Land Investor Seth Williams ⛰ Debunks 8 Land Investing Myths 🤦🏻‍♂️ - YouTube

Hey guys, how's it going?

This is Seth Williams from retipster.com.

I'm a professional land investor, blogger,

YouTuber, podcaster, and overthinker.

And in this video, we're going to talk about

some of the myths and myths conceptions

people have about vacant land as an investment.

So I still remember the first time I ever heard

about this idea of investing in vacant land.

And my reaction was probably the same as a lot of people.

It sure didn't seem that exciting to me.

And I couldn't understand why anybody would take

any significant amount of capital and intentionally park it in vacant land.

It just seems so boring, but I think that lack of excitement,

kind of comes from a lack of understanding

about how the land flipping business works

and the huge opportunity that's available here.

So first stuff, here's one common misconception

that land is a pointless investment because it just sits there.

It's not that useful. It doesn't make any money.

What's the point? Well, that can be true if you buy land

without any kind of a plan or goal in mind,

there's actually a lot of people that do this.

Every parcel of land is useful for something.

A lot of people buy land with some far fetched dream in mind

that probably isn't actually going to happen,

or maybe they buy it without doing their homework

about what the local governing body will actually allow them to do

Is the property even zoned right for the purpose that they want to use it for?

These are all things you have to understand before you go into a property

and actually invest your money in it.

Now sometimes we'll hear that land is a dumb investment

because it doesn't generate any income or cashflow of any kind.

That's not true.

Now I would liken this to a statement like

houses are a dumb investment because they don't make money,

which is also obviously not true.

It depends what you choose to do with that house.

If you choose to live in it or let it sit there and do nothing,

then no, it's not going to make any money.

But if you choose to use it as a rental property, then yes, it can make money.

It's that simple.

And land can actually make a lot of cash flow

and is actually far less of a pain than any other type of real estate

because of the fact that it's vacant.

Nobody's living on it and it just behaves itself.

How can land make money?

Well, just take your pick. There are lots of options to choose from.

Land can make money by leasing it out to a farmer, a billboard company,

a hunter, a mobile home owner.

If you own your own land, free and clear as most land owners do,

you can sell it to another person with seller financing.

And in doing this, you can sell your property at a higher price.

You can charge additional interest and because your buyer is the new owner,

they're not going to be calling you with all their problems

because in their minds, it's their property now.

They're not a tenant and you're not a landlord.

If you're a member of the Land Investing Masterclass,

you already know this is an incredible way to make money when you're selling vacant land.

However, you choose to do it, there's a lot of ingenious ways

to make a lot of money from vacant land.

If you go into it with the right planning and it's frankly, a lot easier than making money

from a lot of other types of real estate.

Another common misconception about investing in vacant land is that

you can only buy a property near where you live,

so you can like drive out and see it and inspect it yourself.

And this is one of the biggest limiting beliefs alot of people have about land.

Heck, I even felt this myself

for my first few years in the land business.

So I totally get it.

And from a due diligence standpoint,

I will say there is definitely some value in being able

to get up to the property and lay eyes on it yourself before you buy it.

But I'll also say it's not true to think that you need to do this

in order to invest in a property.

These days there are a ton of people and services and tools you can use to inspect,

evaluate and understand what kind of property you're buying before you buy it.

This is actually a lot easier to do for vacant land properties,

as opposed to houses and buildings and other improved properties.

So if it was ever feasible to do this, vacant land is the most feasible type to do it with.

I'll be the first to admit that every time I've ever personally visited and inspected

a property before I bought it, it's always been more informative and eye-opening.

So I don't mean to imply that it's not useful to do an in-person inspection,

but I also don't want people to think that they have no other choice

and that's the only way they can buy a property

is if they personally go out and look at it.

And a lot of times when you do go see these properties,

it may be kind of eye opening to see what it looks like on site

and see what the neighbors properties look like.

But I'll be honest, most of the time, it's kind of a boring experience.

You get to the property and there's not a whole lot to see

that you haven't already seen online.

The important thing is to just realize it doesn't have to be you personally,

who physically inspects, measures surveys and evaluates the property.

There are a ton of services and places online

where you can find this kind of help without spending a fortune.

So don't get caught in this mental trap of thinking that you can only buy properties

where you can see them with your own eyes

and that you somehow are critical to that process, because you're not.

It's just about finding the other professionals who can do this for you

and make the job a lot easier along the way.

So another common myth that I come across surprisingly often is

this idea that you can do whatever you want with the land that you own.

And this is also unfortunately not true.

So here's the thing, unless your property is out in the middle of absolutely nowhere

where nobody will ever see what you're doing

or care about what you're doing

there will almost always be some kind of loose guidelines

and restrictions that you have to follow from the local municipality.

To buy a property with this idea that you don't have to answer to anybody,

and you can do whatever you want

you're just going to be setting yourself up for disappointment

if you buy a property with that expectation, because it's just not true.

And the closer and closer you get to a city or a more densely populated area

its limitations and the policing of these restrictions is only going to go up.

So it, while some people have this idea that

they can do whatever they want with their land,

that's only true to the extent that it doesn't disagree

with the local planning and zoning ordinance.

So don't lose sight of the fact that you never really have absolute and total freedom

to do whatever you want to do with your property, because that's just not how it works.

So something I hear people say a lot about their land is "My property is worth X amount"

or this property was valued at this dollar amount

and I think we kind of need to unpack this a little bit.

So when you're dealing with a house or a building,

there usually is enough recent sales data,

and most markets are looking at similar properties that have recently sold

and how much they sold for,

and then actually is possible to accurately estimate the amount that it would cost

to rebuild a property or how much it would sell for

based on similar sales comps in the area,

or even how much it's worth based on how much rent income that property can generate.

So when you're dealing with improved properties

like apartment buildings or houses

is totally viable to come up with a pretty accurate dollar amount

for what that property is worth.

But vacant land is very, very different

because a lot of this data that you need simply doesn't exist.

And because of this, it makes it really, really hard to value vacant land,

even a lot of professional appraisers that I've talked with

when I asked them, how do you guys come up with a reliable value for vacant land?

Their honest answer is like, you don't really have a way to do it.

We can kind of guess at it with the very little data we have.

The bottom line is there's a lot of guesswork involved

and a huge margin of error when it comes to valuing vacant land.

Now, with all that said, there is always a way to come up

with a ballpark value for a vacant land property.

It's not like you can't have any wild guests about what the property is worth.

It's just a lot harder to zero in on a precise number.

The point is there is a lot of room for interpretation

when it comes to the value of a vacant land property.

So some people have this idea in their head that

if they want to buy a land,

what they've got to do is get on a website like Zillow or LandWatch,

and just start cruising around, looking for land that's listed for sale

and whatever price they see on that land

that is the price, and that's what they have to pay.

And there are no other properties out there that they can buy

other than the stuff that's publicly listed like this.

I got to tell you that could not be further from the truth.

As we just discussed here we already know that value is a very subjective thing

when it comes to vacant land.

All land has value to some degree but pinning down a precise number

that everybody agrees with is another thing entirely.

And in terms of which properties you're allowed to buy

a lot of first time land buyers are under this impression

that they're only allowed to buy properties

with a "for sale" sign on the front yard, but that it isn't just false.

It's a dangerous assumption that's going to lead you to overpay

for some of the worst deals out there.

If you want to find the best deals on land at the absolute lowest prices,

you need to know how to find reluctant landowners

who just don't want their property.

And you need a scalable way to find and contact a lot of these people

without wasting a whole lot of time or energy.

When you learn how to do this, you will be shocked

at how many opportunities there are to buy dirt cheap land.

It's not nearly as hard as you might think.

By the way, I'm going to have a couple of links beneath this video

that show you exactly how to do it.

The point I'm trying to make here is that

the value is very elastic with the vacant land properties

and the properties that are listed for sale

represent just a small fraction of all the properties

that are out there available for you to buy.

Sometimes you just need to find them and make the process easy for them.

And you can get a much, much better deal that way.

So sometimes you'll hear people say that land is a simple type of property

and this is true, but that word "simple", I think needs a little bit of context.

So vacant land is just a parcel of dirt.

There's nothing that can fall apart,

break, get stolen, burned down, or otherwise

and this alone makes land a much simpler type of property

than anything else out there.

But land isn't without its issues.

When you're buying a parcel of vacant land, there's a lot of things you need to think about,

and evaluate depending on what you plan to use that property for.

This is why it's so important to have a plan in mind for vacant land

so you know what to to look for in the first place,

for example, is there road access to the property?

Don't take that for granted,

there's a lot of landlocked vacant land properties out there, believe it or not.

Does it have access to all the basic utilities?

You know, like electricity and water and sewer and gas and that kind of stuff.

Are there any usability issues with the property?

For example, is it in a flood zone?

Is it affected by wetlands?

Is it on a cliff?

Is that on a really steep slope or anything like that?

Will the local planning and zoning department

actually allow you to use the property for what you want to use it for.

A lot of these questions you don't even need to think about when you're buying a house

because these questions have already been answered.

That's why there's actually a house there because obviously

you can build a house and that doesn't disagree with the zoning and planning uses.

And with the vacant land, a lot of these questions haven't been answered.

So it's up to you to verify this stuff and make sure you can actually do

what you want to do with it.

And granted houses have a whole host of other things issues

you have to deal with and answer, which is frankly, a lot more than vacant land,

but still to simply sit back and say that land is simple without acknowledging

some of the other hard things you do have to overcome,

I think is a little misleading.

So another thing that people don't really understand about vacant land

is all around the financing aspect of it.

So some people think that they can just go out and get a mortgage

and buy a piece of vacant land.

And that's an interesting thing about vacant land is that

unless you have an immediate plan to develop that property,

you know, like build a house or subdivide it

or make money from it in some way, in the case of farmland,

that you might be leasing out to a farmer or working the ground yourself

if you are a farmer or leasing the property out to hunters or anything like that,

if you just palnned to buy a vacant lot

and just keep it as a vacant lot and not do anything to it,

most banks want absolutely nothing to do with that.

And unless it's a very unique situation with a unique type of lender,

you're going to have a really hard time getting financing for that property.

Part of the reason for this is that from a collateral standpoint,

it's very hard for a lender to know what that property is actually worth.

And if it's not making money or serving some other kind of valuable purpose,

it's just a risky type of collateral for them to get involved with

because of how much conventional lenders look at vacant land like this

most of the people out there who do own vacant lots that

just aren't serving a purpose on their properties free and clear

because they have no other choice.

And when you're talking and negotiating with a landowner

who owns their property free and clear,

it gives you a little bit more leverage to negotiate a lower offer

because that seller doesn't have any mortgage balance

that they have to pay off when they sell the property to you,

they have a lot more free equity to work with.

And if they just want to unload the thing fast, they're free to do that

because they're not tied up with any existing financing.

And this also means that if you own vacant land and you're trying to sell it,

you can provide a huge value to your end buyer

if you're willing to offer seller financing,

because for most buyers out there

given the fact that they can't get financing from a bank,

if you don't finance it, and if they don't just have all the cash in their bank account

ready to pay you and they can't buy the property.

So if you are able to offer that kind of seller financing

and become the bank and agree on whatever terms,

make sense for both you and them,

that's just a huge value that they're not going to have

if you don't offer it to them.

Now, selling land with a seller financing isn't always the right answer for everyone.

But if you are willing to accept payment

for your property over a longer stretch of time,

it's going to make it a lot easier to sell your property for a higher price

and sell the thing faster

simply because you're offering a financing option

where there was no financing option before.

Don't forget you can also make a lot more money in the form of interest payments

and closing fees and servicing fees for the life of the loan.

So there's a lot of money-making opportunity here

if you're willing to deal with the complexities that come with seller financing.

So at the very least it's worth thinking about.

I'm Seth Williams and I hope this video helped answer

some of those common misconceptions

that are floating around out there about land.

Now, I can tell you a vacant land is a great real estate investment.

It really is, but it's very easy to misunderstand the opportunity

and what is and isn't available here.

If you want to learn more about what this business has to offer,

go check out the library of land investing content that

we've been building for years over at retipster.com.

I'm going to have a link to it right beneath this video.

And if you actually want to build a serious money-making business as a land investor,

be sure to check out the Land Investing Masterclass.

This community is filled with hundreds of people

who have forever changed their financial future

because they understood and took advantage of the opportunity

in the land investing business.

And if you want to, you can too.

And if you've made it all the way to the end of this video,

first of all, congratulations, I'm proud of you.

Second of all, check out a couple of these other land investing videos

that'll take you through more of the specifics of

how this land flipping business model works

and why it's so advantageous compared to other types of real estate.

Thanks again for watching.

Hopefully, I'll talk to you again soon.