In my first post on May 1st, 2020, I mentioned investing in raw and rural land and creating cash flow with it. I’m sure you have been wondering how it is possible to create cash flow with land that is literally “in the middle of nowhere.” Literally, I only see the land I own with my own two eyes when I’m on a United plane and just happen to be flying over the area.
So, here is the overview. Someone owns all that land out there. It can be in parcels from as little as 1/4 acre on up to 40 acres and more. There are people that bought that land a long time ago thinking it was a good investment or that they would do something with it someday. There are people that inherited it from their parents and don’t want it any longer. Whatever the reason, people have land and a lot of them don’t want it. It’s more like a liability to them. They can’t do anything with it. But the county makes them pay property taxes just to keep it.
On the other side, there are people that want land “out there.” But they can’t find these people that don’t want it.
The third piece of the picture is that the market for buying and selling this type of land is very inefficient. Why? If you want to unload it, no real estate agent will sell it. It’s way too much work, there is no “drive-by” traffic and the commission is too low. The sellers can’t do it themselves because they don’t know where to sell it. The buyers don’t know where to look to find what they want.
This is where I come in, as well as hundreds of other investors like me. We make offers to owners through direct mail. Only about 1% really end up selling. But they are always happy to find someone who wants to pay them for it. Also there actually is a market online for this land and we advertise there. We advertise that we can sell the land with seller financing. Selling that way, we can sell for as little as $49 per month. Most of my sales, however, range from $99 to $199 per month. As of the end of March, I have built up my passive income to over $6000 per month. Through the first half of 2020, I still haven’t needed to take any of the profits out of the business. So I have continually reinvested those profits back into the business to fuel growth. Should I ever need that cash flow, it will be there for me.
So, that’s the simple model. In the future, I’ll share some more details on some of the stories I’ve heard from buyers on what they do with the land, as well as dig a little more into the economics and some other aspects of investing in land.
As I’ve said before, if you’d like to talk about anything related to real estate, let me know. It’s my favorite business topic.
For now, be safe and take care of your family.