With about 20 years working as a professional land investor, Mark has been buying and selling raw undeveloped land since 2001 and has made 6,000 transactions to date. A hugely untapped market, raw land can potentially be very lucrative for an investor willing to learn the strategies needed to be successful and put in the effort to close the right deals. In today’s episode, Mark shares with us his unique way of buying raw land and making a passive income stream from them.
Prior to getting into raw land investing, Mark was an overworked, micromanaged, and stressed-out employee. This was in 2000. His firm back then hired a guy, who told him about his side hustle flipping land parcels and making a 300% return on his investment.
Initially doubtful on whether it was true, Mark followed him on a trip to New Mexico. There, Mark bought 10 half acre parcels for $300 which he later sold online for $1,200 each.
Later, Mark went to an auction in Arizona and sold the land he purchased from there and made $90,000 cash. It took him only 18 months before the land investing income exceeded his investing income. By then, he decided to dedicate himself full time to land investing.
Raw land investing starts first with getting a list, either from the county treasurer’s office or the county assessor. Mark prefers to buy raw land that is distressed, meaning the landowner owes back taxes. He also looks for landowners who live out of state from where the property is located and have no interest in the land.
To come up with his price offer, Mark looks at the last 12-18 months of comparable sales. Comparable sales information can be gotten from the country assessor’s office or reverse engineered from Landmodo.
He then takes the lowest comparable sale and divides it by 4. That will be the basis of the offer he will make for the property.
A mailing company is used to manage sending out the offers which the owners can accept either through going to their buying website or mailing them back.
The first kind of buyer that Mark targets to sell the land to is the neighbor. He argues that the neighbor might want to buy the land to maintain their privacy.
If the neighbor doesn’t bite, then Mark will go through his buyer’s list. If that doesn’t get any results, he’ll go to Craigslist, Facebook buy-and-sell groups, and online land buying platforms.
So far, Mark has never found himself stuck with a piece of land he couldn’t sell.
There are certain people who like buying raw land. Typical buyers include those who like recreational land for camping and hunting, military people, and people who don’t like other people.
In the past, Mark used to auction off the land for cash on eBay, where they would sell in 7-10 day auctions.
Now, he utilizes the buying and selling platforms available online such as Bid4Assets. He still spends money on platforms, but his marketing expenses are only under $1,000 a month.
To make his offer irresistible, he offers seller financing where the buyer would only need to make around $2,500 down payment then pay installments of maybe $449 a month.
With Mark’s way of making passive income from raw land, he is exempt from the Dodd-Frank Act, RESPA, SAFE Act. He also doesn’t need to do rehab. This is eliminating all the headaches of a landlord but still allowing him to reap the benefits of a passive income stream.
Get educated and start learning. Anyone can go to his website or YouTube and find free resources.
Mark advises against buying in an area that has Superfund Sites as those have industrial waste that would cost you a lot of money to clean up. To find out if a location has Superfund Sites, just go to the Environmental Protection Agency website.
Another big risk in buying land is overpaying. For Mark, he wants to make sure that he’s paying 25 cents to a dollar. If the response rate to his mailing list is under a 3% response rate, then Mark believes his offer might be too low. But if the response rate is over 5%, he will become nervous that his offer might be too high.
Mark offers training for those interested in getting into this type of investing. Students are provided a secret countries list and are properly trained on the steps to do this.
Usually, the program costs $97 but Mark is now offering it for free and listeners of this podcast can then decide if his model resonates with them.
For Mark, grit is what separates the ones who make it work for them from the ones who don’t. To be successful, you would have to dedicate yourself to doing this in the next 3-5 years.
Most find that getting the list is the first challenge they’ll encounter. It takes a lot of problem-solving at the very beginning.
Also, to avoid creating another job for yourself, it’s better to outsource the work to a VA. Sites such as LandVAs offer already trained virtual assistants for land investors.
Rather than get full cash for his land, paying the taxes, then reinvesting the cash on another property, Mark wants to avoid the hustle of constantly reinvesting by providing seller financing and getting passive income. This way he doesn’t need to work on turning his money over 7 times.
With his system, he retains ownership of the underlying asset and doesn’t have any cost of foreclosure. Instead of using a Deed of Trust, Mark uses a land contract for his deals.
Raw land is a huge market where almost no one is doing it. It’s a less sexy, more geeky way of investing, but the lack of big players means that there is more deal flow than there are investors.
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