Make a Fortune Investing in Land

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You can make a fortune in the land. That said, I won't go back over what is probably one of the most difficult types of real estate investing. The reason you can double, triple (or more) your land money is because it is one of the least understood real estate investments. It offers an amazing benefit if you know what to look for and what to do, as very few people understand the land. It is, however, no different from any business. Think of used cars, for example. If you know cars inside and out, you will be able to buy a cheap car from someone selling their car who doesn't know its value. You can then turn around and sell it for a profit. You have capitalized on your knowledge. Plus, you can repair the wing, polish and shine, and even make more money by creating more value. The same applies to the earth. You buy from someone who doesn't understand what you can do with it and you profit from it.

The key elements for making money on earth are:

1. Know your market. Don't even think about buying land outside of the market area you know intimately. Little things can trip you up, even though it seems like nothing can go wrong. Start looking at every piece of land in your market.

2. Dream team. You cannot do it alone. You will need to have close relationships with a civil engineer, land attorney, zoning official, site contractor, real estate agent, and lender.

3. Understand what is selling. You need to know what type of land is selling in your market and at what price. You will need better quality at a lower price. Land is the hardest asset class to sell and has no cash flow. It is very important.

4. Know your zoning. Almost all cities have zoning by-laws which generally describe in a table the basic requirements for having a legal lot (frontage, area, setbacks, etc.). In areas without public water or sewers, you will also need to know about health codes, soils, and wetland issues. Essential to know.

and finally…

5. Create value. This is what it is about. You can buy a lot at a discount and return it, or you can really make money by upgrading it and then selling it. Types of improvements include zone changes, building lot approvals, subdivision, land improvements (access, views, and beautification), free cuts, title merger and conservation tax easements, to name a few.

Once you've targeted a piece of land, there's another major step involved which is the contract or option to buy. The way you structure this can be the difference between making money and making LOTS of money. But that remains for another article.

Do not think that you are going to go out and make a fortune in the dirt without having a lot of knowledge first. You will be hurt. On the other hand, study and learn and you will profit generously from it.

Go to my website http://www.realty-capital.us and read my course on education if you like. I give specific examples of land deals I have made. Thank you!


82 COMMENTS

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