What is Land Flipping?- 8 Factors to Consider Before Investing

May 10, 2024

Land-flipping is the process of buying undeveloped land as an investment and reselling it at a higher price over a short period. Raw land goes through an improvement process to increase value. This includes land clearing, basic utilities installation, and access road creation. The whole process only takes about 3 to 4 months.

This Reddit commenter claims you can easily make $10k to $20k per deal. He said it's best to buy land where people want to build their houses in. It should be a good place for a neighborhood or as a mobile home park. 

Land-flipping has a similar concept to house-flipping. But there’s no physical property involved. Vacant land increases in value through strategies like entitlements and zoning changes. Land flippers also capitalize on market demand changes. The key is to strategically find an undervalued land with good resale potential. However, this isn't easy according to expert realtor Jack Bosch. He said it would be hard to find sellers who will accept low-ball offers. 

There's good business potential in land flipping. The Land Market Survey reported that land sales surpassed commercial real estate sales. Land sales are increasing at a 1.2% rate according to the National Association of Realtors. It's a steady and stable market.

However, land flippers should also be mindful of the risks involved. It’s very dependent on market conditions and was severely hit by the pandemic in 2019. Real estate investors should consider location, development trends, and zoning laws. Existing market conditions are also crucial for determining the profitability of the flip. 

This article covers all you need to know about the land-flipping business. I’ll tell you how it works and the risks involved in this biz. Factors to consider prior land investing are also explained. Plus, I’ll share stories of land-flipping investors and their experiences. 

How Does a Land Flip Work?

A land flip works by buying an undervalued property and quickly selling it for profit. The process starts with market research. You scout listings for raw land or vacant land that’s below market value. Buy land you find in a good location. It’s usually best to buy from property auction, foreclosures, or tax lien sales. Increase the property value through improvements. This includes clearing the area and creating an access road to the property. You can also rezone the area or subdivide large parcels into smaller lots. This way, it’s easier to find buyers who will purchase in cash. Sell the property before it incurs costs. Negotiate terms and seal it with a land contract. 

The two ways to do land flipping are: 

  1. Speculative Flipping: This strategy involves buying developable land. It should have the potential for value-growth. This is a long-term approach to land-flipping. The goal is to sell it at the right time when the market appreciates. Changes in zoning laws could also increase the land’s value. 
  2. Value-Added Flipping: Land flipper enhances the property's value before reselling. Enhancements can be in the form of land clearing and access roads. Installation of basic utilities is also a form of land improvement. All of these factors increase the land’s resale value.

Pros and Cons of a Land-Flipping Business

Pros of a Land-Flipping Business 

Big profit potential 

Less competitive compared to traditional real estate investing

Minimal maintenance 

Lower capital requirement compared to house flipping 

Cons of a Land-Flipping Business

Dependent on market trends and economic conditions 

Longer holding period because of lower demand 

Local zoning laws and land-use restrictions may reduce profit 

Surveying, legal fees, and improvements can reduce profit 

How Profitable is Land Flipping?

Land flipping typically makes a 100% return on investment in a single deal. Reddit says land flippers usually make $10K to $20K per transaction. They also earn 15% annual interest based on the sale price. However, the profit varies depending on the size and location of the land. 

How To Find Profitable Land for Flipping in 2024 According to Jack Bosch

Jack Bosch's Advice on Where NOT To Buy Land

Jack advises not to buy in hotspot areas. Examples are Texas, Florida, or Arizona. Competition in these locations is usually high. Don't buy from areas without county development plans. The land is less likely to increase in value if there are no expansion projects. He also advises against remote land in inaccessible regions. These are poor investments and could lead to losses. Also avoid lands with high property taxes. They're just liabilities if they don't show signs of appreciation. 

Jack Bosch's Advice on Where To Buy Land

Jack suggests buying from areas that are mapped out for future city expansion. This ensures property appreciation as new developments rise. He advises investors to get a copy of their county's 30-year development plans. It's available in every county's development department. Or, from the Association of Governments. More of Jack Bosch's land-flipping advice in the Land Profit Generation course. 

Factors to Consider Before Investing in a Land-Flipping Business in 2024

  • Local Demand: Conduct market research to assess demand for that area. Consider economic trends and population growth. The best states for land-flipping are New Mexico, Tennessee, and Arkansas. Washington might also be a good market. 
  • Accessibility: Land that doesn't have access to basic utilities is hard to sell. It will also decrease the property's value. The parcel of land should have a right of way and shouldn't be far from schools, stores, and hospitals. 
  • Local Zoning Laws: Know the local zoning regulations in the area. Common zones include residential, commercial, and industrial. Agricultural and mixed-use are also zone categories. Changes in zoning laws may decrease the value of the property. You may not be able to sell the land at a higher price. 
  • Holding Costs: Vacant lot isn't income generating. Unlike houses or buildings, you can't earn from rental fees. Consider the expenses of keeping the property, like taxes and insurance. Property tax is around 1.11% of the assessed value according to Tax Foundation. 
  • Resale Strategy: Create a plan for how you intend to sell the land. Understand the market and decide on the best time to sell. 
  • Legal Aspects: Ensure the title is clear of liens or disputes. 
  • Finances: Determine if you have enough money for the property. Land is usually sold in cash. Seller financing is available in some cases. 
  • Environmental Conditions: Natural disasters like floods and landslides will decrease land value. A study by Frontiers found that a property's value decreases as much as 10.4% after a disaster. 

Is Land Flipping Legal?

Yes, land flipping is technically legal. But you should still follow the rules and regulations in your area. Land deals should be done with transparency. Misrepresenting the land’s value or legal status could result in a lawsuit. You should also abide by zoning laws. Obtain the necessary permits if you’re planning to do land development. 

What are the Two Major Drawbacks of Flipping Land?

Market volatility and liquidity risks are the two major drawbacks of flipping land. Land is a volatile investment. It is very dependent on market and economic changes. An economic downturn can lead to a decrease in demand for land. So, it will be harder to sell the land at a higher price point. Investors may be holding a land that has lost its value. You might incur losses instead of making a profit. 

Flipping land places you at risk of liquidity issues. This investment is less liquid compared to traditional real estate. It takes longer to sell, especially if the market is slow. Properties in less desirable locations have fewer potential buyers. Investors should sustain long-term holding cost of the land. They should have backup cash for basic needs while selling the property. 

Real-Life Land-Flipping Experiences

This commenter believes land is a good niche. There are many great opportunities here. There's less competition because you usually need to pay in cash. 

Another guy commented that you can't simply buy and sell land for profit. It needs to be developed to be profitable. 

These two agree that land flipping is risky. It's a hypothetical venture, and there's no single way to get it right. Zoning laws are complicated. Owning a land does not always mean making good profit. 

Land-Flipping Profit: Shelby Wengreen Makes $300,000 on a Single Deal

Shelby Wengreen's Background and Story

Shelby Wengreen used to work for Pinterest and an influencer agency. Her husband used to be a schoolteacher. He's now working as a land surveyor to help in the business. She started land flipping as a stay-at-home income source. Shelby's uncle is a real estate investor. He's the one who introduced her to the land-flipping concept.  

How Did Shelby Wengreen Make $300,000 in a Single Deal?

After joining a land flipping program, Shelby sent out her first batch of emails. She landed her first deal the next day and doubled her money. She partnered with Chase, an investor who funded her next deal. However, they encountered issues with pricing in other counties. They refined their pricing strategy and enhanced their negotiation skills. The duo became more comfortable in handling negotiations with sellers. Shelby was resourceful enough to use DoorDash to deliver property signages. This helped her land multiple successful deals from home. 

How is Shelby's Land-Flipping Business Doing Now?

Shelby and Chase aim to hit $500,000 in gross profit by the end of the year. Their goal is to focus on big deals in their pipeline. They have two primary strategies in land-flipping. One is sub-dividing large lots and adding value to raw lots. The land acquisition deal was worth $165,000. It was a 30-acre property. The plan is to sub-divide the lot and make $440,000 gross sales. 

Their goal for next year is to surpass $1 million gross profit and scale. The strategy is to keep their pipeline full. So, they'll never run out of deals to work on. Shelby doesn't see land flipping as a side business anymore. It's now her full-time job that funds long-term financial goals. 

What's not mentioned in the interview: Shelby didn't mention how much she makes in net income. She might be spending big on improvements. It's because she primarily uses the "value-added" strategy. Sub-diving lots will also require land development expenses. 

Is a Land Flip the Same as Flipping a House?

No. Land flipping is not the same as flipping a house. Although both are similar in concept, their processes are distinctly different. In land-flipping, the investor finds off-market deals on land. There are no buildings or structure. It's just sold as a raw or vacant land. The time-frame is also shorter, only 4 to 6 months. In house-flipping, the property has an existing structure. The time-frame is longer because it involves renovation. Usually 6 months to a year. 

Dan and Ron Apke: Land Flipping VS. House Flipping- Which Will Make You Rich in 2024

Daniel and Ron Apke's Insight on House Flipping 

The house-flipping market is profitable and sustainable. There's always a demand for houses despite the high competition. You can achieve good profits with the right networks and opportunities. However, managing loans can be risky. The process has a steep learning curve and there's a high barrier to entry. Investors might incur unexpected expenses. Processing of permits to build and renovate might also take some time. You might encounter unforeseen delays that could extend the renovation timeline. 

Daniel and Ron Apke's Insight on Land-Flipping

The capital requirement is much lower with land flipping because there's no building. Reselling the property is quicker because you don't need to renovate the building. It relies on direct mail campaigns and blind offers to find deals. Land-flipping is more beginner-friendly because you don't need to do structural repairs. The process is faster and there are no ongoing costs involved. However, it can be tricky to find land with high resale potential. Beginners can easily overpay for the land they purchase. A good strategy is to go on a joint-venture partnership. This lowers the risk for the new investor. 

Daniel and Ron Apke's Verdict

Dan and Ron Apke believe that land flipping is more profitable in 2024. The process is simpler and profitability is higher. Land flipping is less complicated. There are no structural repairs and there's less ongoing costs. Most transactions are in cash. So, you don't have to manage loans. 

Is Land Flipping the Right Business For You?

It's the right business for you if you've bought and sold land in the past. If it's your first time land-flipping, consider getting a partner. It might be the right biz if you're looking for an easier alternative to house flipping. As a land-flipper, you should be comfortable with risks. You should also have enough real estate knowledge to compete. 

It could be the right biz for those with a solid network. Access to surveyors and zoning experts is an advantage. It could be the right biz for those who can analyze market trends. They'll easily find underdeveloped properties with good business potential.

However, land-flipping is not for everyone. The demand for land can fluctuate depending on market conditions. There's no guarantee of profit in every deal. Income is also inconsistent. You'll only make money after selling the property. Newbies are also at risk of overpaying for a vacant property. 

There's a better business than just buying and selling land. My alternative is digital real estate through local lead generation. It's better than land-flipping because there's no physical property to manage. You don't have to worry about taxes and land appreciation. Digital real estate is also more scalable. You can build and rank as many websites as you want. Each site generates passive monthly income for you. 

Income is stable as a digital landlord. You supply leads to business owners. It gives them the competitive advantage. So, they'll stick with you long-term. 

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Ippei Kanehara

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