How to Flip Vacant
Land to Developers
W
hile building has
come to a com-
plete stop in the
exburbs (areas
beyond the suburbs), infill proj-
ects near major metropolitan
areas are hot.
In fact, finished lots in good
locations are becoming a rare
commodity as more consum-
ers become less willing to make
long commutes.
John Burns Real Estate Con-
sulting group expects land de-
velopment in good locations to
increase substantially this year
now that conservative bank fi-
nancing has returned. Public
builders are buying finished
lots near large cities at a faster
rate than private builders, and
their market share is growing
rapidly.
Realty411Guide.com
Does this mean you should
run out and buy some land so
you can sell it to a public build-
er? Not exactly. Slick salespeo-
ple have been hawking “land
banking” for years, trying to
get investors to hold land until
it becomes valuable. Unfortu-
nately, that could be a really
long wait if the land is out in
the exburbs where there’s al-
ready an oversupply of homes
from overbuilding in the early
2000s.
Holding land in the outskirts
can be costly if you add the
missed opportunity of creat-
ing income from that asset.
Let’s say, for example, that you
used your IRA to buy $100,000
worth of land that is located
over an hour from the city. How
long will it take before builders
that would cost $16 million to
purchase, but only $2.4 million
to option. We took the option!
In the meantime, we will get
the property entitled within 18
months, and then sell the 110
finished lots to builders for a
total of $28 million. The $10
million dollar profit will be
split amongst the owners and
investors. In order to acquire
this deal, we were able to find
48 investors to put up $50,000
each. ROI is expected to exceed
67%.
To find out more about this
and other projects, go to http://
www.realwealthnetwork.com/
alameda-terminal or sign up
for a free membership at www.
RealWealthNetwork.com for
cutting edge investor education
and turn-key properties.
are needed there for the lots to
become valuable? Based on the
amount of inventory for sale to-
day, it could take decades.
If you invested that $100,000
to buy a home instead of land,
you could earn $10,000 net in-
come each year. After 10 years,
you would have doubled your
money. Would the lot out in the
booonies double in value over
that amount of time? No one
knows for sure, but we do know
that one strategy is predictable
and the other is speculative.
At Real Wealth Network, we
have found that infill projects
are a safer bet for land flipping,
but they can be quite expen-
sive. That’s why optioning the
land can be a home-run.
We recently optioned wa-
terfront property in Alameda
PAGE 41 • 2011
article by
Kathy Fettke
CEO of the
Real Wealth
Network
reWEALTHmag.com