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The Real Estate Investor's Blue Print on What to do with Raw Land

Apr 22, 2008
The market for raw land is a sub market of real estate that many real estate investors ignore. However, with a basic understanding of a few principles you can turn land transactions into an additional source of deals and profits for your quick turn real estate investing business.

If you market for motivated sellers, some of those sellers will inevitably be owners of raw land or lots with old, dilapidated buildings in need of demolition. But you can also target such owners with your direct mail advertising, classified ads, farming, and other marketing methods, including tracking down the owners to market to them by telephone.

Unless you have your own acquisition and exit strategy for raw land as part of your business model, you will also need to find buyers you can sell it to in order to make a profit. There are several classifications of buyers who will likely be interested in purchasing raw land from you.

One such type of buyer is builders, who of course are likely to be interested in acquiring land to build new homes and businesses on. Another type of potential buyer for land is developers. Developers typically are interested in purchasing large tracts of land at a time, which they zone appropriately and install utilities to get them ready to build new subdivisions on.

Land speculators may also be interested in purchasing your dirt. These are buyers who buy land solely for the purpose of appreciation gains, and try to buy land parcels of all sizes that are in the pathway of future development or gentrification. And finally, don't rule out business owners and other private individuals, such as mobile home owners or ranchers, who may be interested in your parcel of land for their own reasons.

There are a few types of expenses that are unique to raw land transactions that you should be aware of, as they will be relevant to factor in to your negotiations. The first of these is demolition, which refers to the removal, by bulldozer, of old houses or other structures that may be on the property. (You do have demolition services included as a category in your rolodex, don't you?)

Of course, if the structure is in good enough condition and is the right type of construction, you might just be able to get a house mover to take it away for you for free. Besides demolition, there might be debris or vegetation on the property that requires clearing as well. When dealing with a property that has no pre-existing structures it may be necessary to apply for the appropriate type of zoning permits before any construction is begun.

When dealing with a larger parcel it may be profitable to subdivide it into small properties before you sell it, which can be a very lucrative practice that you can undertake yourself. And for even larger tracts of undeveloped land, the developer will need to make arrangements for the installation of public utilities in order to allow for construction.

The more types of transactions you are able to handle, the more profitable your business will be. Understanding a few key concepts will allow you to recognize and capitalize on profitable raw land deals when you see them.
About the Author
Omar Johnson is a successful real estate investor and author of the home study course "Secrets To Making Big Money In Real Estate With Little Cash and No Credit" For more info visit http://www.gettingrichinrealestate.com
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