Author Topic: Painless land: Who needs money?  (Read 1724 times)

Offline LdMorgan

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Painless land: Who needs money?
« on: June 01, 2009, 04:05:58 PM »
Let's say you want to buy a piece of land as painlessly as possible.

Here are some things to consider.

First, keep the realtors out of the deal. They take their 6-10% from the seller, who passes it right on to you. If you can find what you want, you don't need a realtor to show it to you. Or to meddle in the negotiations.

Second, keep the bankers out of it. They'll not only want their pound of flesh, they'll want several pounds of yours.

Let's say you want exactly ten acres. Think outside the box.

Look for a 100-acre plot that you like. if you like it, others will like it also.

Let's say you find one for $600,000.00. (That's fairly cheap for Florida). "Fred" is the seller.

Step One: Take an option on the 100-acres. "Buy" that land for $600,000.00 in the form of an option contract for deed with (say) $6,000.00 down, and $594,000.00 due within one year. Specify in the agreement that you can buy all or part of the acreage at $6,000.00 per acre. Also arrange for exclusive non-destructive "use" of the the land in the interim--if possible.

Will the seller make such a  deal? He may if he figures he can get a free $6,000.00 out of you and also keep the land. He WILL do it if you find a way to make it worth his while. (More about that later!)

Note that now you only need to come up with 54,000.00 to own your very own 10 acres of land, and you have a whole free year to do it in.

But that's if you pay for your land. You don't want to: you want the land to pay for itself.

Step 2: Find someone ("Louie") to buy 90 acres of the land for $600,000.00. Impossible? Not at all. That's less than $7,000.00 per acre! If Louie has cash or credit, he can pay "up front". (He can also put 10% down as earnest money. That's $60,000.00.) Hooray: you're almost home!. Go to step 3.

Note that if Louis changes his mind after paying the earnest money you keep the $60.000.00, and have a solid lock on your "free" ten acres. You win.

But Louie probably really is in earnest, so he'll show up to close the deal. He wants his 90 acres.

Step 3: You notify the original seller (Fred) that you will exercise your option on X date, and have him split the property into two parcels: 10 acres and 90 acres. You close both deals on X date. You take the payment from Louie via bank transfer, and immediately pay Fred via bank transfer.  Fred's attorney confirms the payment, then hands you two deeds. One is for 90 acres, and one is for 10 acres. You hand Louis's attorney the deed for 90 acres.

All done!

OK: This is only one version of possible free-land scenarios, and I didn't even get to the really juicy parts. But it's reading a little long, so I'll stop here. and add another chapter later.

Offline Stein

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Re: Painless land: Who needs money?
« Reply #1 on: June 26, 2009, 02:03:42 PM »
There certainly deals to be had out there.  There is risk in that type of deal though.  Farmer John get foreclosed on, bankrupt, or a lean put against the property while you are working the deal.

A surveyor buddy worked a pretty sweet deal where he bought a 1.5 acre property with a house and did the surveying and engineering work on the side to split it into a normal housing development.  They paid the owner as they sold the lots and cleared $100k each for himself and his partner with only about $30k total out of pocket at any one time.