Flip Raw Vacant Land for Passive Income

While flipping houses has been all the rage, flipping land is actually far more passive and profitable. Other advantages of flipping land include less costs, less taxes and less headache. Considering raw land is substantially less expensive than houses, you'll likely not even need to finance its purchase, which ultimately means more profit for you. Other ways to approach this profitable side hustle include buying land for development, subdividing, selling land owned free-and-clear on a note and much more. Read on to learn more about this opportunity.

The Benefits of Raw Land Flipping over House Flipping

House flipping requires a significant investment of money upfront. You may even need $50,000 or more to buy a house in a bad neighborhood. Most people do not start out with enough money to flip houses. The perfect alternative is flipping land. You can buy raw land at dirt cheap prices way lower than anything you'd see on MLS listings. Concentrate around new construction (substandard housing) and resell it for much higher prices later on due to location advantage or its uniqueness in some way (landmark property).

Land flipping entails finding raw land at cheap prices, maybe due to bankruptcy or foreclosure proceedings. It's not generally as complex as flipping houses because there is no need for contractors to tear things up and put them back together again. Other benefits include:

1) Low upfront cost. If you’ve got as little as $2,000 cash, you can become a property owning investor with vacant raw land.

2) Not as necessary to visit. Vacant land can be bought, flipped, and sold without ever leaving your home. No need to visit the property. So why not buy land out of state?

3) No Mortgage necessary. If you have poor finance history , it won't matter. Most land is cheap enough to buy without financing. You can even use a credit card. It also means less paperwork.

4) Taxes are minimal. Property taxes are quite low on vacant land. Even if you possess the property for months or even years waiting for a good buyer, you won’t break your bank account. The costs are negligible.

5) Diversify. Instead of buying one house, you could buy multiple parcels of raw land (sometimes in bulk) for diversification and then resell them later individually at a profit.

6) Better profit margins. While possible with houses, it's far easier to flip vacant land to double your initial investment.

7) More Passive Income Streams – Paying cash for your land gives you the opportunity to offer financing to buyers. This will provide you with another source of passive income since you can collect interest on the buyer's payments for the length of the term.

What Does Flipping Land Entail?

Land flipping is quite simple in many ways but has some requirements that are worth considering.

1) Due Dilligence. If you want to make the best profit, you have to be willing to put work into it and learn the process. The average person just looks for something they can flip quickly, resulting in poor profit margins. Instead, do a lot of market research. The more you know about real estate, the better off you'll be. There is a lot to know, but it's not rocket science. The best website for collecting knowledge on real estate is biggerpockets.com.

2) Be patient. There are plenty of potential deals on raw land, sometimes due to seller's bankruptcy or foreclosure or because their situation has changed (maybe they have a new baby now). You must make an effort to find good deals, sometimes online at websites like Craigslist and Zillow, or even through contacts or referrals. You can find raw land at dirt cheap prices in the most extreme cases, but you have to do some legwork and look harder than most people. Otherwise, it will be much more difficult to turn a profit.

3) You need a good team (like contractors) depending on what you'd like to do with the land. Or you can accrue the skills yourself to save in costs. In addition, to analyze the land in accordance with zoning laws and other potential red tape, you might want to hire an expert as well.

5) Funding. You need funds to purchase the land, especially if you intend to develop it. You can self-fund, which would make it easier than taking out a loan from a bank which typically takes much longer. You can also get personal loan from a family member or friend. Another option is real estate crowdfunding sites like Patch of Land.

6) Recreate/redevelop: Once you have the funding in place and completed the deal, you can now start redeveloping your raw land. Something as simple as raking dead leaves away, clearing out ugly foliage or even putting markers for a potential driveway can go a long way in helping boost the price and getting the attention of prospective buyers. Anything more than that, it's recommended to hire experts.

7) Marketing and pricing. Once you're done fixing up the land, it's time to resell it for a profit. Most people prefer to invest in houses, so you have to advertise your land wisely in order to nab these potential buyers. Do plenty of market research to find a suitable price. Perhaps hire a realtor to help.

8) Make the Sale. Most buyers will pay a higher price if it’s easy for them to purchase. By simply offering easy financing with a small monthly payment plus low interest rate, you might get more offers and a quicker sale. Once you have struck a deal, use a “land contract” or “contract for deed” for a quick and easy sale. Free land contract forms can be found online. These forms ensure that you retain the title of the land until the final payment has been completed. Afterwards, you can sign the deed over to the buyer.

Vacant Land

Flipping land is not a new concept by any means. Like flipping houses, only savvy investors had taken advantage of its potential profitability for centuries. However, the internet has leveled the playing field for everyone. Now anyone with a little cash and know-how can make money flipping land. Anything you need to know, including available parcels of land and market research, can be found with just a few clicks online. In addition, there are plenty of stories of investors becoming rich off just a few successful flips. This mostly passive enterprise can make you some serious real estate profit.

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