Leveraging Land Investing to Leave His Full-Time Job

0:04So land is really interesting to me we we actually live on 45 acres and we've been talking about like developing part of it for for short-term rentals and stuff but it's gotten me a lot more interested in land so the the biggest thing I think that is a hurdle for a lot of people when it comes to land investing is you know you talked about if you could buy something at a fraction of what it's worth but the value like when I want to know a value of a house I look at the comps all around it and I feel like I get a better sense of value value feels very subjective to me when it comes to land how do you how do you identify that to know that you're buying something at a fraction of what you can sell it for yeah no you hit the nail on the head man it is it's very subjective and there are times when it's less subjective when you can get a lot more clarity

0:52On it but when you look at how an appraisal is done for a house it's much easier to appraise any kind of building than it is vacant land because you've got the income approach you've got the sales comparison approach in the the other one the cost to rebuild three different ways you could look at it to determine what is this thing objectively worth with land there is no cost to rebuild because there's nothing there and income approach usually there's no income unless it's like farmland or something and the only thing you have is the sales comparison approach so looking at similar vacant lots and what those sold for recently and if you're talking about like an infill lot like one of a hundred vacant Lots in a subdivision then you can probably find some comps for that because there's a you know a cookie cutter comparable to work with but

1:41I know in a lot of places in Indiana and a lot of places in Michigan there are literally no comps for certain properties like there's a there might be a 5 acre parcel on a hillside by water like there just isn't anything else like that nearby that recently sold which leaves you to deal with a lot of imperfect information to try to figure out okay so what's the next best thing we could use and you know the next option might be find a property that isn't really a comp and maybe it's a different size and try to figure out okay well if we take that and back into it over here like it sort of get you there but not like a 100% certain answer or you could look at comps further away or go way back in time and the further out you go the less you know the less quality of a comp it is

2:30And this whole reason right there is part of why most banks won't touch vacant land unless you have an immediate plan to improve it that starts to change a little bit when it's vacant land like over 150,000 bucks they start looking at other things and your personal financial net worth and that kind of stuff but but like if you just wanted to go out and borrow 20,000 bucks to buy a vacant lot like is's a good chance most banks won't talk to you unless you have building plans to do something something with it so on one hand like it kind of stinks it does make things harder but on the other hand it's important to understand that the reason a lot of people buy vacant land is not because it makes logical sense they do it because they're buying a dream like they want this idea that yeah I

3:18Can park my RV there on the weekends or I can build my Cottage there someday when my grandkids will come visit me and all this stuff and reality is most of that's never going to happen they just have a dream and they want to own land I mean I've sold landlocked properties to lots of people not keeping any secret that it's landlocked like I say it in the listing they know they can't get to the property so it's essentially worthless like it might as well be on the moon but people will still buy that stuff because it's almost like a I don't know like a conversation topic or something like yeah I own land out in Idaho or something yeah so again like it's it doesn't make logical sense but you know you can kind of see why some people do this and in terms of what what that thing is worth I mean there's lots of ways you can Elevate the perceived value and nobody can

4:06Really tell you otherwise because there's no comps for it and there's ways you can you know get really good pictures of it and give lots of good information and paint a picture explaining why it's a great property again not not misleading people you don't want to hide stuff from them you're just telling them what it is but you're doing it in its best possible light and when you have that versus other property listings with terrible pictures or no pictures it's not hard to look like the best property in the area and it's you it's just a matter of understanding I mean and also other ways that you can make it worth more like if there's no Road access get Road access you know like buy an EAS from somebody if the zoning isn't right change the zoning like with your property you could subdivide that so there's lots of ways you can take a property that the

4:55Acquisition price that you buy it at it legitimately is not worth much and you're making a discount counted offer on that but then once you own it there's a lot of Leverage you can pull to increase the value whether it's perceived or like verifiable based on its uses interesting yeah that's I can see so it's like almost like marketing it's very it's kind of funny how similar that is to airbnbs you know it's it's a lot of it is how you Market especially with like these glamping sites and stuff like that we went and stayed at a place called fields of Michigan in Michigan in your neck of the wood there South Haven and we stayed in a tent and they charge $350 a night to stay in a canvas tent really which that's that's the response every single person says when I tell them the price tag to stay

5:43In a tent but we would actually go back and do it again because the experience was was amazing I mean they you're in nature but they've taken any struggle that comes with being in nature out of it you have your own bathroom in the tent like they pick you up on a Gator and drive you to the tent and start your campfire for you and serve you this gourmet breakfast like it was amazing but it's marketed as this like exclusive incredible experience as opposed to right down the street there's another site that charges barely a hundred a night exact same tent but the pictures the everything about it is just totally different so yeah that makes a lot of sense in what you're you're talking about in terms of just the way you position whatever it is you have makes a lot of difference

6:32In terms of the value of it or perceived value I guess so so how are you getting the information when it comes to land research then it's it feels like that's a little bit harder than when it comes to like sold houses well I guess it just depends which information you're referring to and what area in like if you're talking about you know what was the past sales price or what's the size of it or what the coordinates of it or who's the current owner like a lot of that stuff is very easy to get is that what you meant D you mean something else well that on the property itself but then also on the comps and sold sold lots and all that stuff yeah yeah well I mean I'm not sure how you would normally do it but like my

7:20First place that I would be going is a place like Zillow or red fin and just typing in you know this is the ZIP code or the county or the general area and I'm looking for only vacant lots and we're going to look back maybe the past year or maybe the past six months to see you know how many properties sold if you can narrow it down by the size range similar to the property that you're looking at that's another way to do it even then that still might not give you like a plentiful data depending on the market but that's one way to start if you can't find any good sold comps another way is to look at listed properties and that's definitely not the same quality people can ask whatever they want doesn't mean it's worth that but if you have just nothing else to work with that's another way to just figure out like okay what's my competition like

8:08If I have a similar property that I'm selling right now who am I going up against who do I have to look better than in order to price my property either at at the lowest or make my property look the best in terms of pictures and you can even assign like if you use the listed properties to come up with Market values you could then assign a discount on that like we're going to assume 20 or % cheaper than that and that's what market value is and and again totally imperfect I'm not saying this is like a precise way to do it but if you don't have have any other information like what are you g to do like that's kind of what you have to work with and and this uncertainty is what scares a lot of people out of the land business and keeps it less competitive it also gives you a lot of opportunity when you come to sell your property you don't have to do this but one way to give yourself a competitive advantage

8:57And sell your properties for more and create some recurring income is to offer seller financing when you sell those properties and seller financing if you're willing to do it it fits like a glove with the land business because because of the whole financing issue the fact that Banks usually don't want to deal with these kind of properties and and is that well I guess how are you financing your your properties when you buy them typically well the types of properties I go after currently I've just buy up cash okay and it's a that's the thing it's if the value is there the money is never going to be a problem it's kind of like that example like if you had a $30,000 car for 5,000 bucks or something like you can probably find the money somewhere I mean if you're really getting that kind of value and the

9:46Price ranges that I go after currently I don't need any external financing but but if you ever did there's plenty of people out there who would happily do that for you I me there's even like funding companies now that only do private money for vacant land like this now so yeah the money it actually used to be a lot harder before all these people were offering this kind of money but it's not that hard these days