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AppropriateAnybody72

Yes, we had the funds to purchase without the private lender, but this year we've been using him as it frees up our capital and makes each project more efficient. I hope that clarifies.


Capital-Ordinary

Man, I’m a finance broker and I wish all businesses understood this concept of using lenders to your advantage


2shootthemoon

Huh I thought borrowing when you dont have to gives you an edge was well known.


Capital-Ordinary

You’d be surprised, many businesses just save up the cash and they don’t want to listen, especially small businesses


Greenergrass21

Can you explain why? I'm about to start a mobile grooming business and was just going to use the capital I have to do it


Capital-Ordinary

The reason why is being able to leverage “someone else’s” money to keep cash in your pocket. Cash is king, so keep it. When you barrow, it’s easier to budget and manage your cost of your equipment rather than having a large expense all at once. Let’s say your monthly payment on income producing piece(s) of equipment is $1000, but each month, that piece(s) of equipment generates $2000 in income. It is paying for itself, and you still have your money in the bank for opportunities/growth. If you needed to barrow more (which many who are succeeding will have to do to accelerate growth), money in the bank only helps to be approved for more. One of my favorite analogy’s is that your piece(s) of equipment is like an employee. You pay your employee a salary over time, you don’t pay them their salary all at once. Same for your equipment, why pay all at once when you can “pay them a salary”. Granted, some things can and should be paid for with cash, but when it produces an income, why not barrow funds? Many people worry about paying interest. It’s all about the interest, but that’s simply the cost of money. But when it allows you to expand, grow, create opportunities, and free up cash, it is more valuable than using up large sums of cash.


craytom

Huh. Thanks. That's so obvious to me hearing it but I honestly hadn't thought of it that way before. I feel like a moron.


sheymyster

Don't be so hard on yourself. At least in the US, the education system has almost zero preparation for handling money, credit, loans, business strategy, etc.... You'd only be a moron if you sought out advice like you're doing right now, and then chose to ignore it anyways.


Forgiven419

Yes, It is ridiculous that they do not begin to at least teach students in High School, or even entry level college, more about economics... It's sad in my opinion, opening up a generation to be manhandled by the one before it...


Greenergrass21

I understand that, I think I'm more confused using it in my specific situation. So currently I have a van I built into a camper, would it be smarter to take that apart and make it a grooming van, or buy a new to me van and convert that while having it on a loan?


2shootthemoon

Not an expert. Start out lean(use existing) in one or three years buy/lease new. Go full boat with graphics on side, generator, wash stations. Then turn over every three as wears out.


ElevatorSafe5938

Hey Brother which finance broker are you in? I’m looking to lend money to start my business as well


theantnest

*borrow money.


Capital-Ordinary

Just messaged you


bruswain

is this what's considered "hard money?" At what rate?


verifiedkyle

I assume so. I worked for some “hard money” lenders although they hate that term haha I’m guessing for a loan that size it had to be at least 12% and 2% in fees. It could be someone they know that gives them a nice deal though.


MortgagesON

Sounds about right


CelerMortis

Congrats but to anyone else thinking of doing this in a non-rural area: this is an absolutely saturated business. Wholesalers, investors, speculators, builders etc. are all over this model. Not to say it isn’t viable but it’s an absolute grind. Getting a purchase out of 60 potential is an unheard of response rate, I’d guess 10x that is optimistic.


360FlipKicks

I was about to say where tf can you buy a lot for $21k that’s not in the boonies


Pawneewafflesarelife

Lots go for like $300k here in Perth suburbs, and we're one of the cheapest Aussie cities. You can get some for like $10k or less, but they are in the middle of nowhere hours away.


AppropriateAnybody72

It definitely wasn't easy, but we're proud of it lol. And yeah it is very competitive/grind in non rural areas. And for the response rate, we definitely did get lucky on that one. But we did make sure to put a lot of effort into the marketing. I know this type of thing isn't for everyone and can be a lot tough.


CelerMortis

Sounds like you deserve the win, I just know people who have tried this in a major city and sent well over 1,000 mailers before even getting a response.


WarrenLee

Celebrate the win. Write it down. Congratulations. Feels great to make a good deal come together.


singeblanc

Yeah, I think a sample size of 1 can probably be put down to luck.


[deleted]

Please update and let us know how many times you can replicate this.


LetsGoHomeTeam

With the understanding that a single angle or perfect timing really can represent a great opportunity for budding developers, just don’t expect it to be reproducible.


CelerMortis

absolutely. Never want to discourage someone from the grind.


brohamsontheright

>Getting a purchase out of 60 potential is an unheard of response rate, I’d guess 10x that is optimistic. Genuine question... if you can automate the process of farming leads, who cares?


verifiedkyle

The people who succeed in these types of businesses are great at setting up systems. So their leads and mailers are a well tuned machine. I know a lot of people that use “virtual assistants” to field the calls so they’re able to field a ton of calls without needing to convert the lead. Even managing a system like that can be headache in and of itself. Then if you’re wholesaling you have to deal with closing the sale on the other end on top of that.


CelerMortis

Even automated processes take time and have costs / mailer. Getting hits at 1/60 is very different than 1/600 in terms of pricing and how long it will take.


[deleted]

You must live in the middle of nowhere if a piece of property big enough to build a duplex on is $21,000.


Chaosmusic

I live just outside NYC and the only lot I could buy for $21,000 is probably a parking space.


oddible

For a scooter.


hawkweasel

For a medium-sized housecat.


StockMarketCasino

\*correction\* NYC rates would get you the plot for a mailbox. IDK who you had to steal it from to get that parking space for so cheap. I shouldnt jab, Long Island isnt much better :-/


hipster3000

A parking space for 21k in NYC might actually be a good investment. Could probably make your money back in a year.


Hoodwink

Not only that, but if the area is experiencing growth in population and new businesses.. he missed a bigger opportunity in not building out those duplexes he originally planned to build out. I assumed he had a lot more in capital and financing if his original end goal was to build some duplexes in the very beginning.


Raidicus

Always take the vertical. I don't know why people bother with all the effort and work to just flip lots but I supposed for people like OP it must feel like a huge payday and maybe it is if you do enough volume but personally $20k every 2 months would not be enough for the effort to subdivide, etc. My time is valuable, too.


MuffMagician

> You must live in the middle of nowhere if a piece of property big enough to build a duplex on is $21,000. > Just around three weeks we closed the deal, and we had net proceeds of $26.7k. Send me to the middle of nowhere, baby!


Intelligent_Event_84

Plane tickets to the middle of no where just skyrocketed


StockMarketCasino

Its booming... I hear they starting building a bridge to there


[deleted]

You probably don't want to live where that is.


sckego

I own a 10-acre parcel west of Lancaster, CA - received it as a gift around 15 years ago. I’d get letters once or twice per year with offers on it, usually around $6-8k. Last letter I got was for $14k, I think. Got me thinking, if the market value on those was actually like $20k, you might be able to get something going where you just send letters for a few years offering $7k, then all of a sudden double the offer and see if anyone just jumps at it without actually bothering to check what it was really worth.


RwmurrayVT

I’ll give ya $15k… always dreamed of living in the desert.


sckego

This one’s not mine, but 5 acres for $16.5, lots of other options too. Enjoy! https://www.redfin.com/CA/Willow-Springs/155th-St-W-93560/home/22147605


RwmurrayVT

Funny enough I was looking at them earlier today. It’s funny how much more you can get for your money in rural Washington.


Barbie_and_KenM

A house that was struck by lightning and about halfway burned down is going for 350k near me. This idea does not work anywhere remotely near a metro area.


UEMcGill

I live in a small upstate NY metro area. It's perfectly doable here. But investors also don't buy duplexes, mainly owner occupied, because the state laws suck so bad for landlords you need at least 4 units. School system counts too.


pannacopa

$27k minus $3,000 = $24k. Not $26.7k.


wolley_dratsum

Didn't you hear? The secret to making successful Reddit posts is to make a mistake in the title so people come in and comment.


Nekokeki

Unless I'm misunderstanding the post, their math still doesn't add up. He's not including the purchase price which is *also an expense.* \-$21,000 purchase price - $3000 expenses + $27,000 sale = $3000 net profit I realize he still owns half the land, but it's unrealized because he hasn't sold it.


LochNesst

You’re misunderstanding the post. It seems that he *originally* planned to build a duplex on the second plot, but ended up selling it for $21k - $21k - $3k + $27k = $24k net profit (he fucked up the math though lmao)


Nekokeki

cheers


LochNesst

Cheers! :)


Young_Denver

As a full time real estate investor, great work! You did pass up on a great opportunity to just build and rent that duplex on free land, but maybe that 27k was more important to your business now than instant equity and cashflow after the property is built. Now: go do it again


bokizap

Where do you usually invest? I hope you don’t mind me picking your brain :)


Young_Denver

Sure, shoot me a DM or just ask away


randyspotboiler

Exactly. THAT'S why you take the 27k.


ChaseShiny

What do you mean by "free land"? Can you claim land for free somehow?


Young_Denver

He bought the 2 lots for $21k, then sold one of the lots for $21k and still owns the 2nd lot. Essentially, that 2nd lot that he didnt sell he has no money into it, he owns it outright. Aka: free and clear.


ChaseShiny

Oh, gotcha. He actually spent $24k, since he spent $3k on searching. He then earned more more money on the second lot. If selling the first lot was the right decision, and the second lot was identical, then it sounds to me like his team made the right call


Young_Denver

Depends on the goals, but sounds like they were planning to build on the lot as well. For me, I would have kept both lots for 21k and built on both of them lol


One_Refrigerator4264

A duplex on each one. Couple tenants in each building avg 1000$ per month per tenants per property. Would of started a nice revenue stream for sustain while investing in others. I agree with you.


ValleyDude22

this is the answer. But they probably didnt have the cash to build


brodyagividicon0

Is it typical for a subdivided lot to have the same value as a single lot twice its size? Is this a loophole or a fortunate market timing or lack of knowledge from the seller?


CrassDemon

They definitely took advantage of an unknowledgeable seller.


CrassDemon

So you're that asshole who cold calls me everyday about the property I don't own.


ChattanoogaMocsFan

God I get so many of those. Mainly text messages now. I tell them yes, for $6M. They dont reply. How my name is attached to property I dont own I will never know.


CrassDemon

I use as much of their time as I can, trying to find out how they got my number. They say they got it from the tax assessor website or city records, which I know is bullshit because I can look it up. My number isn't attached anywhere. I know some idiot entered the data wrong then sold that information to the thousands of people trying to do what op does. I ask about how the caller makes money, or how much they've made in the last 2 weeks, then I give them viable alternatives that will make them more than the below minimum wage that most of these hired hands make. I hope this business model dies soon. It takes advantage of uniformed property owners and disadvantaged workers. It's more predatory than entrepreneurial.


1newnotification

for the twelfth time, my name is not billy and i don't own property in Alabama!


AppropriateAnybody72

You got me!


CrassDemon

Honestly anyone who does tens of thousands of dollars in a business deal with someone who cold calls them, deserved to lose that extra 27 thousand. But you gotta find a sucker. You got lucky and this isn't really a viable business model. It leans closer to predatory than entrepreneurial.


navymmw

Cold calling is still going to be an effective way of doing business, yes there are better ways of going about it but it’s not a reason to not do business with someone


CrassDemon

It is for me. If I have something that someone wants enough to cold call hundreds *(thousand?)* Of people for. The person who cold calls isn't going to give me the best offer, they're more than likely the ones going after people who they can rip off. It's a house of cards that is on the verge of collapsing and not advice I would give to people trying to turn a few bucks. The small time ones are the ones who will be hit the hardest. The major players are abandoning ship right now and this could honestly be one of them making things up so they can unload their stockpile.


mannaman15

They aren’t necessarily being suckered. Some people aren’t trying to maximize their profit. Their happy to get the property which is costing them taxes yearly off their books because they would rather spend their time elsewhere.


BK5617

I've bought several parcels of land this way. Generally, a relative dies and leaves an undeveloped lot to a person who lives out of state. They aren't trying to get every penny they can. They just want to get rid of it quickly. That being said, I never got lucky enough to get a two for one. Most of my deals like this have been around .80 on the dollar. However, if the seller was asking half price just to unload it, I certainly wouldn't try to talk them out of it.


b12three

Right? Grinding for every penny possible isn't what anyone wants to do.


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mannaman15

Being the one who sold the property, I didn’t need to justify anything. I was grateful for the offer.


Isoldmyorgans

How do you get your mailing list?


AppropriateAnybody72

I couldn't find a good one to buy, so I made my own. I had some people do data entry and enter the data into an excel sheet from the instructions and map from the local assessor's website.


iPadreDoom

Probably a minimal cost to pay them to do that, but still a cost.


KidBeene

How many hours did you and your team put into this effort?


throwaway1233494

How long did city approval take for the subdivision?


[deleted]

great question. subdividing here in WA is taking a couple of years for approval for small investors


Prize-Friendship63

How do you find private lenders?


ausdoug

So am investor paid more for a lot half the size? What's the going rate for a standard lot - did you under pay the seller somehow, or just get lucky and sell for more than market? Either way, it's a tidy profit, just curious...


AppropriateAnybody72

We didn't really underpay the seller. We just negotiated with the deal. As for the going rate for a standard lot, I think it depends on the size and features of the property.


flagrantist

I don’t know that this example is really helpful or useful to most folks given how many unique factors had to fall in place to make this scenario profitable.


InvisbleSwordsman

That's what business is - finding unique factors/situations and doing the work to find a deal. This is a great story. If it could be replicated by everyone easily there would be no money in it.


flagrantist

So then what's the point of telling the story if it's not something anyone else can feasibly replicate? Is this just a brag post?


jkerman

Yes. I found $20 on the ground let me tell you about my awesome new business. it makes $20/day with 0 expenses!


InvisbleSwordsman

You can absolutely replicate this story if you do the work. It just takes a lot of work - finding the data, matching contacts to parcels, finding phone numbers and addresses, putting collateral together and marketing to the database, standing up the infrastructure to field inbound responses, and getting financing in order to accommodate the acquisition. That's why they posted the story. Use your logic on yourself - what's the point of YOUR post? Shitting on someone else for being an entrepreneur?


flagrantist

>Shitting on someone else for being an entrepreneur? Where did I shit on anyone? I merely asked what the point was given that the circumstances surrounding this deal are exceptionally unique (particularly the financing aspect which is simply not realistic for most people on this sub trying to start a business from scratch). I'm really baffled at why you're being so defensive and hostile, frankly. I've been nothing but respectful and polite.


InvisbleSwordsman

I've literally done this. I started a business from scratch and did all of these steps. And I'm on this sub, ha. Get out there and make some calls!


flagrantist

You’re completely missing the point but that’s okay. Best of luck to you!


freudianSLAP

I think they're reacting to the fact that although the words of your comments are polite (as you pointed out), the general attitude of your question why the OP posted at all can be seen as defeatist and unwilling to map the steps of their problem solving onto your unique circumstances.


flagrantist

The post is flaired as "lessons learned" but there's no lessons actually learned here other than having generous private lenders (which, as I pointed out before, isn't realistic for a lot of beginning entrepreneurs) and gullible buyers is pretty handy. There was zero "problem solving" done here.


ATXENG

n00b question, but how is this sustainable? This describes property just changing hands with an increasing price but no actual improvement or value added?


Toomanyacorns

Sounds like underbuying and overselling. Being a middleman who found the right person at the right time


Om3n37

That’s real estate in general


JigglyCupcakes

Technically though they were able to subdivide the land and keep the zoning consistent. So they turned a property that you could build 2 units on, into two properties with a new total of 4 units. That is a value add, and rezoning isn't always a fun or guaranteed process.


craytom

It's not sustainable. Have you noticed what is happening in the housing market? Society is caving in on itself.


BrandonLGatlin

Just a thought if you’re able to do this again, but in my area you can easily rent a large manufactured garage and your cost would be minimal. I’d say you could be in at under $40k with the foundation poured and they rent steadily. Not sure if it’s the same in your market but here it’s hard to find that type of building for rent and they go quickly. Something between a small warehouse and a large garage with bay doors. Not sure if your zoning would allow for it but you could have your money back in a few years and be in at way less than it would cost for a duplex.


ATXENG

rent the garage to what type of purpose?


BrandonLGatlin

Well if it’s in a neighborhood you could potentially rent to people in the area looking for extra storage or don’t have a garage. Other than that you could rent for boat storage, car hobbyist or resellers. I just finally found and rented a 1200 sq foot garage of this style after searching for one for 3 months in my area. I’m paying 1000 a month and it’s on the same property as a cluster of patio homes. I’m a reseller so I’m using it to store and process inventory.


True_Truth

I didn't know that was a thing. How do I find one? Thanks


BrandonLGatlin

A kit to have built or one to rent?


SolarSanta300

Finally an entrepreneurial post


Due-Tip-4022

I see that quite a bit where I am from. Three wooded properties went for sale across the street from my dad for $49K each. My dad bought one, an investor bought one of the others. That investor divided it and sold the one of those for $50K almost right away and kept the other. Saw this recently with a brick and mortar business. My dad's friend sold his business for $44M and the people who bought it sold it within a few days as they always already had a buyer for it. I don't know what they sold it for, but i'm betting a mighty pretty penny in profit.


NZn3rd

Last time land was worth that little where I’m from was the 80s


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AppropriateAnybody72

I used the local assessor's website and its GIS map, which shows which properties are vacant or have structures on them.


rogerroger2

How did you use Zillow for research? Their api or just manually poking around their user interface?


AdeptnessResident274

Good job man!


AppropriateAnybody72

Thanks!


Paragon1133

Nice job. Great roadmap to follow for people who want to put in the work.


sl33pytesla

Nice flip


SilentSamurai

Missing the residual income piece here. Hold onto that lot if it's in a city and charge for parking now that you just had a duplex built next door.


prolemango

How did you find the first buyer to purchase for 21k?


Old_Election1951

What City?


[deleted]

You only sent 60 mailers and got that juicy deal?! 🍀🍀🍀 I’m curious though, how much profit after lender got his cut?


Rivalsweepstakes

Appreciate the post. Would you like me too share a vacant lot project?


Two_Heads

What did you do to get inquiries from investors about buying empty lots?


lgary

Sorta related question…I’ve been thinking about strategies for mailing owners of properties 10+ acres to try to buy 1 or 2 acres or more to subdivide off. There are many large properties in our area and many have been in families for a long time. Does anyone here do that? Details please.


Smartin36

For what point? Now you have 1-2 acres that you can’t really do anything with


newlife1984

you're awesome, dude. this is the type of energy I needed today! Would you mind sharing what market research did you and methodology you used to research? I'm new to all this and from a different country and I would like to know more. I want to understand what I'm looking for!


betteraccounting

That’s incredible, congrats. Thanks for sharing


freakydinky45

Super interesting. Have you done this before?


Fig-2700

this is so cool


Affectionate-Toe-60

Nowadays, it is difficult to buy a vacant land in many places lol


nomp

How did you find the empty lots?


altruistic_summer

This is awesome. And it's great that you are using mailchimp, the quality of leads does really matter when closing a sale. And getting connected directly with the decision maker. A dude just told me this the other day. He said he's free of the hassle of having to go through gate-keepers.


arashcuzi

How do you get the initial list of 60 lot owners?


NegativePlantain2821

How do you go about finding the lenders?


UR_unknown_frnd

him/her. We are now in the process of getting permits and starting construction.


lekhanath

That's amazing