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Real Estate Investing : Land Investment Last Updated: May 14th, 2012 - 22:24:01

Buying Vacant Land With No Money Down
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Tips For Buying Vacant Land With No Money Down

Many real estate investors are of the opinion that investing in vacant land can be a risky venture as the wrong choice may result in a dud investment without any returns. Basically, vacant land is categorized as agricultural land and development land. Agricultural land is safer as it can be leased to farmers, earning you around 10% interest on your investment without any hassles. Development land is more risky, as the land could turn out to be a dud if its surroundings do not develop as expected.

Tips To Buy Vacant Land

  • Get help from a land broker.
  • Get in touch with experienced land appraisers, surveyors, soil experts, and an attorney who will guide you regarding zoning laws.
  • Decide on the kind of land you want to invest in and your goals regarding it. Will you hold, or will you resell it or develop it, or will you split it up and make a huge profit?
  • Make sure you have the required financial resources ready.
  • Check out the zoning laws that govern the land to give you a very clear idea about the scope of its development and the possible development in its vicinity.

Using No-Money-Down Techniques To Buying Vacant Land

Buying vacant land with no money down may seem impossible, but for a creative investor it is child¡¯s play! There are so many options available that it is amazing. Here are a few options that you could try for buying vacant land with no money down.

1. Lease purchase option can be used. You select a piece of land and after due diligence agree to a lease purchase option, paying a higher than normal monthly rent, a part of which is set aside in escrow to be deducted from the total price of the property.

2. Convince the seller to take a token down payment in return for a high interest monthly payment.

3. ¡°Subject to¡± options where you can assume the seller¡¯s existing mortgage subject to transfer of the deed in your name.

4. Getting a lease option on the land and flipping it to another buyer before the option expires.

5. Getting the buyer to accept gold as a down payment, having an agreement to pay any difference at the closing of the deal.

6. Getting a bank to refinance the property and selling it by subdividing it getting more for each division than the value paid for the entire land. This is possible if you have pre-sold all plots before applying for the loan!

7. Let us say Fred had a debt valued at $30,000 and can arrange for a loan of $50,000. You have $30,000 but cannot get the required $20,000 to close the deal. Fred offers to lend you $20,000 in return for a second mortgage note.

8. Use a note of another property you own instead of a down payment. It will be redeemed after you have repaid the dues promptly.

9. Some investors offer service in lieu of down payments.

10. Real estate agents can use their commission on the deal to pay for part or all of the down payment.

11. Getting a loan from hard moneylenders, family or friends, credit union or perhaps the real estate broker who brought together the deal.

12. Some people exchange or swap properties buying land with no money down.

13. In case of partnerships, working partners will get a share of the property without down payments as a repayment of their efforts.

14. Getting a piece of land at a discount as the owner is in debt.

15. Combining a refinancing option with a land sales contract. Seller gets the cash and you get the title deeds to the land.

16. Using notes bought at a discount as a collateral for its full value to buy land with no money down.

17. Using a home equity loan or a line of credit to finance the deal.

18. Refinancing other property to get the required finances.

19. Bird-dogging and flipping land for a cash assignment fee is also common.

20. Negotiating a lower down payment with the seller.

For creative real estate investors, the sky is the limit. With little or no cash investment of their own, they end up buying property that appreciates over time, giving them a guaranteed return on investments. You could opt to hold on to the land and cash out in a boom period or develop it and make a profit or split it and sell it piecemeal for a considerable profit. With the right education and expertise, a good backup team of financiers, attorney and realtor real estate investments in land with no money down could be very profitable indeed.


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