Flipping vacant land is a type of real estate investment that’s often overlooked. Flipping houses can have its own benefits and drawbacks. It can also be more expensive and a little harder to secure the property if you live out of state. However, flipping land might be a better option for your situation depending on factors like the locale, budget and sweat equity you’re willing to put into the project.
Here are some of the main pros and cons of flipping land:
Land Flipping Pros
Low Competition - From a business perspective, flipping land comes with wide territory and low competition. Since you aren’t restricted to a single geographical area, you’re able to reach potential sellers and buyers across the country. Plus, with the vast amount of sectioned land still available, there is plenty of room for competition.
Ongoing Income Possibility - Through seller financing or working with lenders, you can turn your land flip into an ongoing income stream. Buying land with cash and selling with terms can mean regular monthly rent or mortgage payments in your pocket after the initial sale.
Land Flipping Cons
Active Investment - Flipping land one time seems simple, but making a business out of it requires a lot of work. To maintain steady activity and profits, you need to keep up with marketing efforts and prospecting. Buying and flipping land for profit is an active investment, which means you’ll need to stay on top of your business efforts regardless of cash flow.
Selling Can Be Tough - While finding land to buy might be easy, selling it can be more difficult. Most land flippers find that their primary source of frustration and bottlenecking occurs in the sale process rather than in the buying and improvement process. You may need to hold on to your improved land properties for a while before finding the right buyer.
Flipping land might be a relatively uncommon form of real estate investment, but it definitely has its advantages. Keep these pros and cons in mind when considering whether it’s the right way for you to get into the flipping business.
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