Have anyone bought a house with 1+ acre to flip or L/O? - Posted by Donna

Posted by Joe Kaiser on June 21, 2000 at 20:50:18:

There’s the idea. Much better than my explanation.


Have anyone bought a house with 1+ acre to flip or L/O? - Posted by Donna

Posted by Donna on June 20, 2000 at 12:19:48:

I’ve read plenty about great deals here, but none mention if they have land with the houses they are getting great deals with.

Just curious…do any of you get them (sfr) with acres?


One of my best kept secrets . . . - Posted by JoeKaiser

Posted by JoeKaiser on June 20, 2000 at 16:39:09:

I stumbled onto this dynamic years ago and always keep my eyes open for a houses with land.

Here’s the deal.

Say house in town on a couple city lots is worth $50k and rents for $500. Same house on the outskirts of town on 50 acres may actually may be worth $500k (with all the value being in the land), but . . . (insert drumroll here) it still rents for $500.

You don’t pay rent for the land.

So . . . if you’re clever, you can buy it at the rental rate and get rid of it at the sale rate, which can be six or eight times the rental rate (what are the payments on half a million bucks, anyway?).


Oddly enough it does not seem to make much difference. - Posted by GL

Posted by GL on June 20, 2000 at 14:51:43:

In the case of a rural property, if it is a nice house it does not seem to make much difference to the price if it is 1 acre, 2 acres or 10 acres or even more. Unless it is big enough for a farm, which is usually 200 acres or more, unless it is a special property like for growing small fruits, in which case 50 might be self sustaining.

Town properties may come with a double lot for little or no increase in price, unless it is a ‘hot’ market where lots are very valuable and quick sellers.

In a big city where propery values are measured in square feet it is entirely different.

How’s that again? - Posted by GL

Posted by GL on June 20, 2000 at 19:43:30:

The only way that would work, is if you buy a property of 50 acres for little more than the value of the house, then divide it up and sell lots. Is that what you mean?

Interesting perspective Joe…but how about a house on say 2-5 - Posted by Donna

Posted by Donna on June 20, 2000 at 16:43:47:

acres…that won’t make much of a difference as opposed to 500 acres as the poster below mentions.


Re: How’s that again? - Posted by JoeKaiser

Posted by JoeKaiser on June 21, 2000 at 01:48:46:

You acquire the property as a renter (with an option) and dispose of it as a seller, pocketing the monthly cashflow. $500 going out and $3000 (or whatever) coming in.

Generally speaking, you don’t pay rent for the land (your monthly payment) but you do collect payments for the land value when you sell (your monthly income).

Jim, please explain this better than I have.


Re: How’s that again? - Posted by GL

Posted by GL on June 21, 2000 at 05:07:36:

Joe I have been in the real estate rental business for a while now, and one thing I can tell you is that every tenant is a hanging judge of the rent they pay. Also property owners usually have a pretty fair idea what their property is worth.

I don’t believe it is possible to get a $3000 a month property for $500 per month, or to get $3000 a month for a $500 property.

Of Course You Can! - Posted by JohnBoy

Posted by JohnBoy on June 21, 2000 at 07:42:21:

Sure it is!

Think about this for just a moment?

You own 50 acres with a house on it that is the SAME house located in town on a city lot. The house in town would only RENT for $500 a month and it’s only worth around $50k. The house on the 50 acres would only rent for $500 up to maybe $600 because of all the land around it, but the value of the property is $500,000.00. Now you know you wouldn’t be able to just RENT out the house for $3k - $5k a month because no one would be interested in paying that on $500 a month HOUSE to live in. But! If you were to SELL the property you would have to pay $500k for it. Following so far??

I negotiate with the owner to LEASE the HOUSE for it’s $500 a month value and get an OPTION to buy the thing for FMV of $500k. Now I control a $500k property for $500 a month since that’s all you can really get from the house. No one would pay just RENT for all that land which is were the real value is.

Now that I control the property with a L/O, I turn around and advertise the property as a L/O deal to BUY the whole thing for the FULL value.

NICE! 3bd/1ba House
Country Living on 50 Acres

I sandwich L/O the thing to my tenant/buyer based on FMV. Remember, they’re coming into the thing with the intent to BUY the thing in the near future! So! How much would the payments be on a $500k property after putting a mortgage on be??? Around $4500+??

I offer it at $3k - $4k a month giving the option to my buyer to purchase at $525k - $550k. Meanwhile I’m collect $2500 - $3500 a month cashflow with a profit of $25k - $50k on the back end when my tenant exercises. WHY would someone pay that much in rent? Because they want to BUY the place! My rent is LESS than what a mortgage payment is or even around the same as what a mortgage would be. If they wanted to BUY the place, then making those payments under a L/O wouldn’t be a problem for them since that’s what they would pay every month for 30 years on a mortgage. Get it???

Is that pretty much what ya mean Joe?