You can make a fortune on earth. That said, I won’t sugarcoat what is probably one of the most difficult types of real estate investing. The reason you can double, triple (or more) your money in land is because it is one of the least understood real estate investments. This provides an incredible advantage if you know what to look for and what to do because very few people understand the land. However, this is not unlike any business. Take used cars, for example. If you know cars inside and out, you will be able to buy a cheap car from a person who sells your car and does not know its value. You can then turn around and sell it at a profit. You have capitalized on your knowledge. Plus, you can fix the fender, polish and shine, and even earn more money by creating more value. The same applies to the land. You buy from someone who doesn’t understand what to do with it and capitalize on it.
The key elements to earn money are the following:
1. Know your market. Don’t even think about buying land outside of the market area that you know intimately. Little things can trip you up even if it seems like nothing can go wrong. Start browsing all the parcels in your market.
2. Dream team. You cannot do it alone. You will need to have a close relationship with a civil engineer, land attorney, zoning officer, site contractor, real estate agent, and lender.
3. Understand what you sell. You have to know what type of land is sold in your market and at what price. You will need to have a better quality at a lower price. Land is the hardest asset class to sell and has no cash flow. This is very important.
4. Know your zoning. Almost all municipalities have zoning regulations that describe in a table, generally, the basic requirements to have a legal lot (facade, surface, setbacks, etc.). In areas without public water and sewerage, you will also need to know health codes, soils, and wetland issues. Essential to know.
and finally …
5. Create value. This is what it’s all about. You can buy land at a discount and turn it around, or you can actually make money by upgrading it and then selling it. The types of improvements include, zone changes, approvals for a building lot, subdivision, land improvements (driveways, scenic views, and beautification), free courts, title mergers, and conservation tax easements, to name a few.
Once you have a target parcel of land, there is another important step involved which is the Agreement or Option to Purchase. The way you structure this can make the difference between making money and making A LOT of money. But that remains for another article.
Do not think that you are going to go out and make a fortune on earth without first having a lot of knowledge. They will hurt you. On the other hand, study and learn and you will reap great benefits.
Go to my website http://www.realty-capital.us and read my education course if you want. I give specific examples of land deals that I have made. Thanks!