Ready to maximize your land flipping profits? Steven Jack Butala and Jill K DeWit break down the five main categories of land you can flip for profit, sharing insights on which types offer the greatest potential returns and where to find them across the United States. They discuss the pros and cons of flipping agricultural land, residential infill lots, commercial property, rural vacant land, and other unique land types like wetlands. Discover how to identify undervalued properties, navigate zoning regulations, and maximize your profits by understanding the diverse world of land investing.

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Maximize Your Profits: How To Choose From The 5 Land Types To Flip And Where To Do It

This is episode number 2067. We are talking about which of the five types of land you should be flipping and where in the country to do it or how it works for us, let’s say.

I love it when you do this. We haven’t done it in a while. You’ve done this in Career Path and other closed environments where you’ll look at the map of the United States and go, “Mailed it. Hate it. Love it. Don’t love it. This is good. This one is not good. This is a turney state. Watch out for that.” I love that. We’re not going to go into that much depth here, I believe, but you’re going to give us some other big-picture stuff. That’s so helpful.

That’s one of the things about you. You have the experience. You can do this. You have pretty much bought and sold land in probably every state. Not everyone can say that. You have experience with it. Even if we didn’t do it ourselves, there are deals that come up. That’s for me where I hit it. There are deals that we didn’t mail, but I’ve done deals in that state because it has come to me for funding and then I learned about that state, good, bad, or otherwise.

What’s cool about this is that we will talk about, from a definition standpoint, what the five types of land are. Chances are, you’re going to say, “I buy one of those all the time. That’s what I thought the land business was. I didn’t realize this stuff was over here.” That’s the point of this entire week. It is about what to add to your existing business that can give you another line of revenue.

Land Academy Member Question

On Monday, we talked about tax liens and tax deeds. On Tuesday, we talked about subdividing and splitting property. On Wednesday, we talked about mobile homes and houses. On Thursday and in this episode, we’re going to talk about different types of land. In the next episode, we’re going to talk about how Jill and I have kept food on the table doing this for 30-plus years. Each day in the show, we answer a question from our Land Academy member Discord forum and take a deep dive into land-related topics.

This question is from Matt. Matt wrote, “The places I’ve sent mail for several years have not generated the results we are used to seeing in my last mailer. What are your thoughts here?”

I would love for you to jump in here too because you’re more on the front lines than I am. We are in an economic downturn. We’re in an election year. By the time this airs, the election will be over. As of our record, the election’s happening. There’s some weird stuff happening at the end of 2024 because it’s an election year. Interest rates are really strange. I’ve never in my entire life watched the Fed reduce the prime rate and then watch mortgage rates go up.

There’s a tremendous amount of real estate on the market, but what’s on the market is not being devalued. Usually, when there’s more supply, there’s less demand, and vice versa. That doesn’t seem to be happening. I’m not an economist, but we talk about this stuff on a Thursday call a lot. I’m not sure exactly why you’re not having the regular positive response through the mailers that you’ve always sent out, but I can tell you this. We are in the same situation, and most people are.

That was a good topic that we had with Career Path. Someone said, “Thank you. It’s not just me.” We were like, “No.” That’s why we’re doing all these shows too. It’s to think about other things that you could be doing to increase your revenue or whatever and add to your existing business.

 by the way

That’s true.

The first quarter is usually amazing. I don’t do it too much anymore mostly because of Jill’s positive attitude, but I was famous for walking around the office on Christmas saying, “It’s over. No one’s responding to our phone calls. Nobody wants to sell their land,” and then on January 15th, we’re buying 25 properties. I really believe that’s going to happen. It’s more acute this 2024 because of the economy and the election.

I agree.

5 Land Types

This topic is about which of the five types of land should you be flipping and where in the country to do it. Here are the big category types of land. I’ll give you my comments and hopefully Jill will too. Agricultural property is the vast majority of property out there. When people say land, they think of farmland. That’s not necessarily what we all think of because I don’t believe farmland and agricultural land are the best types of land to flip.

Number two residential properties. These are infill lots or properties that are farmland in an urban area that will no longer be farmed and converted to some type of subdivision. That’s residential property. Those are very popular. Commercial industrial properties are properties that a municipality has designated where commercial stuff is going to go on. It may be for retail, a mall, manufacturing, or office buildings. Jill and I almost never buy commercial property. We have done it by accident and we have done it with intent at great profit.

I like it.

It’s really specific and you need to know what you’re doing.

The deals we have done though have been phenomenal. I have to say that. It’s more work, but they’re phenomenal.

The fourth type of property is rural vacant land. It’s a huge favorite in our group, us included. It’s an overlooked property where most people don’t see any value. What happens with rural vacant land is I might see $5,000 worth of value and you might see $50,000. I might see numbers on a spreadsheet and you might say, “This is a lakefront property that I’ve always dreamed of.”

Rural vacant land is overlooked property where most people don't see any value. Share on X

A griculture is worth what it’s worth. It’s priced like a commodity. I’ve said this several times on the air. Every morning, a bunch of farmers get together all over this country in our local coffee shop and say, “Land is worth $4,000 an acre today. Tomorrow, I bet it’ll be worth $3,900.” It’s priced like that. People like us aren’t going to come in and buy for $2,000 an acre, and we shouldn’t. Leave the farmers alone. Leave that whole industry alone. They know what they’re doing.

Infill lots and residential properties are valued by the stuff that’s going on immediately around it and adjacent to it. It’s very difficult to buy properties that are dramatically undervalued when they’re priced like that. It’s possible, and we do it all the time, but it’s more difficult. Commercial and industrial are specific-use related. I can have a really large piece of commercial property.

In Southern California, it will get valued not for its historical cost, but it will get valued by a company like Honda. They’ll say, “I don’t care about how much this land costs because I’m going to be building cars here,” or, “I’m going to put a regional office here because it’s easier to hire people,” which is what happens in southern California. Southern California was built on companies going there and building plants, the aerospace industry specifically, because the caliber of people that they believed they could hire was higher and typically not unionized.

Do you see that in Arizona? I do.

Yes. It’s moving to more rural markets.

Even in Texas.

It’s more economical for large companies to bring in their workforce than to rely on a local workforce. It’s very hard and specific. It’s a crapshoot to make money in commercial, but you can do it. Rural vacant land is where we hang out. That’s where there are massive variances in value. Some people are so tired of getting a tax bill. They’ve gotten a tax bill for 30 or 40 years. They’ve paid hundreds of thousands of dollars over the years in taxes and we’re buying their property for $8,000. You don’t see that in those other types of properties.

When you say, “Tell me about land,” I see two types. Are you ready for this?

Yeah. This is good.

One is federally protected land. It’s like, “Don’t touch it. You can’t. Good luck.” Two is everything else that we do. It’s like, “I can’t touch it and I can touch it all.”

You can’t play on it. I see what you’re saying.

I can’t buy it and sell it. Federal protective land, which is near and dear to my heart cannot be sold. It’s done. It’s a park.

You can buy and sell it, and then there’s government property.

There’s stuff I can buy and sell and land I can’t buy and sell. Those are the two types for me.

There’s a Native American reservation, federal land, state land, and Bureau of Land Management. That’s what you mean, “I can’t touch it.” There’s property that’s available for the public to buy.

That’s it. Those are two types for me.

That would be a much easier topic to discuss.

It would’ve been a good topic.

Jill nailed the fifth category, which is other types of property and it has to do with specific use. The top one that comes to mind on other types of property is designated wetlands usually in Florida or on the coasts that you can buy and sell but can’t use. You can use it for recreation. There’s a whole slew of other types of property. They always come up because they sneak their way into people’s mailers. After you send the mail out, you find out, “It’s all wet. I can’t do it.”

People love to buy it for weird reasons like duck hunting or snow skiing. There’s a massive trend to put conservation easements on properties. Municipalities are even giving you tax incentives to do that. A would-be property that could potentially be into development has got a conservation easement on it and the owner doesn’t have to pay any taxes or very low taxes. Its future use is very inhibited, if not restricted entirely. It’s a scary thing when you think about it.

I’m not a huge fan of that. There’s a time and a place for it. To blindly do it because you want to save money or get out of something you got into, I’m not a fan of that. I don’t think people know what they’re getting into with that. It’s scary how easy it is. It’s like a deed restriction. You can do all kinds of crazy stuff and be like, “What did you do? I make sure no one will ever build there.” That’s in Manhattan, New York. Is that its highest and best use?

Choosing Your Land Type

Let’s go back to the list and talk about how you should make money. We do not seek out mailing properties in agricultural areas like in the center of the state, Iowa, Nebraska, and all of that. Once a year, for whatever reason, a property sneaks its way into our mailer and a very motivated seller calls us and we buy a piece of property that’s being actively farmed.

Most of the time, for the person who owns it, there’s somebody farming it and they don’t even know that. They don’t know it’s being farmed. They’re not getting paid from a lease standpoint and all of that. Jill and I buy it and immediately resell it. The person who’s farming it continues to farm it but pays the industry lease. There’s no harm there. I don’t think that’s a place where you should add that to your business. I don’t think it’s profitable.

Infill lots, if you’ve never done them, can be great. They’re easy to value. They’re easy to identify in a mailer. If you’re not buying and selling infill lots, you should consider it, especially in urban areas and for cash. Jill and I had a very long detailed conversation about the impact of interest rates on property. We have always bought property for cash. When interest rates are really low, it artificially, which has been for years, inflates the value of property. When they’re high like this and there’s a lot of property on the market, we come in and smash them on the price. That works well. Infill lots are perfect for that.

Commercial and industrial are really specific. If that’s your thing, nail it.  If you’re a commercial real estate broker and you’re reading this, you know the markets you’re in. Send a mailer out to all the commercial markets that you know. You’re going to pick up some property as an owner, and you probably know who to partner with. You know the values of that stuff. That’s insider information. That’s great.

For rural vacant land, we built the companies on this, Jill, me, and Land Academy members. There are some gems in that and the others. Northern Michigan has a lot of property that is unusable which hunters love. Recreation property for water use and hunting is great. I’m trying to think if we’ve done a rec deal. Does anything come to mind?

No. We’ve been, as a group, mostly focused on property that’s going to turn around and be built upon because housing is such a hot thing. I know there’s some going on in Land Academy, but with the deals I’m looking at, it’s a nice option. That’s one of my favorite things when you have multiple uses on a property. It’s 40 acres. You can build upon it. You can camp on it. You can do this. You can do that. I love that.

It’s important to know these categories and subcategories because that’s a really good way to sell your property. I see the description in a for sale property like this, “40 treed acres in a beautiful little area. It’s close to Walmart.” What the heck am I going to do with it? I would like to know what’s possible. You should be saying, “Zone AG3. You can do this on it. People in the immediate area have horse breeding.”

People don’t do that.

Paint picture fruit for me. What is it? If it’s commercial property, you can say, “This is pre-zone for a 48,000-square-foot heavy manufacturing facility.” Knowing your property is my point, hopefully, before you buy it, not before you sell it. Here’s the truth time. We have gotten into these subcategories by accident and gotten our way out of it because we learned what it’s for and sold it that way.

Just know your property before you buy it and before you sell it Share on X

Join us in the next episode where Jill and I are going to talk about the truth about how we have kept food on the table for 30 years flipping land. This topic came up because there’s a little bit of a downturn because of what we said earlier. There’s an election going on. We’ll talk about how we’ve gotten through those cycles in the episode. You’re not alone in your real estate ambition. We are information and inspiration to buy undervalued property.