Wholesaling Vacant Land

Comments(5)

• 
  jlwirk23rd August, 2003

  aahhhaaa2, Just a few thoughts here. Number one, a freind of mine had a similar circumstance, they bought land with an old house an instead of demoing it they went to the city and or local fire department and asked them if they would like to burn it down for practice. the result was they did and gave him a 50,000 tax credit for it. Of course you would need to check but you may be able to use that to your advantage if you sell the lots ( defer gains or something). #2 to get the lots to a more marketable state you could get the piliminary plat approval so it would all ready be approved to build and let the developer worry about the rest.

• 
  ambitious_architect29th August, 2003

  that sounds like some great advice.
  
  
  aahhaaaa-
  
  where is the land located (city, state)?

• 
  NancyChadwick24th October, 2003

  Quote:
  On 2003-08-22 11:20, aahhhaaa2 wrote:
  Hello,
  
  I bought some land with a house that needs to be demolished. Its on a half acre and I have checked with the city and they say I can put 2 seperate twin homes on the land. It is in the middle of a small city (population 15,000). I bought it for 65k and each lot is will be worth 70k.
  
  Breakdown
  
  bought for 65k
  improvements-asphault, curb, gutter, etc and subdivide 32k
  Each lot is 70k x 2 =140k
  
  I do not want to make the improvements myself. I do not want to invest 32k to get that done.
  
  Question-How do I market to wholesale this to a developer? What is a realistic profit I should be making on this?
  
  Thanks
  
  Aaron-UT
  
  
  Just came across your post. Rule of thumb I've used is to multiply realistic new construction sale price for each separately deeded property (2 lots in your scenario) by 25% and subtract improvement costs. You start with what the finished product is worth (the house) and work back from that. For example, if the new house on its lot would sell for $100k and lot improvement costs are $16k, then the vacant land value is $9k. However, $9k per lot assumes the property is subdivided or buyer is buying "fully contingent," meaning doesn't have to close until subdivision is complete. If the owner wants to sell "as is where is," then I deduct 30%.

• 
  sb4him127th November, 2003

  Can you explain the "buyer buying fully contingent" one more time? does that mean if I am buying land for say 7 lots, that I don't have to close on it until all the lots are sold or until the homes sell?
  
  How does this work with the builder if it's not me, do I sell the lots subject to the owner I bought it from? or what . . . never heard of this but new to development.
  
  thanks
  shelly in GA

• 
  NancyChadwick1st December, 2003

  Quote:
  On 2003-11-27 12:56, sb4him1 wrote:
  Can you explain the "buyer buying fully contingent" one more time? does that mean if I am buying land for say 7 lots, that I don't have to close on it until all the lots are sold or until the homes sell?
  
  How does this work with the builder if it's not me, do I sell the lots subject to the owner I bought it from? or what . . . never heard of this but new to development.
  
  thanks
  shelly in GA
  
  
  Buying land fully contingent means that the buyer doesn't have to close until all the contingencies in the purchase agreement are satisfied. In the case of land, that usually means obtaining subdivision approval and the ability to obtain at least one building permit. If you flip the land to a builder, the builder may want to not have to close until he's satisfied whatever contingencies he has included in his purchase contract. If y ou haven't closed with the property owner and you have a right to assign, you'd be assigning your contract to the builder by signing a separate agreement with the builder. It's in this separate agreement that the builder presumably would include provisions that he wouldn't have to close with the owner until his contingencies were satisfied. If you have already closed with the owner and now want to sell the property to a builder, you can either sell fully-contingent or discount the sale price for a quicker sale. If it's the latter, builders in my area knock off at least 30%.