If you’re considering venturing into the world of land flipping, you’re likely wondering about the financial requirements needed.
Whether you have $0 to your name, or $100,000, the question still stands: what is the recommended amount of money to get started in land investing?
Having more capital at your disposal does make it easier to multiply your investments and outsource tasks to save time, BUT it is not required, especially when first starting out.
If you do happen to have the capital, or have done a couple deals and can invest back into your land flipping business, we HIGHLY recommend you consider an answering service to handle calls.
This will increase efficiency even before your business becomes profitable.
If you’re coming in with less money expect a higher operational strain, but use this time as a method of growth.
Before we break down the expenses of starting in the land flipping business, one must first understand the process and WHERE the expenses come from.
The core of our land flipping model involves buying land at 30-50% of market value and reselling it.
The ability to provide cash closings in a matter of weeks adds value to your business, especially for those with illiquid land assets.
A lot of time in these rural areas that we target, land is NOT a liquid asset. We come to them offering $30,000 CASH, promising a two week close with no tax, closing costs & realtor fees, which is very attractive to these land owners.
We reach these potential sellers/land owners via Direct Mail, and we typically see a deal come through for every 2,000 mailers sent.
How do you make more money? It’s really quite simple: increase the number of mailers being sent, in other words increase the marketing budget. We talk more about this in the marketing section below.
If you have finally made the decision to start land flipping, consider your educational investment before all else. There are a few different avenues you can go down, such as choosing free resources like YouTube or reaching out to peers who have experience.
Based off of our years of experience, the most effective avenue is investing in quality educational programs. Average costs can range from $1,200 and up. Only after you have invested in educating yourself on the full process should you focus on building a substantial marketing budget.
Marketing is the lifeblood of your land investing business. In order to to attract deals, allocate the majority of your initial funds (about 90-95%) after education to marketing. The more marketing materials you distribute, the greater your chances of securing lucrative deals.
Direct mail and texting are the most proven strategies for marketing to land owners, and it is how we’ve grown our business to 6 figures in such a short period of time. When doing direct mail, budget for about 5,000 mailers, which typically costs around $3,000.
If you prefer texting, plan for roughly $1,500 to $6,000 after education. Once you have capital built up from doing a couple deals, try sending direct mail AND texting using follow-up strategies.
Check out how our guest AJ landed a $250k deal just from texting!
On average, we see new land investors start turning a profit from their business at around 60-90 days. The most successful make $20,000 to $40,000 on the first deal and immediately put that money back into marketing. Reinvesting in their business to grow.
The cost of entering the land flipping business can vary depending on your educational choices and marketing strategies.
With diligent efforts and efficient use of your resources, it’s possible to turn your initial investment into a profitable land flipping venture within a few months. Balancing education and marketing expenditures will set the stage for success in the world of land investing.
Ron: Welcome to the real estate investing podcast, where we help you unlock your potential freedom through land investing, real estate investing, and entrepreneurship. Hey everybody. Welcome back to the real estate investing podcast. I’m your host, Ron Apke. In this episode, we are going to talk about the cost to get started in land investing.
Now land investing is on the rise. There’s a lot more people entering the space, still with a ton of potential out there. But one thing new people are coming, if they’re coming from different industries, they want to know like. What does it actually take to get started? How much money do you suggest getting started?
That is what this episode is going to be all about. What, if you have 0, your name, if you have a hundred thousand dollars, what, what is that number that we recommend to get started in this business? So first off, I want to talk a little bit about using money to save time. We have people who come in with a lot less money.
We have people who come in with 50, 000 are ready to put into this business. And one of the things, if you have more money coming in one, it’s a little easier to multiply that money. And two, you can use that money to save time. You can use that money to outsource things very, very early in your business.
Even if you’re not running a profitable business yet, if you are trying to outsource things, be more efficient with your time, maybe outsource answering service. So one thing we do. It’s have an answering service opposed to you answering the phone. You pay for an answering service to answer 24 seven, and that saves you a ton of time.
It might not be five, 10 hours a week, but it might be 90 minutes a week. That adds up over 52 weeks in a year. So that is one of the key things. If you’re coming in with less money, there’s going to be higher operational strain. We do have a ton of people who come in with less money who become very successful because they need to grind out that first deal, that second deal.
Like, it is a grind. They need to be much more efficient with their time, with their money. They need to do more stuff in terms of the operations, which is fine. I actually like that way where you come in, you learn everything. You try to be extremely efficient with your money. And then we have people who turn 20 X their money in the first three months.
But, um, let’s quick, before we get into breaking down the money, let’s talk a little bit about what our business model is. Where do the expenses come from? So essentially what we do. Is by land for 30, 40, 50 percent of market value and resend it on, resell on the market. We typically do this via direct mail.
So one of the biggest hurdles is getting deals to get deals. We send direct mail to landowners. We actually put a price on it. So if you own land in Hamilton County, Ohio, I’m going to send you a piece of mail. Listen, I know you own five acres in Hamilton County, Ohio. I’m a land investor. I’m interested in buying your property for X dollars.
Like I said, that offer price, we are trying to offer 30 to 40 percent of market value and flip the property on the market. That is the business model in a nutshell. It’s not overly complicated, but the thing that makes our business so valuable, what makes it valuable to our sellers is they have an illiquid asset.
Land, a lot of times, especially in rural America, where we are trying to target land is not very liquid. It’s not like you can just sell a piece of land on the market and we are offering them cash closes. We are offering them 30, 000, two week close. They can get out of it really fast. They don’t have to worry about tax.
They don’t have to worry about closing costs. They don’t have to worry about realtor fees. We’ll take care of all that. We’ll get them a 30, 000 check in two weeks. And that’s why so many sellers come to us and we get about a deal for every 2000 mailers. So if I send 2000 pieces of mail, 2200 pieces of mail or so, I’m going to get one deal.
That’s going to profit me 20, 000. And to grow in this business, to make more money in this business, you increase that marketing budget. So you go from sending 5, 000 mailers a month to 10, 000. Naturally, your business should double unless there are operational things that are wrong in the middle, whether it’s answering phones, not getting back to sellers, or just being overwhelmed and not having your systems in place.
But as you increase your marketing budget, you will increase your profit. You’ll increase the amount of money you’ve been making this business. If you’re doing things correctly, without a doubt. And that’s the thing that people who come in with a little bit more money can do out of the gate. They can maybe do 5, 000 mailers out of the gate where some people might just be able to do 1500 or 2000.
So it might take a couple of months for that mail to build up. But again, like I said before. Try to be as efficient with your time, with your money. When you’re coming in, whether you’re coming in with 20, 000 or coming in with 5, 000, you want to be efficient with your time and your money and really learn the business.
Don’t try to outsource everything off the bat, learn the business so you can outsource effectively down the line. I’m not a big proponent, um, advocator for coming in and trying to outsource something right away. You want to be an expert in something so you can teach someone else how to do it in your business.
I know how to do every part of this business. Do I do every part anymore? No, because we’ve hired people. I became an expert on it and then I outsourced it to employees. So we have employees doing our pricing. We have employees doing our marketing, sales, everything, transaction, quitter, due diligence. But if you try to outsource before you are an expert, there’s going to be gaps in your business and it’s going to, it’s going to cause some strain in your business because you’re not going to be as effective as if you became an expert in that part of the business.
So finally, guys, let’s get to the cost, like. You’re trying to come into this business. Let’s say you’re coming from rental properties. Let’s say you tried house flipping. You tried household, Sam, whatever it is, and you’re trying to get into this business. So there are a couple costs that go into this. The first one is education.
Like that is your choice, whether you want to. Use YouTube university, use videos like this, use some of our other education, free education, use other people’s free education. So you do either do that, which obviously puts you at 0, but what you’re going to have. When you try to do it that way, you’re probably going to have some money lost from that learning curve that you missed.
You will learn a lot. You’ll have to kind of piece things together. So education costs can be anywhere from 1, 200. And I know there’s programs out there that are much more expensive than we, what we offer, but that first cost is education. Do you want to invest in education to make the kind of have a blueprint to the business model, or do you want to try to figure things out on the way?
We’ve had people who come to us after they do two deals by themselves, like, okay, now I’m ready to invest. I’m ready to be a little more efficient. Um, I think there’s a ton of value in saving time upfront and getting education, but it’s a money thing. Like you need to balance out. Like I’m ready to get into this business.
I can’t afford education right now, but I do have some money for some marketing. So the second piece, and I think 90 percent of your initial funds. After education should be spent on marketing, maybe even 95%. And when I say marketing, I’m talking about getting deals, getting deals is how you make money in this business.
So whether you’re sending direct mail or you’re sending text messages out, or you’re doing whatever it is, your marketing budget needs to be 90 plus percent of your business. When you’re starting out, you need to find a way to get deals. One deal can make you 20, No problem. The more marketing material you have out there, the better chance you have of getting those deals.
So when we’re talking about direct mail, we typically like people to come in with about 5, 000 mailers worth of money, which is around 3, 000. If you’re doing texting, you’re coming in, you want to do text and you want to do how we teach texting, you’re going to get 10, 000 texts a month for 500, which is relatively affordable.
So really the number that we talk about that you hear us say, if you’re coming in, trying to text, texting is going to be more operational heavy. You’re going to have to respond to more people than mail. You’re going to have more leads coming in. You’re going to have to evaluate more land. You need your operations on point to make that work and to make that as efficient as possible.
Very possible that we have people come in with 1500 bucks after education. And they kill it. They grind through texting, then they get a deal or two deals, and then they start doing mail and then they really scale up. So if you’re coming in and you want to do text and you want to learn how to text, you want to get the education, like after education, I would probably have about 1, 500 if you’re coming in and you want to do direct mail, I would have three.
To 6, 000 after education cost three is probably on the low end for direct mail. I like four to 6, 000 honestly, but with direct mail, you can scale up and you can get a deal very, very quickly with our business model. So that is, and like I said, we have people on the high end who come in with 20, 30, 000.
And they’re trying to turn that into 200, 300, 000 with a few months. And they go pedal to the metal right from the start. You don’t have that ability right away. If you’re coming in with four or 5, 000, But you can turn that four or 5, 000 into 40, 000 within the first three months. That’s when we see most people turn their business profitable is after 60, 90 days, 90 to 120 days is when we see the majority of people turn a profit in their business.
They had the full deal cycle once or twice. They made 20, 30, 000 on that first deal, and now they’re reinvesting that profit. They’re scaling up their business. They’re sending more mail. They’re sending more text messages. And that’s when you can really, really grow your business. Other than that, guys, thank you so much for watching.
If you guys have any other topics you want me to talk about in these videos. Please let me know in the comments below. Feel free to shoot me a DM on discord. Other than that, thank you so much. We’ll see you next time. Thanks. As always. Thank you for joining. Please do us a huge favor and like, and subscribe our YouTube channel and share this with a friend.
It really means the world to Ron and I, but more importantly, it could help change the life of someone else. Thanks for joining and we’ll see you next episode.