Episode 112: [LAND] Land Flipping with Seth Williams

Danny Johnson / 2 comments

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Show Notes

Seth Williams is a land investor and residential landlord, with nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of REtipster.com – a real estate investing blog that offers real world guidance for part-time real estate investors.

Seth got started in land investing in 2005 while he was in college. He had first learned about real estate investing from the book Rich Dad Poor Dad. “I was fascinated by the book,” Seth tells, “It totally changed my perspective on a lot of things.”

The book wasn’t specific about how to get into real estate, though, so Seth dug into the MLS to find houses to flip or rent. He learned how to calculate the numbers to figure out what a good deal was, but then the housing market crisis hit. In 2007 he couldn’t find anything that made sense for him to make a profit with.

Because the market was so hostile and Seth was a beginning investor, he went into the work force after college. In 2008 he took a course in land investing where he got the information he was looking for. With that course Seth began finding motivated sellers by using delinquent tax lists. Land was a more simple type of real estate for him to get into with a much lower risk than house flipping. Seth found that you could buy land from people on the delinquent tax lists for pocket change.

“I could buy these plots free and clear with the money I had in my pocket,” Seth says, “When I realized you could do that I was like ‘Whoa, this is a game changer’!”

Without needing to deal with loans or mortgages, Seth was able to build a safe foundation for his land flipping business. House flipping takes time to learn the safe way to invest. For someone who’s been in the industry for a while, it’s not as risky for them to invest in houses because they know what they’re doing. When Seth was was just starting out, he knew nothing about how to safely invest in houses, which is why land investing was so appealing to him.

“With land, I could set myself up with these deals,” Seth explains, “and no matter how the cards fell I would make money from it.”

For example, if you buy a plot of land that’s worth $5,000 and you’re only paying $500 for it, it’s a no-brainer that you’re going to make a profit when you sell it in return. Because this made so much sense to Seth, he started looking at counties that weren’t densely populated and buy land there.

There are three counties in Detroit that are very densely populated, which makes those plots not desirable. The problem with buying land “in the armpit of town”, the only use for it is to build another house. It has less market appeal. On the other hand, land near those densely populated counties has more potential, which is what makes that land a better investment.

Links

REtipster Podcast

REtipster Club

YouTube.com/FlippingJunkie

Seller Lead Hacks Webinar

LeadPropeller Services

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Episode Transcription

Danny Johnson: This is Flipping Junkie podcast episode 112. [music] Welcome to the Flipping Junkie podcast. The podcast for flip pilots everywhere. Flip pilots are the house flippers that work more on our business instead of in our business by keeping a 30,000-flip view. You’re now part of the small group of house flippers that considers themselves flip pilots that strive to build the life of financial freedom and time freedom so that we can spend more time doing what we love with who we love. In this podcast, I give you a glimpse of the daily life of a flip pilot so let’s gets started.

Hey, everybody. Welcome back to the Flipping Junkie podcast. I’ve got a good friend of mine, Seth Williams, on the show today. I’m super excited about it. He’s a land investor and residential landlord with nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of REtipster.com, that’s a real estate investing blog that offers real world guidance for part-time real estate investors. He’s been operating that blog for a really long time and has taken it to a really good level where he’s got so much content on there. He’s got different content than I’ve seen from other blogs, and so I definitely recommend checking it out. He shares a bunch of great tips today on flipping land. You’re going to love this episode. Make sure that you’ve got something to write with. You’re going to be taking notes. Enjoy the show.

Welcome back to the Flipping Junkie podcast. Today, I’ve got a special guest, a good friend of mine. Seth Williams joins us today. How are you doing, Seth?

Seth Williams: Hey, Danny. I’m doing good. Thanks for having me.

Danny Johnson: Great. You’ve been on before. I have to look at what episode it was, but it was early on, wasn’t it?

Seth Williams: Yeah. It was quite a while ago. It was fun conversation though.

Danny Johnson: So I’ll include that in the show notes. You had mentioned this just a little bit before the show. You were talking about three things that we love and three things that we did not like so much about the flipping business. I’m sure that was it. A lot of fun doing that one. But today, I wanted to get a little bit more into how you got into the business—and you focus on land so it’ll be interesting and different—what you’re doing now, what your goals are, and just go from there.

Seth Williams: That sounds great.

Danny Johnson: Awesome. Just start with when you got started and how you got started in the business and—

Seth Williams: Absolutely. I’ll kind of just tell the story as I usually do. It was about 2005 when I was in college. As many people do when they first learned about real estate investing, I was reading the book Rich Dad Poor Dad. I was fascinated by the book. It totally changed my perspective on a lot of things. One of the things he talks in that book and in many of his books is that he’s into real estate but he doesn’t really get specific about how you do it or what you’re supposed to do or anything. So I was like, “Well, real estate. I got to figure this out now.”

So it was, again, 2005 and I started looking on the MLS, trying to find houses I could buy to the flipper to rent out or do something with. I figured out how to calculate the numbers and figure out what a good deal it was. If you remember, in 2005, 2006, and 2007, prices were pretty high—kind of like they’re today in most markets around the country. I just couldn’t find deals. No matter what I looked at, I could not find anything where it would make sense for me to make an offer because the cash flow just wouldn’t be there where it would be just impossible to make a profit on flipping. This is long before I knew anything about how to make low offers and where to find motivated sellers. I didn’t know any of that stuff. I was pretty naïve and just sort of clueless about how the whole business works, but it still just frustrating me a lot because I spent hundreds of hours trying to look at different opportunities that never panned out and would never pan out.

I graduated from college, got into the workforce, and started working my job. It was around 2008 that I took a course on the land-investing business, and I learned about not only land specifically and why it makes and why it’s actually a pretty brilliant way to invest in real estate but also about a way to find motivated sellers through something called the delinquent tax list. This is one of many ways to do it. It’s not the only way to make it happen. It was kind of like these two components put together. The fact that it’s land, so it’s a very simple type of property. There’s nothing that’s going to get broken, stolen, or destroyed like you can sort of walk away from it for 10 years and nothing is going to go horribly wrong with it. Just a very simple type of real estate.

When you know how to find motivated sellers specifically through the delinquent tax list, you can make offers to people that are crazy, like offers for 100 bucks or 500 bucks or 1000 bucks. The kind of money where—I actually have that much in my bank account right now. I can go out and buy that and own it free and clear. When I realized you could do that, it was like, “Whoa, this is like a game changer.” I don’t have to get loans and mortgages and overextend myself and screw things up and ruin my financial future.

Danny Johnson: I’m going take the chance without worrying about it being something that’s going to end up putting you in a hole tens of thousands of dollars, right?

Seth Williams: Yeah, absolutely. If you’re a house flipper and if you know what you’re doing, the risk actually isn’t that big because you know how to do it and you know what to watch out for but I knew none of that and I knew that I knew none of that. There’s just a lot risk in my mind with going down that path. But with land, I could set myself up with these deals so that really no matter how the cards fell, I could make money from it. When you buy something that’s worth, say, $5000 and you’re paying $500 dollars for it, it’s not very hard to turn around and sell that thing without doing anything to it and still make money from it. The exact same concept would apply to like a car or jewelry or any kind of tangible asset. It’s just that we’re dealing with land here. That’s the asset.

Danny Johnson: What was the focus with the land? Intercity lots or things out of town. What do you focus on? And was that what you focused on when you got started?

Seth Williams: Yeah. That’s a very good question. What I started doing was really looking at counties that were not densely populated, but I would look at the counties that were surrounding the densely populated county. For example, Detroit, Michigan. There’s three counties that make that up. It’s Oakland County, Macomb County, and Wayne County. I would not be looking in any of those counties to find land. As in most big cities especially Detroit, there are pockets of the city or very large pockets that are pretty rundown and nasty, not the kind of place where—

Danny Johnson: Oh, Detroit, really? I’ve never—

Seth Williams: Although it’s actually getting a lot better.

Danny Johnson: That’s what I hear.

Seth Williams: But anyway, the problem with buying land in the armpit of town is that when it’s a small residential lot, it’s really only good for one thing and that is building a new house. That’s highest and best use for it. Unless you have some strange situation, most people are not going to invest the money required to build a new house in the middle of a ghetto. That’s just not what happens. Because of all that, it’s just not an ideal type of property to work with.

When you’re working in a rural county though, a place that’s usually an hour or two hours away from a big city so people can get there fairly easily, kind of have it be their home away from home type of thing, those are pretty good type of vacant land property to try to pursue. They’re a lot easier to sell.

Not also because they’re pretty rural and remote, they’re kind of like out of sight and out of mind for most people. The people you’re buying them from—there’s not as deep emotional connection to it, and it’s not the roof over anybody’s head. So they’re a lot of times totally cool with parting with that for a very, very low price because in their mind, especially if they have delinquent taxes and you know that, they basically have just this big problem in their life. They’re kind of looking for an easy button. They want an easy way to get out of it without having to pay money. When you show up with an easy button and you have a solution and you say, “Hey, I’ll take this burden of your property. I’ll give you cash for it,” not everybody, but a surprising number of people will say yes to that.

Danny Johnson: Are you actually mentioning that you know that they have delinquent taxes and you’re marketing to them?

Seth Williams: Well, I used to when I was getting started. I don’t do that anymore especially if I’m sending out any kind of a postcard where it’s like an open message where everybody can see it, but really just in any case I found that it’s not necessary.

Danny Johnson: They know they have the problem, right?

Seth Williams: I can see in some situations that might be more compelling because you kind of know where they’re coming from and that’s like leverage and negotiation, that kind of thing. But for the most part, the deals that I buy, there’s not a lot of negotiation going on. It’s like you either will take this or you won’t. You’re basically throwing a bunch of junk up against the wall and seeing what sticks or what comes down.

Danny Johnson: Well, I like the idea of not having it in the message because I think when you do and they receive, the thinking then in my opinion—I don’t know. I haven’t had delinquent taxes and had this situation so I can’t say for sure. But I would assume that, that would put my mind in a hole, “Who is this? And what kind of research are they doing to find out about my problem?” Do you know what I mean? And you’re thinking of the wrong thing instead of like, “Who’s this guy that’s interested in buying this land of mine?” I wonder if he’d be interested like, “This would work out because I’ve got these delinquent taxes. He’s really just interested in buying the land, so I wonder what kind of price he could give me.” And when you come from the, “I know you have a delinquent tax problem. I’m going to lowball you like crazy,” which you probably might do anyway, it still seems a little bit less adversarial maybe where you have to negotiate like that.

Seth Williams: And really I think the delinquent task list tends to have a much higher response rate than most lists because there’s an act of problem that all these people have in common, but some of the downsides with that is a lot of times the properties—well, I don’t know if I can say a lot of times. But more often than not with other types of list, the properties that are on this list are the people that call you back. It’s kind of like a junk properties. For one reason or another, it has like a problem like maybe it’s landlocked where it’s too small to do anything on it or it’s trashed or something like that. A lot of the people that respond and you talk to, you don’t actually even want the property in the first place because it’s just not the right fit. Another way to do this is you can just get a list of landowners in general that fit the size requirements, the assessed value requirements that you’re looking for.

Danny Johnson: Where do you get this lists from?

Seth Williams: Well, there’s lots of different places. The service I use is called AgentPro247.com but there’s ListSource, RealQuest, and DataTree. There’s lots of services that do the exact same thing. The nice thing about that kind of list is you can sort of target more specifically the exact kinds of properties you want so you don’t end up messing around with the garbage that you don’t ultimately want to buy. The downside though is that you don’t know whether or not they have delinquent taxes. I think the level of motivation tends to be less overall, so you kind of have to send out more mail to get the same number of appeals. Not always but that’s usually what I found to be the case. There’s just different pros and cons to go with different types of lists.

Danny Johnson: Right. So the delinquent tax part of it for a lot of these outlying counties, are you finding most of those online these days? Or are you getting this from a service?

Seth Williams: Yup. There are some places that will say that they can give you delinquent tax list, but I found that usually the information is not that current like not within the past few days or the past week. With this kind of list, it’s actually very important that it’s totally up to date because this list is changing all the time as people lose their property, as people stop paying their taxes, they pay their taxes off—that kind of thing.

So whenever I get this lest, I’m contacting the county treasurer directly and I’m asking them for it. This is one of the harder parts of this particular type of list, is that first of all a lot of times when you call the county, the first person you talk to has no idea what you’re talking about or sometimes they’ll just flat out say, “No. We’re not going to give you the list.” Usually, there are other ways to get it. If you talk to the county IT department, sometimes they can get it for you if the treasurer won’t do it or can’t do it.

Danny Johnson: That’s smart.

Seth Williams: There’s other ways to make it happen. But even then after you get the list, a lot of times, it’s just a total mess. It’s not formatted for you specifically. It’s just like the way the names and addresses and the property information are listed out. It’s going to take a lot of work for you to reorganize it and filter it so that you can upload it to a service like Click2Mail and send out the mail campaign. These are totally “overcomeable” obstacles, and I’ve done it many, many, many times. It’s just annoying. Whereas if you’re getting the list from a list service, it’s more like built specifically for what you’re trying to do so it’s a little bit more pliable and easy to work with.

Danny Johnson: I kind of like the ones that makes it a little bit more difficult because you’re going to have probably a tenth of the people that you’re competing with mailing to the same people.

Seth Williams: Absolutely.

Danny Johnson: Is there an issue with the delinquent tax of getting—if you do it after the New Year or something and they’ve got 30 days to pay it or however long they have to pay it or where counties do split payments and stuff like that. What if they show that they owe taxes but is not necessarily delinquent, do you deal with that ever? How do you find the ones that you are dealing to?

Seth Williams: Yeah. You kind of mean like the timing, like doing it too close to the drop dead date or—?

Danny Johnson: Right. Where it’s like the tax bill is going out and they owe that money. I think here in Bear County, it’s been so long since I pulled that list. If you do it at a certain time of the year like right after the New Year, then they still have time to pay up with the bills there so it’s unpaid. So you’re looking at unpaid taxes, not necessarily delinquent.

Seth Williams: There’s different levels of that and this kind of varies from state to state. For example, in Michigan, you can have up to two years of delinquent taxes before the county will just take your property from you. So that means that every county has two different lists. We have the list of people that are one year delinquent and then the list of people that are two years delinquent. Basically if you go for that list that’s two years, that means that literally the next time this drop dead date rolls around which I believe is March 31st, if those taxes are not paid, they’re losing that property. So they inherently have a higher level of motivation because it’s a big problem and they need to fix it now or they’re going to lose it. Whereas the one-year list, they still have another year or year plus before they lose anything, but you do know that they’re delinquent taxes. So it’s better than just like a regular list of people in terms of motivation but it’s not necessarily like a dire situation yet.

Usually what I do is I go for that two-year list and I make sure I’ve got enough time to actually put some deals together before that drop dead date occurs. I think the downside to that is that there’s a higher delinquent tax balance that I have to pay off when I’m going to buy these properties so that’s a little annoying. But aside from that, the level of motivation is much higher. I just have to make sure that I’m factoring that delinquent tax payoff number into my overall purchase price and make sure it still makes sense.

Danny Johnson: Do you guys have any exemptions in your area where it’s like over 65 or something where they can’t really lose the property to taxes? Do you deal with that or filter that out?

Seth Williams: I don’t know of anything like that, so I don’t filter anything out based on that. But not to say there absolutely isn’t, I’m just not aware of anything.

Danny Johnson: I’m not sure. I think we have something like that here where if it’s over 65, they won’t lose it for property taxes or something like that.

Seth Williams: You mean like if the owners are over 65 years old?

Danny Johnson: Right. But I think that’s probably where if it’s homestead and also maybe homestead and over 65, but I would think the land would probably be a little bit different where you don’t have something because you’re not throwing somebody out that’s got nowhere else to go, that’s elderly. So maybe that’s—

Seth Williams: And that’s another thing that I’ve always liked about the land business, is that—not only from the standpoint of negotiation but also just like I don’t have to feel like I’m kicking somebody out of a house or something. I won’t say life, but nobody’s home depends on it necessarily. It’s kind of like an extra thing and the person doesn’t really need it in their life and that’s why they’re letting it go so it’s still easier to negotiate deals that way.

Danny Johnson: Like you were saying, it’s not typically negotiation. They just want to sell and you want to buy and you throw out a number and it’s like, “Whatever. I don’t have a big attachment to this land because I wasn’t born there. I didn’t grow up there. My parents didn’t live there for a long time.” So, how do you look at these land deals? Because land comes in all shapes, sizes, locations—all that kind of stuff. Do you kind of have your set strategy of who you’re selling to if you’re not developing yourself? And what does all of that look like? What’s all this criteria for how your exit strategy works?

Seth Williams: When I was getting started—and I think a lot of people have this in common—I was just excited to do a deal with anything, so I’d make offers on anything that came across my desk and I just wanted to get experienced. There’s a lot of that can be gained from that just in terms of understanding how deals work and that kind of thing. But these days, I’ve learned that bigger deals like ones that make more money per deal, they don’t come by as much and you basically have to say no to a lot of stuff if you just want to do big deals. But ultimately, it kind of takes the same amount of work to do a big as it does to do a little one. So I tried to do a lot of fewer deals and focused on those. If I understand market values by acre in a given county, then I’m usually searching for properties that have a size that fit within the criteria I’m looking for. So that’s kind of what I have my eye on.

Some areas are a lot more desirable than others. Some counties in Michigan, they’re like super-hot like right on Lake Michigan—that’s where everybody wants to go in the summertime—and other areas that just nobody seems to care about. So you sort of have to understand what’s going to sell fast and what you have to price if you want to move and are there any incentives you have to offer people like seller financing, which can be a huge, huge motivator especially with land because by and large you can’t get conventional bank financing to just buy land. Unless you’re planning to immediately develop then you probably can. But if you’re just going to buy land to just sit on it, banks don’t really want to touch that. If that’s kind of what you’re looking at, it becomes important that you either offer seller financing or you list it for way, way, way beneath market value like half of market value but you can still make good money on. You just have to make sure you’re buying it at like 10% or 20%.

Danny Johnson: Well, you guys can do land contracts up there in Michigan, right?

Seth Williams: Yup, absolutely, and that’s another thing that’s super important to understand based on whichever state you’re working in because every state has different types of documentation, laws, and processes involved with seller financing. Some states make it really, really easy to deal that stuff and other states make it super hard. So you just want to understand what you’re getting into if you want to go down that road.

Danny Johnson: For sure. You don’t want to be in a situation where you can’t get a property back and you’re having to pay taxes and take care of all this stuff while you’re not receiving payment and they’re not giving you back the properties. So, what do you find in most off your buyers? Do you have sort of like a typical buyer for most of the land that you buy and sell? What are they doing with it?

Seth Williams: Well, most of the people that I end up selling to are like the end user, so the person who’s buy it and use it to go RV camping or something like that or build a house. The nice thing about this kind of buyers is that they typically pay more, but I think in my experience in a way usually the sale process happens a little slower. If you have an investor like somebody who basically just pays a marked up price from what I paid and then they’re going to sell it again, those people, if you can find a good one, they can buy them pretty quick and sort of keep the machine moving which is really nice. But if you’re selling to the end user, it just kind of takes longer sometimes to find those people.

I’m usually just advertising on places like Craigslist, and Zillow. Sometimes if I feel like it, I’ll put it in a place like LandWatch and pay money for a listing. Usually, Craigslist gets some pretty good attraction and Zillow as well. In my selling website which is through LeadPropeller—that kind of thing can be super helpful, too.

Danny Johnson: And you’ve given some great feedback, too, on some improvements for that, that we’re working on so I appreciate that for LeadPropeller sites. How long does it typically take you to sell? Because you’re talking about sort of outlying counties out of the bigger metro areas. What are the timeframes? Do you end up with a property for a really long time?

Seth Williams: Yeah. The longest I have ever held on to a property is 15 months and that was a 14-1/2 acre parcel in rural Alabama, just sort of my classic areas where it’s an hour or two hours from a big city. It can go slow, but it’s not the kind of thing where you sit on it for like years and years and years on it. If you got a price rate and if you’re marketing it well, everything will sell eventually. You just kind of have to make sure those boxes are checked. It’s one of those things.

Just this past year, I had a number of properties that I sold and it took those about, I think, nine or ten months to sell those. When you’re in the middle of that phase of like you listed and you’re waiting for the right buyer to come along but they haven’t come along yet and you don’t know when that day is coming, you can get a lot of fatigue. You’d think I like get over this by now as long as I’ve been doing this, but it still bothers me. I’m just like, “Come on. Where are the buyers? Why is this not happening yet?” You really just have to be patient.

Some in our membership site was telling me a while ago: If there’s something you could tattoo on your forehead, “It will sell.” Just give it time. Keep moving forward. Keep doing what you got to do. There’s a lot to be stead for having patience and just being consistent with your marketing.

Danny Johnson: That is big. I think that is really big because you could get to where you’re just thinking it’s never going to happen and you’re going to drop, drop, drop that price. When if you just kind of hold on a little bit longer and—

Seth Williams: Especially with land. A lot of times the key is to find the right buyer. Buyer A may be willing to pay 50,000 bucks for a property; whereas buyer B would only be willing to pay 10,000 bucks for it. So you sort of have to find that person who is like it’s worth it to them. They want that.

The backyard where I live is a perfect example. There is 12 acres of densely wooded land behind, but I don’t actually own it. My neighbor owns it. If you were to ever put that thing up for sale—it’s essentially a land-locked land. Nobody can get to it. I really don’t want him to cut all those trees down and build a bunch of nasty houses back there or a mobile home park or something. If he puts that up for sale, I personally would be willing to pay a lot for that but most other people in the world would not. There’s a little bit of luck involved, I think, but basically just—

Danny Johnson: Do you find that happening a lot where people are buying like neighboring properties?

Seth Williams: Yeah, because you have to find a lot. Something I always do when I’m trying to sell my properties is send out neighbor letters where I can—it’s not hard to find the name and address of every adjoining property owner across the street and smart guy behind you. You just send them a simple one- or two-page letter explaining that you are now their neighbor and you own the property right next to them just basically to contact you if they want to buy it. I would say like 20% of the time give or take that will result in a sale. So it’s not like it’s always going to happen.

Danny Johnson: That’s a good percentage.

Seth Williams: It’s worth doing. I wouldn’t just ignore that.

Danny Johnson: Are you putting signs out too on the property?

Seth Williams: Well, I don’t want to say never. I’ve done it a handful of times, but generally I do not. I’ve heard that can actually help a lot in some areas, but a lot of the properties I buy these days are nowhere near me so I can’t get to them and I don’t feel like finding somebody to monkey around with that. I just kind of skip that. I’m still able to sell them. I’m sure there are times when that’s never going to hurt.

Danny Johnson: So you’re not able to see all these properties. Are you buying all over the country?

Seth Williams: Yup.

Danny Johnson: And so, you’re not able to physically see them. How are you checking out these properties?

Seth Williams: There’s a lot of different things you can do. I think these are harder to do if you’re dealing with a house or any kind of a building with improvements because either you or somebody you trust, you want to get in there and see it and see what you’re dealing with. With land though, it’s just dirt. And everything you need to see, you don’t have to get in anything.

So things like Google Earth becomes super helpful especially because it shows the topography and the elevations of the land. Google Street View, if that’s available, that can be really helpful. And even things like finding somebody on Craigslist or a local realtor to drive by and snap a few pictures for you. Things like that can go a long, long way. If you can see them in person, I think that trumps everything. That’s always the most helpful thing to do, but I wouldn’t say you have to do that. There’s definitely ways to get around that. That’s kind of how I handle it.

Danny Johnson: Nice. Are you buying them cheap enough to where it’s pretty hard to lose? Or do you put any kind of clauses in your contracts? How do you handle any kind of case where there might be something really weird with the property that you didn’t anticipate?

Seth Williams: Yeah. There’s all kinds of “wordsmithy” ways to give yourself a backdoor. Usually, I’m saying something like the buyer has the right to terminate this contract for any reason at any point. I’m not trying to trick him. I’m just saying it outright. This isn’t done until it’s done, and I generally don’t pay him a deposit or anything like that. So it’s actually kind of like a loosey-goosey thing. They could also walk away at any point with no repercussions. Sometimes that happens, but usually it doesn’t because there’s not a lot of competition in the land business. I’m not fighting with a bunch of other investors for the same property. This person generally does not have somebody else waiting in line. So it’s like if I don’t buy it, it’s not like they’re going to sell it to then other people in the meantime.

Danny Johnson: What would be some of the things that you would be concerned about with a piece of property? Obviously like toxic waste and dump, but I mean how often are you going to have something like that? Are there any kind of things that you watch out for that you look out for just to be something where it’s just not usual land for whatever reason? Maybe this slope is too steep or something. I don’t know what.

Seth Williams: That’s a great question. I actually have a blogpost. I can give you. Maybe you can link it somewhere.

Danny Johnson: Sure.

Seth Williams: It’s called Fifteen Things to Watch Out for When Buying Vacant Land. Most of this stuff you are not going to encounter with the average land deal, but usually you’ll see at least like one or two of them so it’s going to be wearing all. But some of them are common things depending on what part of the country where you’re working. It would be things like: Is the property in a flood zone? Or are there wetlands on the property like a swamp that you just can’t see? Or are there are zoning restrictions? Does the municipality specify what you can and can’t do? And usually there’s some of that going on in some way, shape, or form. What else?

The topography of the property. Is the property on a cliff and you just can’t see it when you are looking at a satellite map? And again, that’s kind of where Google Earth comes into play and it’s really, really helpful with that kind of thing. Another thing is like access and utilities. Is there electricity running to it? Can you basically build a house there today? Is that possible? Or is that going to be a problem if you want do that?

Danny Johnson: Do you not buy whenever there’s no utilities?

Seth Williams: No, that doesn’t necessarily disqualify. It just helps me understand like, “What am I dealing with here? What are going to be the challenges when I try to sell this thing?” There are some properties that are super rural and remote, and that’s actually exactly what people want. They want to live off the grid so that they’re not relying on any municipal power source or anything like that. So if you find the right kind of buyer, it could be just what they’re looking for. Just things like that.

Wetlands for example, that’s something you generally are not going to have a lot of issues with on the western end of the country just because there’s a lot of deserts. It’s just not a big thing. But around the east coast, that’s a huge thing. In Michigan, that’s all over the place so you really got to be careful that you’re not buying that kind of property.

Danny Johnson: Whenever it comes to valuing these, how are you determining value because land can be so different? How are you putting a value on these?

Seth Williams: That is one of the most challenging parts of the business honestly. Even in my conversations with appraisers like, “How do you guys value land? What are you looking at?” Because really when you look at how you value a house, it’s usually fairly straightforward. There are quantifiable things you can look at like similar sales and the cost to rebuild the house if you need to and number of bedrooms and bathrooms and things like that. None of that is available with land. There is no cost to rebuild it because there’s nothing there. And usually the comps are few and far between. Just the data you need to make that decision is not around.

There’s a few things you can do. I will say in the recent times that I have been looking for a sales comps for vacant land on Zillow, I’ve actually been surprised. I don’t know why it used to be that I would find nothing like maybe one or two comps in the county and that’s all I can find. But now, I’m finding a lot more. I don’t know if their data is getting better or what, but it’s becoming easier than some markets to find sales comps so that’s a good thing.

But even when you don’t have sales comps, it’s a matter of finding what are the similar-sized properties and similar types of vacant land properties on the market that are listed for sale right now. That is not the same thing as what it’s going to sell for, but it at least shows you what is your competition, what kind of listings do you need to look better than when it comes time to sell. Are you going to be able to price your properties lower than all of these and get better pictures than all of these and make it look like the obvious one to buy in the area when it comes time to sell it? So just sort of having an understanding of what you’re up against once you own this thing and it’s time to sell it, that can be a really helpful thing as well.

Danny Johnson: That’s a good point. I could imagine. I guess you get into and you start doing it. You find what you feel is going to be a good amount and you just kind of be a little bit more conservative maybe on the buy. Are you using any formulas for figuring out what you want to pay for a property based on anything at all? It’s like, “Whatever. I just feel like paying this much. So I’m just going to—”

Seth Williams: You can certainly spend a lot of time on this. You can really, really analyze it to death, and I think it helps a little bit to do that. You might discover things that you might not have known about, but there’s sort of this diminishing returns thing. Usually, if you spend like 10 or 20 minutes looking at as much as you can before you make a determination, that’s usually like a sweet spot for me anyway. If I spend more than that, I’ll probably not going to come up with a much better idea after that.

Usually, I’m looking at similar-priced properties assuming that those are all eventually going to sell for like probably 70% of what they’re listed for. Sometimes if it’s like a huge deal and I really want to make sure I’m not wrong, I might call two or three local realtors. Again, realtors are not necessarily geniuses when it comes to land either. I would not necessarily take what they tell me at face value. I call a few them and get a few different perspectives, but the benefit of that is if I call a local realtor and just say, “Let’s pretend that I own this property and I wanted to sell in the next six months, what do I need to price it at to make that happen?” The benefit is they are actually in that market working in there every day and I’m not. So even though if their answer might not be like perfect or the smartest answer, it’s probably going to be better than just my own gut feeling, getting some kind of outside input on it. So that kind of thinking is really helpful as well.

Usually when I zero in on whatever I think the market value is, it’s extremely rare that I pay more than 20%. Usually, it’s like 10% to 15% of that number is what I’m making the offer for including any taxes I have to pay off or closing costs. So it’s a very, very, very low offer. As you can imagine, a lot of people do not accept this but that’s okay. I’m looking for that small percentage of people that will say yes.

Danny Johnson: That clears things up a lot because I’d feel a lot better about not knowing exactly what that’s going to sell for. If you make what you thought it might sell for, great. But if you don’t, it just means you’re making less than you hoped to and that’s all.

Seth Williams: Absolutely.

Danny Johnson: Right. That’s awesome. Wow. We’ve already been talking for quite a while. As you’ve done more and more because you have the blog, REtipster.com, you’ve got a membership site which I like for you to talk about in a little bit here, and you’re doing all of this stuff—we were actually in a small mastermind group together too so I know you’re doing a lot of things. You talked about hiring a VA, and I wanted to see what that looks like for you and how that’s worked out for you, what kind of task you have them do.

Seth Williams: Absolutely. I don’t know why, but I just have struggled in this department for a long time just trusting other people to handle anything in my business.

Danny Johnson: I get it.

Seth Williams: In some ways, it’s really—as much as it kind of stinks when we’re getting started because everything is slow and nobody knows about you and it’s just things are kind of slow to pick up, there is something that is inherently nice about that because you can do everything and make sure it’s all being done right or at least to your satisfaction. I handled it that way for a long time.

Really for the past couple of years, it just sort of hit this point of like, “This is seriously getting in the way of me living a healthy life, and you’re on my business.” So I basically have had to learn to start trusting people. In addition to hiring out one-time tasks, actually getting like a full blown virtual assistant who is there on a regular basis to do things like answer emails and edit stuff and basically just set up appointments for me and handle a lot of the stuff that I used to do myself, but it wasn’t like a monetizing thing. It didn’t keep me in the revenue-generating activities. That’s kind of what she does, is allow me to focus on things will grow and produce income in some way.

I found her on Upwork. The nice thing about Upwork is when you’re hiring for ongoing tasks, you can really handle like all of the payment through there. That’s how I pay her, and you track what they’re doing like actually take screenshots of their computer so you know what’s going on. It’s just a really nice platform to use for that kind of thing.

I have struck out before in Upwork. Sometimes I’ve hired people that are not worked out, so it’s not like you’re guaranteed to get the best person ever. It’s not a bad place to start searching for that.

Danny Johnson: Do you have any steps for who to look for? Because, I think, that’s where simply I struggle with a lot of times when I think, “Well, I have this task I need to do.” I’d rather just get a VA on Upwork to do it for me, and I spend so much time trying to describe what I’m looking for so I get the right person and I end up feeling like, “Well, I should’ve just done it myself,” which is not good thinking because the next time I need to do it. If you already had somebody that you used before, do you have any tips for that? I don’t know if that’s such a wide open question that’s kind of hard to answer.

Seth Williams: Well, no, it’s a good question. I totally get that, and I’ve thought the same thing on many occasions especially when it’s like a one-time task. For what I was hiring for, it was going to be an ongoing—basically an employee but I’m just paying them through Upwork, so there’s no W-2 necessarily. I basically just thought long and hard about what exactly I wanted and who I was looking for and sort of came up with the ideal candidate. Just have that description in there.

In the description, I said, “Please include a video of yourself answering these questions.” A lot of times, and maybe it’s just because I’ve been blogging for as long as I have—I don’t know—but you can sort of tell by the way somebody writes whether English is their first language, how well they communicate. Almost like a level of competence in a way. Maybe that’s not the best judgment of that, but—I don’t know—I found it to be relatively accurate.

I had probably like a dozen people that responded and several of them—I can just tell by the way they were writing with their little proposal—they’re like, “Yes. I’m not even going to talk to you.”

Danny Johnson: They’re going to answer emails for you and things like that.

Seth Williams: Exactly. Essentially, they’re an extension of me. They need to be able to think a lot like I do. It’s probably not reasonable for them to know everything I do but just understand what kinds of things are good opportunities or things I’m interested in and respond on my behalf.

What I did was I just asked for people to give me that kind of information and write a little message and record a video. The video was actually like a big part of it because I could sort of see their personality and how they conducted themselves verbally. Maybe it’s not right to judge a person based on that, but it ended up being like a really reliable and accurate in my case. I thought that was a really good way to get to know sort of who I was going to work with. And then of course, we have a video Skype call before we actually made it official. She’s been doing a really good job. She’s a great writer and speaks three languages.

Danny Johnson: Do you mind my asking how much you’re paying and whether it’s 40 hours a week and what country she is from?

Seth Williams: Yup. I’m paying her $20 an hour which is actually like quite a bit more than most VAs that you would get in like the Philippines. There’s a few reasons behind why I’m more than happy to pay that. I’ve known VAs that charge $85 bucks an hour. I think there’s different tiers of VAs you can get. If you want somebody who’s just going to post stuff on social media for you and it doesn’t matter when they do it and what they say, they’re just posting the links like data entry, that can be done for pretty cheap, I think. It’s yummy to pay 20 bucks an hour for that. But when you want somebody who can think with a good deal of intelligence and critical thinking and write well and they’re in your same time zone so they’re active and doing things the same time you are, that’s really something.

When you think of for what I need a VA for, helping them understand how do I think and what kinds of things would I say yes or no to and what does good content look like. Things like that. It takes a long time to train somebody for that. And when they know it and when they start thinking like I do, that’s worth something and I don’t want to lose that. I do not want to start over from scratch. So you really want to pay them enough so that they’re not just going to like pull the plug and leave when something else better comes along.

So, 20 bucks an hour, I think, is a very fair price for that. Right now, she’s working like 20 hours a week. I should probably up that honestly to like 30 hours a week. That’s another nice thing about Upwork, is that you can set a limit per week. This person can work up to X number of hours and then they’ll just basically cut them off. They can’t work any more than that. If you’re trying to stick to a certain budget, they will basically just kind of force them to stick to that.

Danny Johnson: I like how they have the whole thing where you can allow them to do manual hour entry, too. If they’re doing stuff that’s based in a computer, when they’re working, it’s going to track all of that and they won’t allow them just to put in, “Hey, I worked two other hours.” If you want to see that they were actually on the computer working for those two hours, then it’s pretty nice. So, is that US based or somewhere else?

Seth Williams: She’s in Orlando, Florida. She’s actually a Canadian citizen, and she lived in Nicaragua for a long time so she speaks very, very fluent Spanish and, I think, French too. I wasn’t even looking for that. That’s just kind of an added benefit.

Danny Johnson: Well, that’s cool. I’m glad. How long have you been working with her?

Seth Williams: I think it’s been since January of this year, so it’s coming up on like half a year now.

Danny Johnson: That’s great. I’ve gotten to that point, too. Everybody kind of hopes like, “I’m going to find $3 or $4 an hour person and get all this great work.” The reality of it is if you have the time to train and weed through a bunch of people to get the perfect person, maybe you can find that but I just got to the point where it’s like, “I don’t have time for that, and I don’t want to mess with that. I’m just going to pay more and find the better people and have stuff done right the first time,” because nothing is worst done having work done and then finding that you can’t even use it or you’re just not happy with this, not up to your standards, and you just wasted time.

Seth Williams: If I hire somebody that I want to do right by me and do good work and have high expectations, just from a leadership perspective, I need to start by doing right by them and paying them well and really just being a blessing to them and not like somebody who’s resentful about doing this kind of work and only getting paid X number of dollars when they’re worth more and that kind of thing. “Let’s skip all that. I’ll just pay what you’re worth and what I think is a really good wage,” and hopefully they’re happy to do that.

Danny Johnson: If they’re replacing you on a lot of that stuff too thinking like, “If I was doing that, what is that worth?” And I’m sure your time is worth a lot more than $20 an hour, so it’s a no brainer at that point if they’re actually able to save you all that time.

Awesome. Seth, this has been a great episode. I’m going to link several things in this. You have the blogpost about the things to look out for when buying land, and it’ll be on the show notes page, flippingjunkie.com/112 for this episode. If you would, would you mind sharing a little bit about your membership site and what that entails and how they can find out more about it?

Seth Williams: Sure. The membership site, I put that together about two and a half years ago, almost three years. It’s basically just a website where people have been asking me for a while that put together like a course about land investing, just really explaining the whole thing from start to finish. So I did that. I put together a 12-module course with tons of video content so people can download all my templates and everything. I made it into a membership site so that there’s also like an ongoing monthly coaching calls that I do with people that are recorded. There’s a forum there I participated. It’s kind of just a community for people who are looking to learn about the land business and grow their land business. It’s resource for people to use for that if that is what they’re looking for. So, that’s what the site is all about. It’s REtipster Club; retipster.club is the URL. It’s a lot of fun.

Danny Johnson: Make sure you don’t put R-E-I-tipster because even to this day I still type that in first for some reason. I hope you own that domain.

Seth Williams: I actually did the R-E-I-tipster.com, so I got that one.

Danny Johnson: retipster.com, and we’ll include a link to that as well in the show notes just in case anybody is driving and they don’t have a way to write that down, so we’ll have that there. Flippingjunkie.com/112. Thanks again, Seth. Is there any other way people can reach out to you if they would like to? What’s the best place for them to do that?

Seth Williams: Good question. Probably on the blog I have a contact page. That’s one way they can do it. I’m also on Facebook, Twitter, and LinkedIn. There’s all kinds of ways you can harass me if you want to.

Danny Johnson: That’s awesome. All right. Well, have a great day. [music]

Seth Williams: You bet. Thanks, Danny. I appreciate it.

Danny Johnson: Yup. Talk to you later.

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2 awesome responses to “Episode 112: [LAND] Land Flipping with Seth Williams”

  1. Seth Williams on

    Thanks for having me on your show Danny! It was great talking with you again!