Land Investing Online

In this episode of “The Real Estate Investing Podcast”, hosts Daniel Apke & Ron Apke discuss wholesaling land, and how it can be a solid business model if done correctly.

What they reveal is that many people are actually doing it wrong, which leads to low-value deals and eventually, frustration. 

Due diligence in the land industry is CRUCIAL, whether you are flipping, holding long-term or wholesaling.

Knowing what to research about a property before buying is going to save you a lot of time and money in the long run.

For example, looking at the slope of the terrain to make sure it’s buildable, checking whether it’s on wetlands, and making sure there is road and sewage access are all parts of the due diligence process, and must be done before purchasing OR wholesaling. 

Listen or watch the full episode below ⬇️ for an in-depth breakdown on HOW to reach your 2024 land flipping goals!

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Dan: Welcome to the real estate investing podcast, where we help you unlock your potential freedom through land investing, real estate investing, and entrepreneurship. Hey everyone, welcome back to the real estate investing podcast. Today’s topic, we’re discussing wholesaling land the right way. I’m your host, Dan Apke, joined by my brother and business partner, Ron Apke.

And to get into the episode, I see so many people wholesaling land. The hard way, the uphill battle way, what, in my opinion, the wrong way. And I think there are so many easier, more efficient ways to wholesale land. I think it can be a really solid business model when done right. But I just see so many people locking up properties, not doing due diligence on it, not knowing what the market value is, getting it at market value than trying to sell it when you have it at market value.

And it comes down to not analyzing the land and giving offers the wrong way. It’s like people make calls to wholesale land. And then as soon as a buyer says, or a seller says they’re interested, they ask how much money do they want? And then the seller says 70, 000. And then they say, deal 70, 000. It is, then they lock them up in a wholesale.

Agreement and try to find an investor without doing due diligence and all this other stuff. And then you make 3, 000 because you bought it at market value or you let it sit and you have so many properties in your pipeline because of that. And it’s just such a low value way to do business. I think.

Ron: Yeah.

I mean, you said it pretty perfectly, honestly, Dan, like there’s a right way and there’s wrong way to do this. We’ll touch base on both. Dan, we’ll just touch base on the wrong way to do this. Just to just getting under contract on whatever. That’s the biggest thing. I think the biggest gap is people not worrying about what they’re getting under contract on.

And since there’s no risk on their part, why not get this under contract? Why not market this and see if I can sell it for X dollars and make a couple of thousand. Uh, that way is going to burn you out. You’re not going to make much or any money.

Dan: Yeah. And you’ll have a lot of deals locked up and the sellers are going to get frustrated.

You’re going to lose deals. Just a bad way to do things. And I want to go into the specific of doing it the wrong way that I see. Cause I get. A lot of properties submitted to me every single week from wholesalers that are trying to get me to buy their land. And I look at it and I’m like, did you know this isn’t a hundred percent wetland?

Or did you know you’re telling me to buy your property for a hundred thousand when you know, the property next door, five acres sold for 80, 002 months ago. Like it’s just such basic stuff and it’s just such a low value way. It’s like, they’re trying to, they’re trying to do the marketing without understanding how the actual process works.

And. That’s the step one of doing things the wrong way is giving the person any amount they’re looking for. They want 40, 000. You’re giving them 40, 000. They want 50, 000. You’re giving them 50. They want 75, 000. You’re giving them 75, 000 whatever they ask for. You’re giving them instead of, and we’ll get into the right ways later on.

I don’t want to get into too many specifics yet, but instead of seeing what the property is worth in your own mind with your analyzation, which is through mail, we send out blind offers or text or coming up with an offer. Knowing, I know that their land where is worth 75. That’s why I’m not going to offer them 75.

I’m going to offer them 40 or 35 based on that number. So there’s margin in it for me to find a really good buyer on the end, which we’ll get into. But that’s the problem. Number one, Ron is giving the person amount. I see that way too much. Like if, if they’re interested, just give them any amount they want.

That is a horrible business model.

Ron: And it’s the crazy thing is it’s a disservice to the seller too. Because you’re leading them on acting like they’re going to get something over market value. They’re excited. Uh, you’re excited because you think you have a deal just because you have a contract or whatever, but you’re not doing, you’re not helping anyone.

You’re not helping yourself. You’re not helping the seller. And like Dan said, like without. Not necessarily negotiating on every deal. Like sometimes the seller is going to say, I want 20, 000 and that’s going to make sense. But without you understanding what the resale value is, there’s no value in what you’re doing.

You’re going to, it’s just, you might get a deal every six months that works out and you have a tiny little margin, but 90 percent of the time, Dan, if you just take whatever the seller wants, you’re going to, you’re going to be at market value or above market value.

Dan: Yeah. And that’s like an approach where you’re taking it.

Like there are millions and millions and millions and millions and millions of vacant parcels out there. And you’re acting like you got the only one. Um, and it’s just taking whatever instead of moving on because they want too much and not trying to negotiate down. You’re just taking whatever’s thrown at you.

Uh, and. And then the second part I want to talk about is lock up any property without doing due diligence, because these people, even if they have some of these wholesalers that bring me deals, even if you guys have a decent price on it, there’s absolutely no due diligence done. The good wholesalers give me extensive due diligence, right?

And are very solid and they have it at a good price and they know what they’re talking about and they know they’re going to be able to get rid of it on the disposition side, whether it’s to me or someone else or on the market. And we’re going to go into that more. But lock up properties and, and then you just start trying to find sellers or buyers without even doing due diligence or anything on it.

And it’s just, it’s, um, waste everyone’s time at the end of the day. And now, you know, I have people, if I go on my Instagram, I could scroll through and look, and I’m not meaning to call anyone out. I appreciate everyone bringing me deals, um, always, but there’s just so much, so much lack of due diligence.

Some of the guys bring me great due diligence and understand that, but there’s like some of the basic things, Ron, like. Um, no access type things, wetlands, just, they don’t understand land. And I think that’s what the wholesaling community lost track of. And you see this in houses a lot too. They don’t understand the actual rental, like the rental world and the rehab world and all that.

They’re just locking up properties and trying to get rid of them as soon as possible without understanding the fundamentals and the basics behind it.

Ron: Yeah. If you don’t know the asset that you’re buying or understand what you’re buying or what you can do with it and you’re not really buying it at the end of the day, they’re just trying to sell the contract.

Um, but if you don’t understand what you’re under contract on, uh, there, there’s no point in really being under contract. Like Dan said, like due diligence, basic due diligence, does it have road access? Um, what’s the slope like? Is it in wetlands or floodplain? If you can answer those three questions and they are in your favor, we have road access, minimal slope, not in wetlands or floodplain.

Okay. Now we can start looking at price a little bit, um, and see what we can make work. But those three things are so basic in terms of how to get it. And like Dan said, not, not trying to really call anyone out, but just doing that before you bring it to someone is the bare minimum in my mind, Dan.

Dan: And if the, and some of the questions you should be asking, like, do you have a motivated seller and is the land good?

And if you have those two questions, then go at them with a good offer. That’s going to make you a lot of money. Don’t go out, you know, market value, make sure you have 15, 20, 30, 50, a hundred grand of margin in there, which you will get. There are millions, like I said, a hundred million plus parcels out there.

Right. Um, And that’s just the fact of it. And just to summarize this part of what, what the wrong ways are is just locking up really anything run. And that’s what it comes down to just locking up any property without having a box or knowing what’s going on. And, um, like I said, in the example earlier, like we call Bob, Bob wants to sell his land for 75, 000.

The property might be worth 75, 000 market value, but since he’s a motivated seller at 75, I don’t do any research on it. I just lock it up. And then try to find a, uh, a buyer and expect them to do all the work without knowing anything. It’s just a bad way to do business. And that kind of summarizes it up and I’m not calling anyone out.

Um, you know, and I think as you guys get through these processes, you and do this once the right way, you guys will understand the value in it. And I think the summarize the right way. It’s about getting more offers out there under market value for good land and motivated sellers to summarize it like getting more offers out cold calling in the wholesaling world works really well because you’re giving them whatever the hell they really want Ron.

But when, when you come to actually making big margins, cold calling. Uh, isn’t as, it can be still very good. I’m not going to say it’s not, it can be still very good, but as you are looking for bigger spreads and bigger margins, and you take your numbers from wanting to make 5, 000 to making 20, 30, 40, 50 plus thousand dollars, you’re going to get less, uh, deals per lead because you’re not giving a market value anymore.

So you’re going to get less deals. You’re going to do the same amount of work ultimately though, on the sell side and get getting all this, you’ll just make much more profits. And I think to summarize the right way, Ron, it’s getting more. Undermarket value offers out there to landowners instead of focusing on every single one.

And that’s why cold calling, um, the efficiency of it goes down a little bit. And texting starts to go up in male and blind offers go up. And we’re huge, huge proponents of double closing and wholesaling. We, we have modules in the course now on it. Um, we, it works very well. With how we teach things. And I want to reiterate that because we’re not against wholesaling at all.

It’s been a big part of our, our business and community at land investing online, and it’s only growing from here, but it’s about getting the right price. Uh, and we’re going to get into that.

Ron: Yeah, for sure. And it’s all, it’s all about that. Honestly, it’s, it’s a volume game, but in terms of marketing, it’s a volume game.

Deals do not have to be a volume game to make a lot of money. You need to, if you’re shooting. At volume, these people at 60 percent of market value, you’re going to get deals. It’s not going to be as many deals as if you shot them 95%, but you’re going to make more money. You’re going to do less deals and make more money.

And that’s the beauty in this. Um, but, uh, yeah, I think you broke down pretty well. Dan.

Dan: Yeah. And then that’s the key negotiate and get a good price. Like the better way to do it is negotiate and get a really good offer price where you’re making 15, 000 or more on each deal. So I’ll tell you guys how we do it and what’s really worked for our community.

Um, and I’m, we’re talking like six figure profits per deal on some of these, uh, 50, 000, 30, 000, like we’re talking big numbers here. And I’ll tell you guys why it’s because, so the way Ron and I do it, our blind offers, right? Uh, so we’re, we’re sending out mail to individuals who own land in a very bulk way, right?

We’re spending 2000 per per deal essentially. And what we’re doing, we’re offering about 40 percent of market value. So if the land’s worth a hundred thousand, we might offer 45, let’s just call it 45, 000, uh, 45%. And then. What happens is sometimes that seller will want to do that and you have 55, 000 of margin there.

Right. And then we’ll, we’ll get a signed purchase agreement with that. Cause that’s what a blind offer is. Like I said, it’s an offer letter in the mail for that price and the signature for them to execute it on. So what ends up happening sometimes is they don’t want to sell at 45, but they’re very motivated.

The land’s good. And, and we’re trying to negotiate it and get cheap as cheap as possible. But they want to sell at 65, 000. Let’s just call it 65, 000. So we do our best to try to negotiate it down. They won’t come down to that 45 and you try to meet somewhere in the middle. Let’s call it 60, right? And let’s say you got it down to 60, 000.

There’s still 40, 000 of play there. So we started really low option. One didn’t work. We tried to negotiate. Um, and we, we were able to negotiate a little bit, but there’s still like from the traditional model that we’re working with here around, which is buying and flipping land. There’s still, it’s still a little tight margins to do that with deal funding and that other stuff at 60, 000, right?

That’s a good double close opportunity. You want to talk about that, Ron?

Ron: Yeah. So they want 70, 000 for what you said right, Dan?

Dan: They wanted 65. Let’s say we negotiated it from 45 to 60 and we can’t flip it for, uh, we can’t get deal funding for it, essentially.

Ron: Yeah. So your, what’s your job is to do after that double closing this is you need to get them Assigned, um, attorney, in fact, document where you have the rights to market their property.

Um, so you just tell them like, listen, I can’t do 60 right now, but I think I can get you 60, 000, uh, within about two or three months. If we sign this, give me rights to market it, uh, find an end buyer on this and we can make this happen. Um, so you get that signed and then you can market the property like it’s yours.

Essentially, you can get on the MOS, uh, make sure you check in your local jurisdictions for this. Um, but then you list it, don’t list it for 100, 000 cause it’s worth 100, 000. List it under market value. So you can get, sell it quickly. You can get the, uh, you can get the seller, their money, and then you can make the money.

So list that 90, 000. What’s going to happen. You’re going to flip it. It’s going to go. The deed is going to go from that seller to you, to the end buyer that you found all in the same day. So that’s why it’s a double close. There’s two closes in one day, A to B first seller. To you and then you to the end buyer, you’re going to get that check for 30, 000.

And then, uh, I mean, that’s how it works, Dan. Think about it. If you do that at 85, 000, you make five, 10, 000. That’s when it doesn’t work, but this is a legitimate example from how you can make 25, 30, 000 in the deal.

Dan: Yeah. And a lot of people, a lot of the traditional wholesalers going back will offer 95 and you know, it’s just not going to work.

You’re going to make a little money with doing the same amount of work. The key is to get more offers out there. Um, and. You’ll make more money flipping it with deal funding money in the end if you were able to get it at that 45, 000, um, and get good deal funding terms and be a good, you know, to find a good partner for that.

But overall, um, your next step is to negotiate and get it as low as possible. And then if there’s still margin in the deal, uh, go into it. And Ron said, use an attorney. In fact, that’s one way to do it. The other way is just to change it to a wholesaling template. Like, uh, just add a contingency on your purchase agreement.

That says the seller has the right to market this within 90 days. And then you can put it on land. com and Facebook. You just won’t be able to put it on the MLS. Once you do have that signed and notarized attorney in fact, though, that legally, that’s an attorney. In fact, that legally gives you the rights to market that property in any real way.

You want to, I’ll obviously check your jurisdiction and everything, but that is a notarized document and attorney. In fact, and that’s very powerful and that seller can not back out. That is a notarized legal doc. You can cloud that title. You you’re very protected in that way. That’s the most sustainable way to do it, especially for these higher dollar properties that you want to lock up and, you know, put on the MLS and get all that going.

But you can always do it to the 90 day option. And I’m telling you guys right now, this is the best way in my mind that I’ve seen to. To flip land, to make a living off of land is going through these steps. Give them a good offer at 40, 45%. You’ll be surprised how many people say yes to that. And then that doesn’t work and they’re motivated and the land’s good.

Try to negotiate as long as, as low as possible and get deal funding and work it that way. And then, because they want, a lot of these people want their money in two weeks, which you can do with deal funding. And then the third option. Is, uh, get the attorney. In fact, double closed at that type of stuff, wholesale.

Uh, that’s the third, but it’s also less value. You are giving them more money. You’re giving them a lot more money, but it’s also going to take a long time to get. So you have that conversation. Like Ron said, I can’t get you that 45, 000, or I can still get you that 45, 000 in two weeks. I have that money ready to go.

Now you want 65, 000. I’m happy to make that happen, but I work with different investors in the area and come up with different solutions for each property. And we’re just not, I can’t get you that money in two weeks. I have to, I need more time to align things and get things together. If you can give me 90 days to get this done, I can get you that 65, 000.

Most of the time, it’s much quicker than this. Most of the time I can do it in a month or two. Maybe even sooner, but I just want to relay that because that 65, 000 is pushing my limits with this. And I can’t just close it in two weeks. It’s higher. It’s riskier. Now, if you want that money now, 45, 000 offer still stand.

Just let me know. If not that 65, I’m going to need that. And that’s how those conversations go. But this is the most solidified business model out there. I feel so strongly on this. If you guys are doing things the wrong way, like we talked about and just offering whatever. Stop doing that. Start doing this.

You’ll make so much more money. Yes. You won’t get a deal per every 10 calls or 50 calls or whatever it is. But you’re going to make 40, 50, 000 a deal on this, and you’re going to end up doing less work, especially if you start to mail and text instead of cold call. There’s just so much money in this. It’s not that difficult.

Ron: Yeah, I think that strategy Dan will talk about is definitely the best, like where you’re targeting getting for 40 to 45. But you have this in your back pocket if someone gets stuck because you, the biggest thing with this, you can’t throw, not saying you can’t, but you don’t want to throw away a deal where the seller is stuck at 60, 000, 90, 000, and the market value is 90, 000.

Even though you cannot get traditional deal funding with that, there’s other options. Like this is the other option, Dan, um, and doing stuff like this over and over. You can make, I don’t know, you do a deal month, 30, 000, like you’re gonna make. Whatever that is, five, 400, 000 in a year. And that’s, those are legitimate numbers that aren’t that difficult to attain in my mind.

Dan: Yeah. You’ll get better margins per deal. Um, you’ll provide more value. You’ll sell the properties quicker because now that you have it under 60, 000, you can keep dropping 65, 000. You can drop the price a little more aggressively. 95, you’re going to be stuck at a hundred thousand selling minimum. And that price is worth a hundred.

Even if you’re at 90, you don’t have much room to keep dropping it. But all of a sudden you’re at 60, 000 and you’re selling it for a hundred with no skin in the game. It’s a double close. You have no money out. You can keep dropping that and you’ll get better margins per a per deal. You’ll provide more value, turn properties quicker and you’ll be able to list it on the MLS.

And that’s another thing that I don’t see a lot of good wholesalers doing is. They’re not getting these attorney and fax for whatever reason. They’re just listing it, uh, investors. And I never understood that. I really never understood why I understand that of turning them quick when you have a good builder or something, you’re talking info lots and you have good relationships there and turning quick, but you can list these on the MLS and sell them.

I’d never understood why these people aren’t marketing to mass public instead of just going after builders.

Ron: Yeah, that’s an interesting point. And you don’t really see that with a wholesaling market as a whole. You see everyone doing it kind of like you’re saying, and just talking to investors, stuff like that.

Um, but yeah, you get that attorney attorney. In fact, you can sell that anywhere like that attorney. In fact, how we write or how it was, how, what it says is like, you have rights to sell this property. Um, they’re going to get their money obviously at the end of the day, but you have rights to sell the property and then you’re kind of the middleman in this.

So that’s why there’s so much potential in it.

Dan: And if things go south, you can cloud the title if they try to walk away or backdoor because on the south side. Now you’re selling this on the market, say someone found you on Zillow, you’re on the MLS, they call you. They’re asking who you are and that’s where these conversations get a little sticky.

Um, and you got to just say, you got to tell them you’re under contract to buy it before they close on it. Nothing changes. You’re an attorney. In fact, with them, they try to go around you. You’re going to screw up everyone’s situation because you can cloud the title and stuff. So you just got to walk them through some sticky conversations come.

That’s fine. Everything’s legal. Everything’s ethical. You’re doing a huge service for both sides. You’re still selling it, selling it under market value and providing a good listing and you’re giving the seller the money that they wanted as well. So you’re still doing a really good service here, which is why I like it.

Ron: Yeah, exactly. I don’t have much more to add, Dan.

Dan: No. And if you guys aren’t doing that, or if you guys are in the community, watch these double closing modules. It walks through exactly how to do this. It gives you the documents or course gives you the documents, the calls, the scripts, all that stuff is in the course.

So make sure to watch that. If you guys haven’t, 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.

Watch the Full Episode Here