Can you really be able to buy land for as little as $100? YES.
You may ask, How is that possible! Where here are the details:
- You need to be able to have access to search parcel numbers and look up the owners of those properties.
- Someway to be able to get the parcel numbers of the properties that you are looking at.
- You need to be able to go online to the county assessors office to cross search for tax delinquent properties.
What I do is I pick an area that I have an interest in. Being in real estate, I have access
via a title company to be able to search land parcels that will get me the parcel number and the owners name and address. There are some companies where you can get paid access to this information. Search online, there may even be ways to get the same information for free. This whole process takes work. Now you're going to be bouncing back and forth between the parcel number information and the county tax information. You're going to want to be looking for land that is 3 to 4 years in arrears in taxes and where the owners live out of area or out of state. Look at the dollar amount that the owners are behind in. You don't really want something that is several thousands of dollars delinquent. Unless it is a property that has a high value and you know that you can get a buyer for it quickly. Use one of the online sources like Zillow, Realtor or public MLS access to see what sales have been for similar properties. I prefer that you use the public MLS access over the other two. You'll get more accurate sales information. Now before you go rushing off and mailing letters making offers to buy the land, you need to start doing the numbers.
Here is a hypothetical example:
5 acres in a rural area outside of the city limits. No utilities or anything. Just raw land accessible by dirt road. Amount owed in back taxes is $1,200. You see that in the last 12 months similar parcels have been selling between $5,000 to $8,000. I always recommend driving out to the property. Walk the property. Look for things that could be a problem getting the property sold. Look for natural washes that run down the middle of the property or too many Joshua Trees on the property. Check and make sure that the area is not in a protected plant or animal area that could hinder a sale. If everything checks out OK, mail off that letter offering $100 or $200 or $300 to take over the property and take care of the delinquent property taxes.
The owners have accepted your offer. Now what? There are a couple of different ways that you can take title. You can have the owners sign over the Grant Deed or Quit Claim Deed it to you. No need to get a title and escrow companies involved. That's just unnecessary money that you don't need to be spending. Head over to your County Recorders Office and have the transfer recorded. Now that you own this land, now what?
It's time to get your new property sold. Let's just say that you ended up paying the owners $300 for the property. So you're $1,500 into the property now. And now you're saying, "but Willy, how am I going to make any money?" Well, you already know that similar properties have been selling between $5,000 to $8,000. Here's where the creative financing comes to play. $100 x 60 payments = $6,000. $150 x 36 payments = $5,400 or $150 x 60 payments = $9,000. $200 x 36 payments = $7,200. Keep the payment schedule between 3 years (36 payments) or 5 years (60 payments). And if you can, get the buyer to put a down payment that will cover the delinquent taxes and adjust the payments accordingly. Otherwise just go the flay monthly payment. Use Craigslist to advertise your property for sale. Search online for other sites to advertised for free. ZERO DOWN $100 Per Month. (or $150 per m. or $200 per m.)
You may get the call, like I get sometimes, from someone saying that they can buy a similar property for $3,600. You know what I tell them, "Why are you calling me then? Go buy that property! I'm dealing with buyers who don't have $3,600 in cash, but that can pay $100 or $200 or whatever a month".
"But Willy, I have a Buyer now! Now what do I do?" Now it's time to draft your Contract for Deed. I use Rocket Lawyer, but there are others online that you can use like Nolo. I like Rocket Lawyer because of it's ease of use. Get the Contract for Deed recorded also. Set up an online back account like GoBank or PayPal where people can go online and make their payments. Make sure that they use the parcel number in the notes. That way it makes it easy to keep track of who has made their payments. I'm a big Google user and like to use Google Docs to create a spreadsheet to keep track of the accounts and payments. You can use Office or OpenSource or any other program that allows you to be able to create a spreadsheet. The main thing is that you want to have some sort of spreadsheet to keep track of payments, especially is you have payments from several properties coming in. The reason why I like to use the Contract for Deed is because if a Buyer should ever default (stop) making the payments, you can take the property back without having to go through the whole foreclosure process. Turn around and put the property back up for sale again and do the whole thing over again. As the Buyer pays off the property, you just sign over the deed just like when bought the property and make sure that you get the transaction recorded also.
** This type of transaction can be done in the State of California and in a few other States that I know of. I know other investors have said that a Contract for Deed can be used in every State. Please verify that your State does allow the usage of a Contract for Deed when privately selling real estate.