What is a Land Bank property? How can this be seen as a viable investment?
1. A large parcel...more than 50 acres.
Needs to be big enough to have decent potential. Decent reward for time & energy expended.
Needs to be big enough to have decent potential. Decent reward for time & energy expended.
2. Must be purchased at a significant discount.
Wholesale(-) only
3. Must have future development potential.
Requires some study/some imagination & research
4. Holding cost must be low.
Taxes, fire protection, mortgage payments
5. Acquisition terms must be favorable to the buyer.
Commercial Offer only. Long exam period.
6. Listing agent or buyer agent must be capable of moving initial development process forward.
This service should be low cost—if done by the agent that handled the transaction.
This service should be low cost—if done by the agent that handled the transaction.
7. Seller finance available--note must be assumable*.
This is a BIG item. Study the Deed of Trust*. Study the Promissory Note. Define recourse.
This is a BIG item. Study the Deed of Trust*. Study the Promissory Note. Define recourse.
8. Minimum cash into deal.
Shoot for 10% to 15%. Negotiate this amount, and negotiate all the other terms.
Shoot for 10% to 15%. Negotiate this amount, and negotiate all the other terms.
9. Long term potential with short-term bailout potential (see #7).
If you need the money, the property could be resold much easier than other land parcels. Some/all of the diligence is complete, and some/all of the development is complete. The Terms/finance are transferable*. The contract to closing evolution (in and of itself), and the closing transaction, makes this property far more valuable than before.
If you need the money, the property could be resold much easier than other land parcels. Some/all of the diligence is complete, and some/all of the development is complete. The Terms/finance are transferable*. The contract to closing evolution (in and of itself), and the closing transaction, makes this property far more valuable than before.
10. Safety of invested capital equal to bank CD.
With a combo of: low PP, good terms, completed diligence items, transferability…you can achieve a high degree of safety coupled with at least moderate appreciation. Apply inflation factor.
With a combo of: low PP, good terms, completed diligence items, transferability…you can achieve a high degree of safety coupled with at least moderate appreciation. Apply inflation factor.
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