How to Make Land Cash Flow
by Jonathan Haveles
Many people think and have been taught that land is risky, expensive, doesn’t cash flow and takes a long time to convert into profits. And in this article, I want to focus on the one thing I hear mentioned about land all the time and that irks me the most when I hear people talk about it. And that is that:
“LAND DOESN’T CASH FLOW”
While it technically is correct that land itself does not cash flow the same way a rental house cash flows, there are some distinct ways to make land cash flow which I will go into details when I am presenting at ICOR in August.
And when I am saying you can make land cash flow, I am not particularly talking about traditional income land like Farmland or land with billboards or cell phone towers on them.
Certainly, that works too, and it is absolutely possible to take a piece of land in a city and rent it out as a parking lot, a storage place, or even as a place to put a cell phone tower or billboard on. There are many land owners who have made a nice steady income by buying a piece of land in rural areas next to an interstate and then either fixed or non-fixed (trailers or old trucks with advertising surface) and renting out the surface to businesses in the area forever. Just a few of them make more income a month than most people earn in their jobs.
But that is not really what I am talking about in the special drill down session on how to make Land Cash flow.
Instead I am talking about Making Land Cash Flow by selling it with Seller Financing.
What is particularly of interest when selling land with Seller financing. MY WAY, is that with my technique you often get all your investment back the moment you sell the property and every single payment afterwards is just pure profit.
Looking for ways to get a high return on investment? Look no further.
Here Is What I Mean:
The concept of seller financing is not new. But mostly it looks like this that someone buys a property for let’s say $100,000 and then sells it for $120,000 with $20,000 down and $900 a month for 15 years or so. That is nice and brings the seller peace of mind, $900 monthly cash flow and a good ROI. But at the same time, it takes a good 7-8 years to get the original $100K you put into the property back.
Now let’s look at Seller financing and making land cash flow.
You buy TWO Properties worth $40,000 each for $6,000 and then you sell it for $6,000 down and monthly payments for $450 (each) for 12 years which would add up to $900/month in cash flow.
So, it’s the same monthly cash flow but everything else is completely different.
- The moment you sold the property you got ALL your money back
- From the first payment on, each month you get $900 in cash flow that is ALL profit.
- There are no tenants, toilets and termites and midnight moveouts or anything like that.
- Land is outside of Dodd Frank so you don’t have to deal with Mortgage originator licenses and all kinds of government red tape.
- You don’t need to take on a mortgage in the first place to buy the property. Many of our students have bought properties for $100 and sold them with seller financing for thousands.
Also, which of the ROIs is higher? Of course the second one, A LOT, and the best part is you have none of your own money at stake. I like those kind of deals. And this is the kind of cash flow I will drill down into at the August meeting.