In this week’s episode of the Turning Profit podcast, we will be discussing everything you need to know about our land flipping business.
Many of you have asked us questions about it, and today, we’ll be covering all the basics and giving you the answers you’ve been asking for.
But first, let us ask you a question of our own: When you hear flipping, what do you think?
Most (if not all) people will think about house flipping, and that makes sense. House flipping has been a super popular trend in the last few years (a short scroll through your Instagram or Tiktok feed will show you just how popular it is).
However, houses are not the only thing that can be flipped.
And that, friends, is when land flipping comes in.
What is it? How does it work? And how can you start doing it?
We answer all these questions (and more!) in this week’s episode of the Turning Profit podcast, so tune in now to learn more!
Well then, what are you waiting for?
Let’s dive in!
How It All Started
Pete and I have owned land before, but never through the land flipping business model, which is pretty unique.
You see, most people think that the only way a land investor can make money is by buying land, holding on to it for a long time, and as cities grow, the land will become more valuable. This whole model focuses on buying land in the path of progress.
We chose not to go for this business model, and to get into land flipping instead.
Back in 2020, Thanksgiving time, Pete decided he wanted to get back into real estate investing (we discuss this whole story in our very first episode, “Why We Started Investing In Real Estate,” so make sure to give it a listen).
His research showed that some land flippers were buying land for $10,000 and selling it for $30,000. You can’t really turn your nose at profit like that, so we decided to give this model a go.
Peter bought a training program and learned everything he could on land flipping, from where to find the best deals to how to evaluate properties for this particular model.
We sold our first property through this model in March of 2021, and we made $17,000 off of it. And that was just the beginning.
So, What’s Land Flipping Exactly?
Land flipping is based on a pretty simple model. You buy a property from sellers, you improve it a bit and make some minor changes to it, and then you resell it with a real estate broker or on the market.
The minor changes done to the property are truly minor; you could clear up paths on the land, you could do a survey of the property, you could get a perc test done, etc…
We often find these properties through… wait for it… direct mail! We send letters (a lot of them) to landowners with offers to buy their properties. Usually, the price we offer property owners is based off of the averages of the particular area they’re in.
As soon as an owner gets back to us (and they’re interested in our offer), we move on to the next step, which is writing and signing the contract.
At the same time, we also do more extensive research on the property, we send out a photographer who takes pictures (aerial ones as well), and we loop in the local broker to get more information on the land, because sometimes, they might know something you don’t.
Let’s Talk About Funding Partners
Generally, we purchase all of our land flipping properties with cash. However, that’s not a possibility for everyone. And since it’s not a house either, you can’t really get a mortgage on it. It’s in this situation that funding partners come in.
A funding partner is basically someone who puts in the money while you take care of finding the right deals, marketing them, and selling them. Once the deal is closed, the funding partner gets their money back plus a percentage of the profits.
The Land Flipping Timeline
Our average hold time of a land we’re flipping is sixty days. Yes, sixty. These are very quick flips (even quicker than the ones in house flipping), that still make you pretty good profits.
A lot of people like to hold out for top dollar, but with land flipping, you need to keep the money moving, so you can make more money.
We discuss all of this in more detail (plus share if land flipping is right for you) in the episode above, so make sure to give it a listen to learn more!
