sells for $1,000

1 Property you buy for $500 and sell for $1,000

2 Properties you buy for $1,000 and sell for $2,000

4 Properties you buy for $2,000 and sell for $4,000

8 Properties you buy for $4,000 and sell for $8,000

16 Properties you buy for $8,000 and sell for $16,000

32 Properties you buy for $16,000 and sell for $32,000

64 Properties you buy for $32,000 and sell for $64,000

128 Properties you buy for $64,000 and sell for $128,000

256 Properties you buy for $128,000 and sell for $256,000

512 Properties you buy for $256,000 and sell for $512,000

1024 Properties you buy for $512,000 and sell for $1M

We have generated more than $20M doing this over the years.  It all started with a few thousand dollars on my coffee table on Sundays.

If you keep your job, do most of the work on the weekends yourself in the beginning, you can create a bundle of equity pretty quickly.

Then take the money and pay cash for some rental houses or apartments.

Five good rental houses can feed a family for generations: 

$1,800 x 5 = $9,000 a month for your lifetime and your kids lifetime.